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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NO. 0-29-092
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED, 401(K) PLAN
(FULL TITLE OF THE PLAN)
1700 OLD MEADOW ROAD, SUITE 300,
MCLEAN, VA 22102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(703) 902-2800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOTICES AND COMMUNICATIONS FROM THE SECURITIES AND EXCHANGE COMMISSION
RELATIVE TO THIS REPORT SHOULD BE FORWARDED TO:
NEIL HAZARD
CHIEF FINANCIAL OFFICER
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
1700 OLD MEADOW ROAD
MCLEAN, VA 22101
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FINANCIAL STATEMENTS
(a) FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Primus Telecommunications Group, Inc. 401(k) Plan:
Independent Auditor's Report
Statements of net assets available for benefits, December 31,
2000 and 1999
Statement of changes in net assets available for benefits
for the year ended December 31, 2000
Notes to the financial statements
Supplementary Information:
Schedule of assets held for investment purposes at end of
year, December 31, 2000
Schedule of non-exempt transactions for the year ended
December 31, 2000
PRIMUS TELECOMMUNICATIONS GROUP, INC.
401(k) PLAN
FINANCIAL REPORT
DECEMBER 31, 2000 AND 1999
CONTENTS
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INDEPENDENT AUDITOR'S REPORT 1 - 2
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FINANCIAL STATEMENTS
Statements of net assets available for benefits 3
Statement of changes in net assets available for benefits 4
Notes to financial statements 5 - 9
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SUPPLEMENTARY INFORMATION
Schedule of assets held for investment purposes at end of year 10
Schedule of non-exempt transactions 11
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INDEPENDENT AUDITOR'S REPORT
To the Trustees and Participants
Primus Telecommunications Group, Inc. 401(k) Plan
McLean, Virginia
We have audited the accompanying statement of net assets available for benefits
of Primus Telecommunications Group, Inc. 401(k) Plan (the Plan) as of December
31, 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2000. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit. Other auditors were
engaged to audit, before the matters discussed in Note 8, the statement of net
assets available for benefits of Primus Telecommunications Group, Inc. 401(k)
Plan as of December 31, 1999. Their report dated October 31, 2000, disclaimed an
opinion on the 1999 statement as permitted by 29 CFR 2520.103-8 of the
Department of Labor's (DOL) Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974 (ERISA).
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects the net assets available for benefits of the Plan as of
December 31, 2000, and the changes in net assets available for benefits for the
year ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.
As described in Note 8 to the financial statements, the Plan changed its method
of accounting from the modified cash basis to the accrual basis of accounting.
We also audited the adjustments in Note 8 that were applied to restate the
December 31, 1999, financial statements. In our opinion, such adjustments are
appropriate and have been applied properly.
1
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at the end of the year and nonexempt transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
DOL's Rules and Regulations for Reporting and Disclosure under ERISA. These
supplemental schedules are the responsibility of the Plan's management. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
The schedule of assets held for investment purposes at the end of the year that
accompanies the Plan's financial statements does not disclose the historical
cost of certain nonparticipant directed plan assets held by the Plan trustee.
Disclosure of this information is required by the DOL's Rules and Regulations
for Reporting and Disclosure under the ERISA.
McGladrey & Pullen, LLP
Alexandria, Virginia
December 11, 2001
2
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
2000 1999
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ASSETS
Investments $ 4,313,408 $ 4,235,016
Receivables
Employer contribution 101,991 25,011
Participant contributions 112,234 78,709
Interest 24,227 -
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TOTAL RECEIVABLES 238,452 103,720
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TOTAL ASSETS 4,551,860 4,338,736
-------------------------------------------------
Liabilities - -
-------------------------------------------------
Net assets available for benefits $ 4,551,860 $ 4,338,736
=================================================
See Notes to Financial Statements.
3
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2000
----------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income (loss):
Net (depreciation) in fair value of
investments $ (2,571,405)
Interest and dividends 303,621
-------------------
(2,267,784)
-------------------
Contributions:
Participant 1,723,689
Employer 639,479
Rollover 438,150
-------------------
2,801,318
-------------------
TOTAL ADDITIONS 533,534
-------------------
Deductions from net assets attributed to:
Benefits paid to participants 313,205
Administrative expenses 7,205
-------------------
TOTAL DEDUCTIONS 320,410
-------------------
NET INCREASE 213,124
-------------------
Net assets available for benefits:
Beginning, as previously reported 4,235,016
Cumulative effect of adopting the accrual
basis of accounting 103,720
-------------------
Beginning, as restated 4,338,736
-------------------
Ending $ 4,551,860
===================
See Notes to Financial Statements.
4
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. PLAN DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
PLAN DESCRIPTION: The following description of Primus Telecommunications Group,
Inc. 401(k) Plan (the Plan) provides only general information. Participants
should refer to the plan agreement for a more complete description of the Plan's
provisions.
GENERAL: The Plan is a defined contribution plan covering all employees, except
nonresident aliens, of Primus Telecommunications Group, Inc. and LCR Telecom
(the Company) who are 21 years old. Full time employees must have completed 1/4
year of service and part-time employees must have completed one year of service
to be eligible. It is subject to the provisions of the ERISA.
CONTRIBUTIONS: Each year, participants may elect to make salary reduction
contributions of up to 20% of pretax annual compensation, as defined in the
Plan. Participants may also contribute amounts representing distributions from
other qualified defined benefit or defined contribution plans. Participants
direct the investment of their contributions into various investment options
offered by the Plan. The Plan currently offers 9 mutual funds, a common
collective trust account, and the Company's common stock. The participants may
change their investment allocations daily. The Company contributes 50% of the
first 6% of base compensation that a participant contributes to the Plan. The
matching Company contribution is invested directly in Primus Telecommunications
Group, Inc. common stock. Additional profit sharing accounts may be contributed
at the option of the Company's board of directors. For the year ended December
31, 2000, no discretionary contributions were made. Contributions are subject to
certain limitations.
PARTICIPANT ACCOUNTS: Each participant's account is credited with the
participant's contributions and allocations of (a) the Company's contribution
and, (b) Plan earnings/losses and charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
VESTING: Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's contribution portion of their
accounts is based on years of continuous services. A participant is 100% vested
after three years of credited service.
PARTICIPANT LOANS: Participants may borrow from their fund accounts a minimum of
$1,000 up to a maximum of $50,000 or 50% of their account balance, whichever is
less. The loans are secured by the balance in the participant's account and bear
interest at rates of prime plus 1% set at the time the loan is taken. The Prime
rate at December 31, 2000, was 9.5%. Principal and interest payments are made
through bi-weekly payroll deductions and applied to the loan balances once a
month.
PAYMENT OF BENEFITS: On termination of service due to disability retirement or
death and the total benefit is greater than $3,500, a participant or his or her
beneficiary may elect to receive either a lump-sum amount equal to the
participant's vested interest in his or her account or leave their account in
the Plan. If the total benefit is $3,500 or less, the entire amounts is to be
paid in a lump-sum distribution.
5
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. PLAN DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FORFEITED ACCOUNTS: At December 31, 2000, forfeited nonvested accounts totaled
$42,660. These accounts will be used to reduce future employer contributions.
During 2000, employer contributions were not reduced by any forfeited nonvested
accounts.
A summary of the Plan's significant accounting policies follows:
ESTIMATES: The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION: Investment in pooled separate
accounts are recorded at fair value, as determined by the unit value reported by
Merrill Lynch. Participant loans are valued at cost, which approximates fair
value. The common stock of the Company is value at market value.
The Plan invests in a common/collective trust account and mutual funds. Such
investments are exposed to various risks such as market and credit. Due to the
level of risk associated with such investments and the level of uncertainty
related to changes in the value of such investments, it is at least reasonably
possible that changes in risks in the near term would materially affect
investment balances and the amounts reported in the financial statements.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are reported on the
ex-dividend date.
PAYMENT OF BENEFITS: Benefits are recorded when paid.
NOTE 2. INVESTMENTS
The following presents investments at December 31, 2000, that represent 5% or
more of the Plan's net assets:
--------------------------------------------------------------------------------------------------------------------
ML Retirement Preservation Trust, 608,200 units $ 608,200
AIM Blue Chip Fund Class A, 31,927 units 503,170
ML S&P 500 Index Fund Class A, 29,022 units 469,581
Alliance Premium Growth Fund Class A, 41,348 units 1,104,401
Oppenheimer Global Fund, 10,029 units 531,321
AIM Balanced, 10,009 units 301,177
Common stock - Primus Telecom GP, Inc., 13,447 shares* 31,322
Common stock - Primus Telecom GP, Inc., 119,450 shares** 275,936
6
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 2. INVESTMENTS (CONTINUED)
The following presents investments at December 31, 1999, that represent 5% or
more of the Plan's net assets:
--------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund $ 288,221
Fidelity Magellan Fund 366,897
Oppenheimer Global Fund 314,044
American Century Ultra 482,869
Janus Fund 469,799
National Money Market Fund 311,637
Common stock - Primus Telecom GP, Inc.* 292,874
Common stock - Primus Telecom GP, Inc.** 1,266,075
* Participant directed
** Non participant directed
During 2000, the Plan's investment in mutual funds, a common collective trust
account and Company stock, including gains and losses on investments bought and
sold, as well as held, during the year, depreciated in value from January 1,
2000, through December 31, 2000, by ($2,571,405).
NOTE 3. NONPARTICIPANT - DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows
as of December 31, 2000 and 1999:
2000 1999
--------------------------------------------------------------------------------------------------------------------
Net Assets:
Common stock - Primus Telecom Group, Inc. $ 275,936 $ 1,266,075
Employer contribution receivable 40,889 25,011
--------------------------------------------
$ 316,825 $ 1,291,086
=============================================
Year ended
December 31, 2000
--------------------------------------------------------------------------------------------------------------------
Changes in Net Assets:
Contributions $ 639,479
Net depreciation (1,593,217)
Benefits paid to participants (20,523)
--------------------
$ (974,261)
====================
7
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions ay any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
NOTE 5. TAX STATUS
During 2000, the Plan adopted a non-standardized prototype plan. The prototype
plan received a determination letter from the Internal Revenue Service (IRS)
dated June 29, 1993, stating that the prototype plan document as designed
qualified under the provisions of Section 401(a) of the Internal Revenue Code
(IRC). The Plan has been amended since adopting the prototype plan, however, the
plan administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
NOTE 6. RELATED PARTY TRANSACTIONS
Certain plan investments are units of pooled separate accounts managed by
Merrill Lynch Trust Company, FSB (ML). ML is the trustee as defined by the Plan
and, therefore, these transactions qualify as party-in-interest. Fees paid by
the Plan for the investment management services amounted to $1,793 for the year
ended December 31, 2000.
NOTE 7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 2000 and 1999, to the Form 5500:
2000 1999
--------------------------------------------------------------------------------------------------------------------
Net assets available for benefits per the financial statements $ 4,551,860 $ 4,338,736
Contributions receivable (214,225) (103,720)
Interest income receivable (24,227) -
Rounding difference (1) -
--------------------------------------------
Net assets available for benefits per the Form 5500 $ 4,313,407 $ 4,235,016
============================================
The following is a reconciliation of investment (loss) per the financial
statements for the year ending December 31, 2000, to the Form 5500:
--------------------------------------------------------------------------------------------------------------------
Investment (loss) per the financial statements $ (2,267,784)
Interest income receivable at December 31, 2000 24,227
Other (3,669)
--------------------------------------------
Investment (loss) per the Form 5500 $ (2,247,226)
============================================
8
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (CONTINUED)
The following is a reconciliation of contributions per the financial statements
for the year ending December 31, 2000, to the Form 5500:
--------------------------------------------------------------------------------------------------------------------
Contributions per the financial statements $ 2,801,318
Contributions receivable at December 31, 2000 (214,225)
------------------
Contributions per the Form 5500 $ 2,587,093
===================
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ending December 31, 2000, to the Form 5500:
--------------------------------------------------------------------------------------------------------------------
Benefits paid to participants per the financial statement $ 313,205
Benefits paid during 2000, not reported on the Form 5500 (53,522)
-------------------
Benefits paid to participants per the Form 5500 $ 259,683
===================
The following is a reconciliation of administrative expenses per the financial
statements for the year ending December 31, 2000, to the Form 5500:
--------------------------------------------------------------------------------------------------------------------
Administrative expenses per the financial statements $ 7,205
Administrative expenses paid during 2000, not reported on the Form 5500 (5,412)
-------------------
Administrative expenses per the Form 5500 $ 1,793
===================
NOTE 8. CHANGE IN METHOD OF ACCOUNTING
During 2000, the Plan changed its method of accounting from the modified cash
basis to the accrual basis of accounting. Consequently, the 1999 statement of
net assets available for benefits was restated to report the statement on the
accrual basis of accounting in conformity with accounting principles generally
accepted in the United States of America. Receivables for participant and
employer contributions, as of December 31, 1999, were recorded in the amounts of
$78,709 and $25,011, respectively, to report the statement of net assets
available for benefits on the accrual basis of accounting in conformity with
accounting principles generally accepted in the United States of America. The
cumulative effect of this adjustment was to restate net assets available for
benefits at December 31, 1999, by an increase of $103,720.
NOTE 9. SUBSEQUENT EVENT
The Company is in the process of amending and restating the Plan to comply with
recent legislative changes.
9
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, ITEM 4i
YEAR ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------------------------------------------
Employer Identification Number - 54-1708481
Plan Number - 001
(a) (b) (c) (d) (e)
Identity of Current
issuer Description of investment Cost value
--------------------------------------------------------------------------------------------------------------------
* Merrill Lynch ML Retirement Preservation Trust,
608,200 units ** $ 608,200
* Merrill Lynch ML Focus Value Fund Class D, 3,360 units ** 37,667
* Merrill Lynch AIM Small Cap Growth Fund Class A,
4,075 units ** 121,484
* Merrill Lynch AIM Blue Chip Fund Class A, 31,927 ** 503,170
* Merrill Lynch ML S&P 500 Index Fund Class A,
29,022 units ** 469,581
* Merrill Lynch Alliance Growth and Income, 21,242 units ** 80,721
* Merrill Lynch ML US Govt Mortgage Fund Class D,
12,089 units ** 117,631
* Merrill Lynch Alliance Premium Growth Fund Class A,
41,348 units ** 1,104,401
* Merrill Lynch Oppenheimer Global Fund, 10,029 units ** 531,321
* Merrill Lynch AIM Balanced, 10,009 units ** 301,177
* Merrill Lynch Phoenix-Aberdeen Worldwide, 574 units ** 5,291
* Merrill Lynch Cash and accrued income ** 10,662
* Primus Tele-
communications
Group, Inc. Primus Telecom GP, Inc. common stock,
13,447 shares, participant-directed ** 31,322
* Primus Tele-
communications
Group, Inc. Primus Telecom GP, Inc. common stock,
119,450 shares, nonparticipant-directed *** 275,936
Participants Loans, ranging from 8.75%-10.5% ** 114,844
---------------
$ 4,313,408
===============
* Represents a party-in-interest
** Cost is not required for a participant-directed plan
*** Historical cost is not available
10
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
SCHEDULE OF NON-EXEMPT TRANSACTIONS
FORM 5500, SCHEDULE G, PART III
YEAR ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------------------------------------------
Employer Identification Number - 54-1708481
Plan Number - 001
(a) (b) (c)*
Identity of Relationship to Plan Employer Description of
Party Involved or Other Party-In-Interest Transaction
Primus Telecommunications
Group, Inc. Employer, Plan Sponsor
*Late remittances of employee contributions as follows:
o $128,348 for October 2000 payroll not remitted to participants' accounts
until December 22, 2000.
o $112,234 for December 2000 payroll not remitted to participants' accounts
until February 27, 2001.
11
SIGNATURES
THE PLAN. Pursuant to the requirements of the Security Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIMUS TELECOMMUNICATIONS GROUP, INC. 401(k) PLAN
December 21, 2001
/s/ NEIL HAZARD
____________________________________________
Neil Hazard, Chief Financial Officer of
Primus Telecommunication Group, Incorporated
12