SOURCE: PRIMUS Telecommunications Group, Incorporated

Primus Telecommunications Group, Incorporated

August 13, 2009 16:28 ET

PRIMUS Telecommunications Reports Second Quarter 2009 Financial Results

MCLEAN, VA--(Marketwire - August 13, 2009) - PRIMUS Telecommunications Group, Incorporated (PRIMUS) (OTCBB: PMUG)

--  Company Emerges From Bankruptcy; Reduces Debt 55% to $256.3 Million
--  Q2 Net Revenue of $196.7 Million, up 1.2% Sequentially
--  Q2 Income from Operations of $14.2 million, up 3.9% Sequentially
--  Q2 Adjusted EBITDA of $20.4 Million, up 3.9% Sequentially
    

PRIMUS Telecommunications Group, Incorporated (PRIMUS) (OTCBB: PMUG), a global, facilities-based integrated communications services provider, announced results for the second quarter 2009. Net revenue was $196.7 million; Income from Operations was $14.2 million; Adjusted EBITDA was $20.4 million; and Net Income was $25.4 million.

Chairman and Chief Executive Officer K. Paul Singh stated, "On July 1, we successfully exited our expedited prearranged Chapter 11 restructuring with a significantly strengthened capital structure and no major disruption to our operating units around the world as, by design, they were excluded from the proceedings. Our debt has been reduced by over 55% to $256.3 million and, to date, we are tracking ahead of the 2009 Adjusted EBITDA projection of $66.0 million contained in our Plan of Reorganization."

Mr. Singh continued, "Second quarter 2009 results were stable despite the challenging economy and our conservative approach to sales and marketing spend during the preceding two quarters. Our operating units around the world executed within our expectations, and this execution, combined with aggressive cost management and favorable currency translation, delivered sequential growth in Adjusted EBITDA and generated $14.2 million in free cash flow. We look forward to discussing our post-Chapter 11 business plan, our outlook for the remainder of 2009 and our longer-term strategy on our September 23, 2009 strategic update call."

Second Quarter 2009 Financial Results

Second quarter 2009 results reflect operations recorded during the Chapter 11 proceedings from which PRIMUS emerged on July 1, 2009. PRIMUS will adopt the "fresh start" provisions of SOP No. 90-7 in the third quarter of 2009, which requires that all assets and liabilities be restated to their fair value. Certain of these fair values may differ materially from the values recorded on the accompanying Consolidated Condensed Balance Sheets. Additionally, the Company must also adopt any changes in generally accepted accounting principles (GAAP) that it is otherwise required to adopt within twelve months of such date. For these reasons, the Company's financial statements for periods subsequent to July 1, 2009, the Effective Date of the emergence from bankruptcy, will not be comparable to previous periods.

Average Exchange Rates

Approximately 80% of the Company's net revenue is derived from sales and operations outside the United States. The table below presents the average exchange rates used to translate second quarter 2009 results and the historical currency rates used in previous quarters presented.


                             Second Quarter  First Quarter  Second Quarter
(in $US)                          2009           2009            2008
                            --------------- --------------- ---------------
Australian Dollar                     0.758           0.664           0.943
                            --------------- --------------- ---------------
Canadian Dollar                       0.857           0.805           0.990
                            --------------- --------------- ---------------
United Kingdom Pound                  1.547           1.434           1.971
                            --------------- --------------- ---------------
Euro                                  1.360           1.304           1.563
                            --------------- --------------- ---------------

Net revenue, exclusive of the currency effect, decreased $11.1 million, or 5.7%, from the first quarter of 2009. Reported net revenue, inclusive of a favorable currency impact of $13.4 million, increased $2.2 million to $196.7 million in the second quarter of 2009 from $194.5 million in the first quarter of 2009. On a year-over-year basis, exclusive of the currency effect, net revenue decreased $6.1 million, or 2.6%. Inclusive of an unfavorable currency effect of $33.1 million, net revenue decreased $39.2 million to $196.7 million from $235.9 million in the year ago quarter.

Net Revenue by Major Operating Segment

The following details second quarter 2009 and sequential and year-ago comparisons by major operating segment.

Canada        Second Quarter 2009   First Quarter 2009  Second Quarter 2008
              -------------------   ------------------  -------------------
($US in 000s)             $55,061              $53,245              $68,989
              -------------------   ------------------  -------------------
Summary Variance Exclusive of Currency Effect
Net revenue declined $1.5 million and $5.3 million, sequentially and
year-over-year, respectively.  The sequential decline is comprised of
$1.0 million from voice services and $0.8 million from prepaid services,
partially offset by $0.3 million of growth in internet, data and hosting
services.  The year-over-year decline is comprised of declines in voices
services of $6.0 million partially offset by $0.7 million of growth in data
and hosting services net revenue.  The effect of foreign currency was a
favorable $3.3 million on a sequential basis and an unfavorable $8.6
million year-over-year.


Australia     Second Quarter 2009   First Quarter 2009  Second Quarter 2008
              -------------------   ------------------  -------------------
($US in 000s)             $58,475              $52,027              $75,992
              -------------------   ------------------  -------------------
Summary Variance Exclusive of Currency Effect
Net revenue declined $0.8 million and $3.2 million sequentially and
year-over-year, respectively.  The sequential decline is comprised of $0.3
million from residential voice services, $0.4 million from business voice
services and $0.3 million from internet, data and hosting services,
partially offset by $0.2 million growth in wireless services.  The
year-over-year decline is comprised of $5.5 million from residential
voice, broadband and dial-up services, partially offset by growth of $2.3
million in services to commercial customers.   The effect of foreign
currency was a favorable $7.3 million on a sequential basis and an
unfavorable $14.3 million year-over-year.


Wholesale     Second Quarter 2009   First Quarter 2009  Second Quarter 2008
              -------------------   ------------------  -------------------
($US in 000s)             $50,279              $54,203              $48,866
              -------------------   ------------------  -------------------
Summary Variance Exclusive of Currency Effect
Sequential net revenue declined $5.8 million while year-over-year net
revenue increased $8.4 million.  The effect of foreign currency was a
favorable $1.9 million on a sequential basis and an unfavorable $7.0
million year-over-year.


United States Second Quarter 2009   First Quarter 2009  Second Quarter 2008
              -------------------   ------------------  -------------------
($US in 000s)             $16,918              $18,095              $22,445
              -------------------   ------------------  -------------------
Summary Variance
Net revenue decreased sequentially and year-over-year through residential
and small business customer losses and usage declines.  Revenue decreased
$1.2 million, or 6.5%, sequentially and $5.5 million, or 24.6%,
year-over-year.


Europe        Second Quarter 2009   First Quarter 2009  Second Quarter 2008
              -------------------   ------------------  -------------------
($US in 000s)             $13,031              $13,637              $16,925
              -------------------   ------------------  -------------------
Summary Variance Exclusive of Currency Effect
Net revenue declined $1.2 million and $1.5 million sequentially and
year-over-year, respectively. The sequential decline is primarily
attributable to the loss of $1.4 million in UK-based dial-around services
partially offset by continued growth of $0.2 million in retail services in
Primus France.  The year-over-year decline is comprised of the loss of
$1.6 million in UK-based dial-around services and $0.9 million of retail
voice services partially offset by continued growth of $1.0 million in
retail services in Primus France.  The effect of foreign currency was a
favorable $0.6 million on a sequential basis and an unfavorable $2.4
million year-over-year.

Net revenue less cost of revenue was $70.8 million, or 36.0% of net revenue, compared to $65.1 million, or 33.5% of net revenue, in the prior quarter and $93.4 million, or 39.6% of net revenue, in the year-ago quarter. The sequential margin percentage improvement reflects the continued efforts to contain costs, a shift in product mix including less low-margin wholesale revenue and the benefit of a $1.5 million cost of sales dispute settlement. The year-over-year margin percentage decline is reflective of a second quarter 2008 non-recurring reduction to cost of revenue of $5.8 million from a favorable Australian regulatory ruling.

Selling, general and administrative (SG&A) expense was $50.4 million, or 25.6% of net revenue, compared to expense of $45.4 million, or 23.4% of net revenue in the prior quarter, and $70.0 million, or 29.7% of net revenue, in the year-ago quarter. The sequential increase in SG&A expense reflects a $3.2 million increase from foreign currency translation and a $1.4 million increase in advertising, sales and marketing and a $1.3 million increase in compensation and severance accruals, partially offset by a $0.8 million decrease in other SG&A. The year-over-year decrease in SG&A reflects a $7.5 million decrease from foreign currency translation, a $5.4 million decrease in advertising, sales and marketing costs, a $5.8 million decrease in salaries and general and administrative expenses, and a $0.9 million reduction in occupancy and professional fees.

Income from operations was $14.2 million, an increase of $0.6 million from $13.6 million in the prior quarter and a decrease of $1.0 million from $15.2 million in the year-ago quarter.

Adjusted EBITDA was $20.4 million, or 10.4% of net revenue, compared to $19.7 million, or 10.1% of net revenue, in the prior quarter and $23.5 million, or 10.0% of net revenue, in the year-ago quarter. The sequential improvement reflects a $1.8 million increase from currency translation and the variances described above. The year-over-year decline includes the $5.8 million benefit from the Australian regulatory ruling recorded in the prior year quarter. Adjusted EBITDA is a non-GAAP measure -- see non-GAAP measure reconciliations and descriptions below.

Interest expense was $3.4 million, a decrease of $7.4 million from $10.8 million in the prior quarter and a $10.2 million decrease from $13.6 million in the year-ago quarter. The sequential and year-over-year decreases are attributable to debt obligations that are subject to compromise as a consequence of the Chapter 11 restructuring process; and, therefore, not accruing interest from the Chapter 11 Petition Date to the Effective Date. Liabilities subject to compromise include the 8% Senior Notes, 141/4% Senior Secured Notes, 33/4% Convertible Notes, 5% Exchangeable Senior Notes, 123/4% Senior Notes and the Step Up Convertible Subordinated Debentures. Interest expense in each of the third and fourth quarters of 2009 is anticipated to be in the $8.0 million range.

Net income was $25.4 million, or $0.15 per diluted share, compared to $14.0 million, or $0.08 per diluted share, in the prior quarter and $46.5 million, or $0.25 per diluted share in the year-ago quarter. Net income for the second quarter of 2009 includes a $24.2 million foreign currency transaction gain and a $8.3 million expense from reorganization items, reflecting professional fees related to the Chapter 11 cases. Net income in the first quarter 2009 reflected a $16.6 million gain from reorganization items as a result of the Chapter 11 filing and a loss of $3.0 million in foreign currency transactions. Net income for the second quarter 2008 included a $32.2 million gain on the early extinguishment or restructuring of debt and an $8.1 million foreign currency transaction gain.

The number of shares outstanding used to calculate diluted earnings per share in the second quarter of 2009 was 173.1 million. This amount will decrease significantly in future quarters based upon the current number of basic shares outstanding of 9.6 million and the effect of dilutive common stock equivalents upon the Company's emergence from Chapter 11.

Balance Sheet, Liquidity and Capital Resources

As previously announced, on July 1, 2009, PRIMUS emerged from Chapter 11 with a strengthened capital structure and significantly reduced debt obligations. Under the terms of the Plan of Reorganization, PRIMUS reduced its debt by 55% to $256.3 million from $572.4 million, reduced interest payments by approximately 50% and extended certain debt maturities. PRIMUS exited bankruptcy with the following debt and equity instruments:

--  $123.5 million of 141/4% Senior Subordinated Secured Notes with an
    extended maturity until May 2013;
--  $95.8 million variable rate Term Loan due February 2011 (reinstated
    and amended);
--  $29.5 million variable rate Canadian Credit Facility due May 2011
    (amended);
--  $7.6 million of capital lease / vendor financing agreements;
--  Newly issued Class A warrants to certain former debt holders to
    purchase up to an aggregate of 3,000,000 shares of new common stock at
    strike prices ranging from $12.22 to $20.50 per share, subject to
    adjustment;
--  Newly issued Class B warrants to certain former debt holders to
    purchase up to an aggregate of 1,500,000 shares of new common stock at a
    strike price of $26.01 per share, subject to adjustment;
--  Contingent Value Rights to holders of old common stock representing
    the right to receive up to 2,665,000 shares of new common stock after the
    Company's equity value reaches a certain threshold;
--  9,600,000 shares of new common stock to certain former debt holders;
--  400,000 performance based restricted stock units granted to Company
    management;
--  400,000 service based stock options granted to Company management and
    employees with a strike price of $12.22 per share, subject to adjustment;
--  100,000 performance based stock options granted to Company management
    

PRIMUS ended the second quarter 2009 with $41.5 million in unrestricted cash and cash equivalents up from $32 million at March 31, 2009. Cash uses during the quarter were comprised of $2.9 million in capital expenditures, $5.3 million for debt reduction, $3.8 million for interest, $0.5 million for taxes and $0.8 million for payment of reorganization costs. These uses were offset by $20.4 million of Adjusted EBITDA, $1.3 million from favorable working capital movements and $1.1 million from currency movements. During the second half of 2009 the Company expects to make approximately $16 million in cash payments for previously accrued reorganization fees and income and indirect taxes, which would bring our "adjusted" cash balance at June 30, 2009 to $25 million.

Free Cash Flow for the second quarter 2009 was $14.2 million compared to $1.9 million in the prior quarter and $5.1 million in the year-ago quarter. PRIMUS defines Free Cash Flow as net cash provided by operating activities less cash used in the purchase of property and equipment. Free Cash Flow is a non-GAAP measure -- see non-GAAP measure reconciliations and descriptions below.

Thomas R. Kloster, Chief Financial Officer, commented, "During the second quarter, while Chapter 11 proceedings were underway at the holding company level, we focused our operating units on serving our customers seamlessly. Simultaneously, we continued to manage aggressively our cost of sales and SG&A expenditures to maximize free cash flow generation."

Six Months Results

Net revenue was $391.2 million for the first six months of 2009 compared to $461.3 million for the first six months of 2008. Adjusted EBITDA was $40.1 million for the first six months of 2009 compared to $38.7 million in the first six months of 2008. Net income was $39.4 million for the first six months of 2009 compared to $43.5 million in the first six months of 2008.

Conference Call to Discuss Strategic Update

PRIMUS will hold a conference call on Wednesday, September 23, 2009 at 8:30 A.M. (EST) to discuss its outlook for the remainder of 2009 and its longer-term strategy. The call can be accessed on the Internet via the Investor Relations section of PRIMUS' web site at www.primustel.com or by dialing (866) 305-6438 (domestic) or (706) 679-7161 (international), Conference ID # 24469714. Please access the call 10-15 minutes prior to the scheduled start time.

The webcast will also be archived on PRIMUS' website. A telephonic replay of this conference call will also be available by dialing (706) 645-9291 or (800) 642-1687 and using the conference ID above from 11:30 A.M. (EST) on September 23 until 11:59 P.M. (EST) time on September 30.

About PRIMUS Telecommunications Group, Incorporated

PRIMUS Telecommunications Group, Incorporated is a facilities-based integrated global communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures as defined under SEC rules, which include Adjusted EBITDA, Adjusted Diluted Income (Loss) Per Common Share, and Free Cash Flow. As required by SEC rules, PRIMUS has provided a reconciliation of these measures to the most directly comparable GAAP measures, which is contained in the tables to this release and on our website at www.primustel.com. Additionally, information regarding the purpose and use for these non-GAAP financial measures is set forth with this press release in our Current Report on Form 8-K filed with the SEC on August 13, 2009 and available on our website.

Safe Harbor

Statements in this press release concerning post-restructuring financial condition, prospects, cash flow and investments, "adjusted" cash balances, fresh start accounting, second half 2009 financial performance, financial condition and ongoing impacts on our operations and objectives constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on current expectations, and are not strictly historical statements. In some cases, you can identify forward-looking statements by terminology such as "if," "may," "should," "believe," "anticipate," "future," "forward," "potential," "estimate," "reinstate," "opportunity," "goal," "objective," "exchange," "growth," "outcome," "could," "expect," "intend," "plan," "strategy," "provide," "commitment," "result," "seek," "pursue," "ongoing," "include" or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this filing. Factors and risks that could cause actual results or circumstances to differ materially from those set forth or contemplated in forward-looking statements include, without limitation: (i) the ability to service substantial indebtedness; (ii) customer, vendor, carrier and third-party responses to our Chapter 11 plan confirmation; and (iii) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission (including those listed under captions "MD&A -- Liquidity and Capital Resources -- Short- and Long-Term Liquidity Considerations and Risks;" "Special Note Regarding Forward-Looking Statements;" and "Risk Factors" in our annual report on Form 10-K and quarterly reports on Form 10-Q) which cover matters and risks including but not limited to (a) the general fluctuations in the exchange rates of currencies, particularly any strengthening of the United States dollar relative to foreign currencies of the countries where we conduct our foreign operations; (b) the possible inability to raise additional capital or refinance indebtedness when needed, or at all, whether due to adverse credit market conditions, our credit profile or otherwise; (c) a continuation or worsening of turbulent or weak financial and capital market conditions; (d) a continuation or worsening of global recessionary economic conditions, including the effects of such conditions on our customers and our accounts receivables and revenues; (e) fluctuations in prevailing trade credit terms due to past Chapter 11 filings or uncertainties concerning our financial position, or otherwise; and (f) adverse regulatory rulings or changes in the regulatory schemes or requirements and regulatory enforcement in the markets in which we operate and uncertainty regarding the nature and degree of regulation relating to certain services. As such, actual results or circumstances may vary materially from such forward-looking statements or expectations. Readers are also cautioned not to place undue reliance on these forward-looking statements which speak only as of the date these statements were made. We are not necessarily obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(tables follow)

               PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 (in thousands, except per share amounts)
                                (unaudited)


                                For the Three Months   For the Six Months
                                        Ended                 Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
NET REVENUE                     $ 196,742  $ 235,897  $ 391,216  $ 461,331

OPERATING EXPENSES
   Cost of revenue (exclusive
    of depreciation shown
    below)                        125,914    142,495    255,288    283,979
   Selling, general and
    administrative                 50,400     69,969     95,836    138,827
   Depreciation and
    amortization                    6,250      8,091     12,346     16,050
   (Gain) loss on sale or
    disposal of assets                 16        115        (43)    (2,465)
                                ---------  ---------  ---------  ---------
       Total operating expenses   182,580    220,670    363,427    436,391
                                ---------  ---------  ---------  ---------

INCOME FROM OPERATIONS             14,162     15,227     27,789     24,940

INTEREST EXPENSE                   (3,359)   (13,554)   (14,135)   (28,747)
ACCRETION ON DEBT DISCOUNT, NET         -        217        189        187
GAIN ON EARLY EXTINGUISHMENT OR
 RESTRUCTURING OF DEBT                  -     32,177          -     34,487
INTEREST AND OTHER INCOME             161      2,127        396      3,189
FOREIGN CURRENCY TRANSACTION
 GAIN                              24,170      8,134     21,121      9,841
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS BEFORE REORGANIZATION
 ITEMS AND INCOME TAXES            35,134     44,328     35,360     43,897

REORGANIZATION ITEMS, net          (8,271)         -      8,297          -
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS BEFORE INCOME TAXES    26,863     44,328     43,657     43,897

INCOME TAX BENEFIT (EXPENSE)       (1,110)     2,382     (3,907)       (38)
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS                        25,753     46,710     39,750     43,859

LOSS FROM DISCONTINUED
 OPERATIONS, net of tax              (283)       (21)      (676)       (66)
GAIN FROM SALE OF DISCONTINUED
 OPERS., net of tax                     -          -        251          -
                                ---------  ---------  ---------  ---------

NET INCOME                         25,470     46,689     39,325     43,793
Less: Net (income) loss
 attributable to the
 noncontrolling interest             (104)      (165)        32       (268)
                                ---------  ---------  ---------  ---------

NET INCOME ATTRIBUTABLE TO
 PRIMUS TELECOMMUNICATIONS
 GROUP, INCORPORATED            $  25,366  $  46,524  $  39,357  $  43,525
                                =========  =========  =========  =========

BASIC INCOME PER COMMON SHARE:
   Income from continuing
    operations attributable to
    Primus Telecommunications
    Group, Incorporated         $    0.18  $    0.33  $    0.28  $    0.31
   Loss from discontinued
    operations                      (0.00)     (0.00)     (0.00)     (0.00)
   Gain from sale of discontinued
    operations                          -          -       0.00          -
                                ---------  ---------  ---------  ---------
   Net income attributable to
    Primus Telecommunications
    Group, Inc.                 $    0.18  $    0.33  $    0.28  $    0.31
                                =========  =========  =========  =========

DILUTED INCOME PER COMMON
 SHARE:
   Income from continuing
    operations attributable to
    Primus Telecommunications
    Group, Incorporated         $    0.15  $    0.25  $    0.23  $    0.23
   Loss from discontinued
    operations                      (0.00)     (0.00)     (0.00)     (0.00)
   Gain from sale of discontinued
    operations                          -          -       0.00          -
                                ---------  ---------  ---------  ---------
   Net income attributable to
    Primus Telecommunications
    Group, Inc.                 $    0.15  $    0.25  $    0.23  $    0.23
                                =========  =========  =========  =========

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING:
   BASIC                          142,695    142,633    142,695    142,633
                                =========  =========  =========  =========
   DILUTED                        173,117    190,328    173,117    195,221
                                =========  =========  =========  =========

AMOUNTS ATTRIBUTABLE TO COMMON
 SHAREHOLDERS OF PRIMUS
 TELECOMMUNICATIONS GROUP,
 INCORPORATED
   Income from continuing
    operations, net of tax      $  25,649  $  46,545  $  39,782  $  43,591
   Loss from discontinued
    operations                       (283)       (21)      (676)       (66)
   Gain from sale of
    discontinued operations             -          -        251          -
                                ---------  ---------  ---------  ---------
   Net income                   $  25,366  $  46,524  $  39,357  $  43,525
                                =========  =========  =========  =========



              PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
                   CONSOLIDATED CONDENSED BALANCE SHEET
                             (in thousands)
                               (unaudited)


                                                  June 30,
                                                    2009
                                                -----------

Cash and cash equivalents                       $    41,461
Accounts receivable, net                             93,826
Other current assets                                 16,955
                                                -----------
   TOTAL CURRENT ASSETS                             152,242

Restricted cash                                       9,467
Property and equipment, net                         117,840
Goodwill                                             35,351
Other intangible assets, net                            482
Other assets                                         19,155
                                                -----------
   TOTAL ASSETS                                 $   334,537
                                                ===========


Accounts payable                                $    50,890
Accrued interconnection costs                        38,778
Deferred revenue                                     12,322
Accrued expenses and other current liabilities       53,982
Accrued income taxes                                 20,986
Accrued interest                                         19
Current portion of long-term obligations            107,097
                                                -----------
   TOTAL CURRENT LIABILITIES                        284,074

Non-current portion of long-term obligations         25,740
                                                -----------
   TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE      309,814

Liabilities subject to compromise                   451,050
                                                -----------
   TOTAL LIABILITIES                                760,864

Stockholders' deficit                              (426,327)
                                                -----------
   TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $   334,537
                                                ===========


               PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
              RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
                              (in thousands)
                                (unaudited)


                                                Three Months Ended
                                        ----------------------------------
                                         June 30,   March 31,    June 30,
                                           2009        2009        2008
                                        ----------  ----------  ----------

NET INCOME ATTRIBUTABLE TO PRIMUS
 TELECOMMUNICATIONS GROUP,
 INCORPORATED                           $   25,366  $   13,991  $   46,524
Reorganization items, net                    8,271     (16,568)          -
Share-based compensation expense                11          16          70
Depreciation and amortization                6,250       6,096       8,091
(Gain) loss on sale or disposal of
 assets                                         16         (59)        115
Interest expense                             3,359      10,776      13,554
Accretion on debt premium, net                   -        (189)       (217)
Gain on early extinguishment
 or restructuring of debt                        -           -     (32,177)
Interest and other income                     (161)       (235)     (2,127)
Foreign currency transaction (gain)
 loss                                      (24,170)      3,049      (8,134)
Income tax (benefit) expense                 1,110       2,797      (2,382)
Minority interest income (expense)             104        (136)        165
Loss from discontinued operations,
 net of tax                                    283         393          21
Gain from sale of discontinued
 operations, net of tax                          -        (251)          -
                                        ----------  ----------  ----------

ADJUSTED EBITDA                         $   20,439  $   19,680  $   23,503
                                        ==========  ==========  ==========



              PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
         RECONCILIATION OF DILUTED NET INCOME PER COMMON SHARE TO
               ADJUSTED DILUTED NET INCOME PER COMMON SHARE
                 (in thousands, except per share amounts)
                                (unaudited)


                                                Three Months Ended
                                        ----------------------------------
                                         June 30,   March 31,    June 30,
                                           2009        2009        2008
                                        ----------  ----------  ----------

NET INCOME ATTRIBUTABLE TO
 COMMON STOCKHOLDERS - DILUTED          $   25,366  $   14,201  $   47,496
ADJUSTMENT FOR INTEREST EXPENSE
 ON DILUTIVE SHARES                              -        (210)       (972)
                                        ----------  ----------  ----------

NET INCOME ATTRIBUTABLE TO
 PRIMUS TELECOMMUNICATIONS GROUP,
 INCORPORATED                           $   25,366  $   13,991  $   46,524
Add:
Reorganization items, net                    8,271     (16,568)          -
(Gain) loss on sale or disposal of
 assets                                         16         (59)        115
Gain on early extinguishment
 or restructuring of debt                        -           -     (32,177)
Foreign currency transaction (gain)
 loss                                      (24,170)      3,049      (8,134)
Loss from discontinued operations,
 net of tax                                    283         393          21
Gain from sale of discontinued
 operations, net of tax                          -        (251)          -
                                        ----------  ----------  ----------
ADJUSTED NET INCOME                          9,766         555       6,349

ADJUSTMENT FOR INTEREST EXPENSE
 ON DILUTIVE SHARES                              -           -         230
                                        ----------  ----------  ----------

ADJUSTED NET INCOME ON DILUTED SHARES   $    9,766  $      555  $    6,579
                                        ==========  ==========  ==========

DILUTED WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING                        173,117     169,449     190,328
ANTI-DILUTIVE WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING ADJUSTMENT                   -      (7,279)      6,154
                                        ----------  ----------  ----------

ADJUSTED DILUTED WEIGHTED AVERAGE
 COMMON SHARES OUTSTANDING                 173,117     162,170     196,482
                                        ==========  ==========  ==========

DILUTED NET INCOME PER COMMON SHARE     $     0.15  $     0.08  $     0.26
                                        ==========  ==========  ==========
ADJUSTED DILUTED NET INCOME PER COMMON
 SHARE                                  $     0.06  $     0.00  $     0.03
                                        ==========  ==========  ==========




              PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
        RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
                            TO FREE CASH FLOW
                              (in thousands)
                                (unaudited)


                                                Three Months Ended
                                        ----------------------------------
                                         June 30,   March 31,    June 30,
                                           2009        2009        2008
                                        ----------  ----------  ----------

NET CASH PROVIDED BY
 OPERATING ACTIVITIES BEFORE
 REORGANIZATION ITEMS                   $   17,097  $    4,643  $   12,832
Net cash used in purchase of property
 and equipment                              (2,874)     (2,786)     (7,741)
                                        ----------  ----------  ----------

FREE CASH FLOW                          $   14,223  $    1,857  $    5,091
                                        ==========  ==========  ==========