<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 14, 1999
McLEODUSA INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 0-20763 42-1407240
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 364-0000
Not applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
Announcement of Data Strategy
- -----------------------------
On April 14, 1999, McLeodUSA Incorporated issued a press release
announcing its plans to offer high-speed digital access and data services as
part of its integrated communications product package using DSL (Digital
Subscriber Line) and other technologies. These services are expected to include:
. basic dial tone transmitted digitally,
. high-speed data communications for Internet and intranet
applications and
. commercial network connections for local area, metropolitan
area and wide area networks.
Attached as Exhibit 99.1 to this Current Report on Form 8-K is the text
of the April 14, 1999 press release announcing the proposed data strategy.
McLeodUSA also made available 12 slides regarding its proposed data strategy on
its Internet Web site at www.mcleodusa.com/datashow. The contents of these
slides are described in Exhibit 99.2 to this Current Report on Form 8-K.
Proposed Secondary Offering of Class A Common Stock
- ---------------------------------------------------
On April 14, 1999, McLeodUSA issued a press release announcing its plans
to file a registration statement with the Securities and Exchange Commission in
connection with a proposed underwritten secondary offering of up to nine million
shares of its Class A common stock by several of its stockholders. Attached as
Exhibit 99.3 to this Current Report on Form 8-K is the text of the April 14,
1999 press release announcing the proposed secondary offering.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
99.1 Press release, dated April 14, 1999, announcing the
proposed data strategy.
99.2 Description of 12 slides regarding the proposed data
strategy.
99.3 Press release, dated April 14, 1999, announcing the
proposed secondary offering.
2
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* * * * *
Some of the statements contained in this Current Report on Form 8-K
discuss future expectations, contain projections of results of operations or
financial condition or state other forward-looking information. Those statements
are subject to known and unknown risks, uncertainties and other factors that
could cause the actual results to differ materially from those contemplated by
the statements. The "forward-looking" information is based on various factors
and was derived using numerous assumptions. In some cases, you can identify
these so-called forward-looking statements by words like "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and other
comparable words. You should be aware that those statements only reflect the
predictions of McLeodUSA. Actual events or results may differ substantially.
Important factors that could cause actual results of McLeodUSA to be materially
different from the forward-looking statements include availability of financing
and regulatory approvals, the number of potential customers in a target market,
the existence of strategic alliances or relationships, technological, regulatory
or other developments in the industry, changes in the competitive climate in
which McLeodUSA operates and the emergence of future opportunities. These and
other applicable risks are summarized under the caption "Risk Factors" in the
McLeodUSA Annual Report on Form 10-K for the fiscal year ended December 31,
1998, which is filed with the Securities and Exchange Commission.
3
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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 hereunto duly authorized.
McLEODUSA INCORPORATED
Date: April 16, 1999 By: /s/ Randall Rings
----------------------
Randall Rings
Vice President, Secretary and
General Counsel
4
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EXHIBIT INDEX
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Exhibit Description
- ------- -----------
99.1 Press release, dated April 14, 1999, announcing the proposed
data strategy.
99.2 Description of 12 slides regarding the proposed data strategy.
99.3 Press release, dated April 14, 1999, announcing the proposed
secondary offering.
5
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EXHIBIT 99.1
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Press Release
McLeodUSA Unveils Data Strategy Designed to
Enhance Product Package and Provide High-Speed Digital Access
Cedar Rapids, Iowa April 14, 1999 McLeodUSA Incorporated (NASDAQ/NMS:MCLD), a
leading Integrated Communications Provider (ICP) in Midwest and Rocky Mountain
states, today announced plans to offer high-speed digital access and data
services to current and future McLeodUSA customers. Beginning in the second half
of this year and continuing into 2000, many of the nearly 200,000 local line
customers of McLeodUSA, along with many new customers, will be able to receive
upgraded local service. The upgrades will range from basic dial tone transmitted
digitally, to high-speed data connections for Intranet and Internet
applications. Commercial network connectivity for Local Area, Metropolitan Area
and Wide Area (LAN, MAN, WAN) Networks will also be added to the McLeodUSA
integrated offering. As Midwestern cities in our markets are brought on line
under this new plan, local line signals will be clearer, and data transmissions
will be ten to twenty times faster than with existing dial-up services.
"McLeodUSA has long been recognized as a premier provider of integrated
communication services," said Steve Gray, President and COO. "The data strategy
we are announcing today enhances our integrated product package exponentially.
As our nearly 1,500 sales, service and field operations professionals continue
to build relationships with McLeodUSA customers and prospects, they will be able
to offer advanced data transmission alternatives to keep our market share
growing and reinforce our already industry-leading customer retention rate."
McLeodUSA plans to roll out its enhanced product offerings in additional markets
on a city-by-city basis beginning immediately.
Concurrent with this announcement, McLeodUSA reports the addition of five states
to its target marketplace. Gray: "Idaho, Montana, Nebraska, and Utah have been
identified as our expansion states for some time. Now we're ready to initiate
the regulatory and infrastructure requirements to begin building market share in
those four states as well as Kansas, a new state for McLeodUSA. That brings our
target marketplace to 16 Midwest and Rocky Mountain states."
Clark McLeod, Chairman and CEO added, "Previously, we had estimated the ten-year
market potential in our target geography to be $40 billion by 2009. By adding
this data component to our existing product package, and overlaying that
dimension with our geographic expansion, our ten-year market potential jumps by
60 percent to $65 billion."
McLeodUSA has consistently followed a three-part strategy: build customer share,
build facilities and migrate the services on-switch and on-net. Gray: "The data
plan we announce today continues our evolution of that strategy--allowing an
additional option for adding enhanced data products to our one-call, one-bill
service. Rolling out our data plan allows us to provide a variety of advanced
data products using DSL (Digital Subscriber Line) technologies to leverage:
. our substantial customer base,
. our nearly 7,800 route miles of fiber, and
. our co-locations in Bell company central offices to upgrade existing
copper facilities."
McLeodUSA reported annual revenues of $604 million in 1998. Of that total, $44
million originated from private line and data products. Current plans are to
nearly double that number in 1999 and again in 2000.
<PAGE>
In addition, McLeodUSA plans to double the number of co-locations in Bell
company central offices each year for the next two years.
In addition to advanced data products such as ATM, Frame Relay and high-speed
Internet access, McLeodUSA offers Web site development and hosting. The
directory publishing business of McLeodUSA also has over 100,000 e-commerce
customers via mcleodusa.com.
McLeod: "As we pursue our mission to be the leading provider in our markets, we
continue to build on the foundation of our strong brand. Today we add a
substantially enhanced product package for our customers. Our network
infrastructure provides the opportunity to offer low-cost, high-capacity data
and voice communications. We believe our rapid expansion and increasingly
pervasive coverage in what is now a 16-state footprint should help us to grow
both the top and bottom lines for our shareholders."
McLeodUSA, founded in June 1991, is a publicly traded company headquartered in
Cedar Rapids, Iowa, providing integrated telecommunications services to business
and residential customers. The McLeodUSA target marketplace now includes 16
states: Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and
Wyoming. Products offered include local and long distance services, Internet
access, voice mail, paging, teleconferencing and calling card services.
McLeodUSA is one of the largest independent publishers of yellow and white page
telephone directories in the country. In the next 12 months, the publishing
subsidiaries of McLeodUSA plan to distribute nearly 21 million copies of
competitive directories in 21 states, expected to reach 33 million people.
Some of the statements contained in this press release discuss future
expectations, contain projections of results of operations or financial
condition or state other forward-looking information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The "forward-looking" information is based on various factors and
was derived using numerous assumptions. In some cases, you can identify these
so-called forward-looking statements by words like "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of those words and other comparable
words. You should be aware that those statements only reflect the predictions of
McLeodUSA. Actual events or results may differ substantially. Important factors
that could cause actual results of McLeodUSA to be materially different from the
forward-looking statements include availability of financing and regulatory
approvals, the number of potential customers in a target market, the existence
of strategic alliances or relationships, technological, regulatory or other
developments in the industry, changes in the competitive climate in which
McLeodUSA operates and the emergence of future opportunities. These and other
applicable risks are summarized under the caption "Risk Factors" in the
McLeodUSA Annual Report on Form 10-K for the fiscal year ended December 31,
1998, which is filed with the Securities and Exchange Commission.
CONTACT: McLeodUSA, Cedar Rapids
Press & Investor Contact: Bryce Nemitz
Phone: (319) 790-7800
FAX: (319) 298-7767
http://www.mcleodusa.com
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EXHIBIT 99.2
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Description of Slides Regarding the Proposed Data Strategy of McLeodUSA
-----------------------------------------------------------------------
[Preceding the 12 slides is a large McLeodUSA logo and, immediately below the
logo, the following text:]
Some of the statements contained in this presentation discuss future
expectations, contain projections of results of operations or financial
condition or state other forward-looking information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. Actual events or results may differ substantially. Important
factors that could cause our actual results to be materially different from the
forward-looking statements include availability of financing and regulatory
approvals, the number of potential customers in a target market, the existence
of strategic alliances or relationships, technological, regulatory or other
developments in our business, changes in the competitive climate in which we
operate and the emergence of future opportunities. These and other applicable
risks are summarized under the caption "Risk Factors" in our Annual Report on
Form 10-K for our fiscal year ended December 31, 1998, which is filed with the
Securities and Exchange Commission.
<PAGE>
Slide 1
/ / / Integrated Service Evolves to Data. . .
. Data, Explosive Growth
. Marketplace, Best Positioned
. Financial Impact, Leverage Assets
[McLeodUSA logo] . . . aligning with current strategy
<PAGE>
Slide 2
/ / / Explosive Growth Today, However. . .
[Two graphs appear below this text. The heading on the graph on the left is
"U.S. Revenue." The heading on the graph on the right is "U.S. Bandwidth." The
U.S. Revenue graph shows, for the years 1990 through 2005, projected U.S.
revenues from data communications increasing at a faster rate than voice
communications. The U.S. Bandwidth graph shows, from 1990 through 2005,
projected demand for bandwidth for data communications increasing at a
significantly faster rate than voice communications.]
[McLeodUSA logo] . . . the real growth is next 10 years
<PAGE>
Slide 3
/ / / Explosive Growth for McLeodUSA. . .
[Directly below this text appears a map of the continental United States,
showing each of the 48 states therein. The two-letter postal state abbreviation
symbols "ID," "MT," "WY", "UT," "CO," "ND," "SD," "NE," "KS," "MN," "IA," "MO,"
"IL," "WI," "IN," and "MI" appear in bold type within the respective boundaries
of the state which each such symbol represents. The state of Kansas is shown in
relief. Directly to the right of the map are two large vertical arrows pointing
up. Between the two arrows, placed vertically, is the text "$ Billions."
Directly above the tip of each arrow is written the year "2009." The arrow
closest to the map is the smaller of the two arrows. Below that arrow is the
word "Today." Immediately above that word, and inside the lower boundary of the
arrow, is the number "21." At the top of the arrow inside the tip is the number
"40." The arrow farthest from the map is the larger of the two arrows. Below
that arrow is the word "w/Data." Immediately above that word, and inside the
lower boundary of the arrow, is the number "30." At the top of the arrow inside
the tip is the number "65."]
[McLeodUSA logo] . . . adding 60% revenue opportunity
<PAGE>
Slide 4
/ / / Best Positioned, Timing. . .
. Build Customer Share
. Build Facilities
. Migrate On-Switch/On-Net
[McLeodUSA logo] . . . matches our execution strategy
<PAGE>
Slide 5
/ / / Best Positioned, Network. . .
[Following this text is a schematic of the proposed data components of the
communications network of McLeodUSA. One large egg-shaped loop points towards
the left-hand side of the slide. A straight vertical line slightly right of
center forms the base of this loop. Within this loop and sharing its base is a
smaller loop with a large letter "A" in the middle. A third, medium-sized egg-
shaped loop, which also shares the same base line with the other two loops,
points toward the right-hand side of the slide. In the middle of that loop is
the letter "B." At the top of the shared vertical base line is a three-
dimensional box with the text "City POP #1" inside. At the bottom of the shared
vertical base line is a three-dimensional box with the text "City POP #2"
inside. On the left edge of the smallest loop (loop "A") is a three-dimensional
building with the text "Bell Colocation" at the top. The portion of the loop
connecting this building to the box labeled "City POP #2" is embedded with the
text "McLeodUSA Carrier Fiber." A short line points out from the upper edge of
the largest loop. At the top end of this line is a small three-dimensional
building with the letters "MDU" appearing at the top. Another short line points
out from the upper edge of the largest loop. At the top end of this line is a
small three-dimensional house with the word "Home" appearing at the top. On the
left edge of the largest loop is a large building with the word "Office"
appearing at the top. A straight line connects the "Office" to the "Bell
Company." The text "Intra/Internet" line appears directly above that line. On
the left edge of the largest loop and slightly below the "Office" is a large
building with the word "Business" appearing at the top. A straight line connects
the "Business" to the "Bell Company." The text "Pair Gain" appears directly
below that line. The text "XDSL" appears directly between the "Intra/Internet"
line and the "Pair Gain" line, with an arrow pointing up from that text toward
the "Intra/Internet" line and an arrow pointing down from that text toward the
"Pair Gain" line. On the top edge of the medium-sized loop is a large three-
dimensional box divided in half with the word "Switch" appearing at its base and
a McLeodUSA logo and the text "Gateway 2" appearing at the top of the box. On
the left half of the box the word "Data" appears and on the right half of the
box the word "Voice" appears. On the right edge of the medium-sized loop is a
smaller three-dimensional box with the text "Data Switch" appearing at its base
and a McLeodUSA logo and the text "Gateway 2" appearing at the top of the box.
On the lower edge of the medium-sized loop are images of two superimposed clouds
with the caption "MCIW Global Network" appearing therein.]
[McLeodUSA logo] . . . regional/local sonet rings deployed
<PAGE>
Slide 6
/ / / Best Positioned, Marketplace Success. . .
Single Source ------+ Simple, Complete
Integrated Product ------+ Best Pricing and Value
Superior Cust. Service ------+ Low Attrition
[McLeodUSA logo] . . . proves we deliver
<PAGE>
Slide 7
/ / / Best Positioned, Early Success. . .
[Following this text is a vertical bar graph with three bars. The text "($
Millions)" appears in small type size at the top left of the graph and the
caption "$71 million 4Q98 Annualized" (in larger text) and "(Proforma for
Acquisitions)" (in small text) appears above the first two bars and to the left
of the third bar. Starting from the left, the first and smallest bar has the
text "Internet WEB Hosting" below it and the figure "$5.4" above it. The
second, medium-sized bar has the text "Data CPE" below it and the figure "$15.0"
above it. The third and largest bar has the text "Private Line Frame ATM" below
it and the figure "$51.0" above it.]
[McLeodUSA logo] . . . springboard for growth
<PAGE>
Slide 8
/ / / Leverage, People. . .
[Centered on the slide is a collage of 5 separate photographs. In the center is
a photograph of a person wearing a headset in front of a computer. At the top
right is a photograph of a control center with numerous computers and a large
control screen. At bottom right is a photograph of heavy equipment laying
cable. At bottom left is a photograph of three people in suits looking at a
three-ring binder. At the top left is a photograph of a work area with rows of
computers operated by individuals wearing headsets.]
[McLeodUSA logo] . . . same distribution, 2X in 12 months
<PAGE>
Slide 9
/ / / Leverage, Network Deployment. . .
[Directly below this text appears a map containing the states of Idaho, Montana,
Wyoming, Utah, Colorado, North Dakota, South Dakota, Nebraska, Kansas,
Minnesota, Iowa, Missouri, Illinois, Wisconsin, Indiana and Michigan. The two-
letter postal state abbreviation symbols "ID," "MT," "WY," "UT," "CO," "ND,"
"SD," "NE," "KS," "MN," "IA," "MO," "IL," "WI," "IN," and "MI" appear in bold
type within the respective boundaries of the state which each such symbol
represents. There is a network of lines connecting points marked by colored
triangles and stars within the states shown. To the left of
the map is a legend containing two columns under the heading "Switch." At the
top of the first column is the word "Data" and at the top of the second column
is the word "Voice." In the "Data" column appear a white triangle opposite the
date "1998," a green triangle opposite the date "1999" and a blue triangle
opposite the date "2000." In the "Voice" column appear a white star opposite the
date "1998," a green star opposite the date "1999" and a blue star opposite the
date "2000."]
[McLeodUSA logo] . . . combines voice and data
<PAGE>
Slide 10
/ / / Leverage, Each Customer Line. . .
Local Business Lines
[Directly below this caption appears a map containing the states of Idaho,
Montana, Wyoming, Utah, Colorado, North Dakota, South Dakota, Nebraska, Kansas,
Minnesota, Iowa, Missouri, Illinois, Wisconsin, Indiana and Michigan. The two-
letter postal state abbreviation symbols "ID," "MT," "WY," "UT," "CO," "ND,"
"SD," "NE," "KS," "MN," "IA," "MO," "IL," "WI," "IN," and "MI" appear in bold
type within the respective boundaries of the state which each such symbol
represents. The state of Kansas is shown in relief. The following numerical
percentages appear within the following states: Wyoming "14%," Colorado "12%,"
North Dakota "20%," South Dakota "20%," Minnesota "9%," Iowa "40%," Missouri
"26%," Wisconsin "10%," Illinois "28%," Indiana "5%" and Michigan "5%." At the
lower left of the map is a legend showing a star with the text "Springfield, MO"
and "Indianapolis, IN" to its right. A similar star appears in north central
Indiana and southwestern Missouri. Underneath the map is the text "excludes
tier 1 markets." To the right of the map is a large vertical arrow pointing up.
Inside the lower boundary of the arrow is the figure "$60" and inside the tip of
the arrow is the figure "$80." In the middle of the arrow, placed vertically,
is the text "Added Data Rev./Bus. Line."]
[McLeodUSA logo] . . . additional revenue opportunity
<PAGE>
Slide 11
/ / / Our Mission, 10 Years. . .
[Following this text are three bar graphs, each of which has three bars. The
first bar graph has the caption "ATM Dual Locations" beneath it. The second bar
graph has the caption "Colocations" beneath it. The third bar graph has the
caption "Data/PL Revenue" beneath it. Starting from the left, the first bar of
each graph has the caption "1998" below it, the second bar of each graph has the
caption "1999*" below it, and the third bar of each graph has the caption
"2000*" below it. At the top of the "1998," "1999*" and "2000*" bars of the "ATM
Dual Locations" bar graph appear the numbers "1," "10" and "19," respectively,
with the height of the bars corresponding to the magnitude of these numbers. At
the top of the "1998," "1999*" and "2000*" bars of the "Colocations" bar graph
appear the numbers "80," "160" and "350," respectively, with the height of the
bars corresponding to the magnitude of these numbers. At the top of the "1998,"
"1999*" and "2000*" bars of the "Data/PL Revenue" bar graph appear the figures
"$44," "$85" and "$236," respectively, with the height of the bars corresponding
to the magnitude of these numbers. A legend in the upper left hand corner of the
slide reads "*Estimated." In the middle of the third graph appears the caption
"($MM)."]
[McLeodUSA logo] . . . be #1 provider in our region
<PAGE>
Slide 12
/ / / McLeodUSA, Evolving to be. . .
. Great Opportunity, Great Start
. Pervasive Brand and Product
. Low Cost, Data-Centric Infrastructure
[McLeodUSA logo] . . . leading provider in our markets
[Following Slide 12 is a large McLeodUSA logo.]
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EXHIBIT 99.3
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Press Release
McLeodUSA Announces Proposed
Secondary Offering of Class A Common Stock
Cedar Rapids, Iowa--April 14, 1999--McLeodUSA Incorporated (NASDAQ/NMS:MCLD),
announced today its plans to file a registration statement with the Securities
and Exchange Commission in connection with a proposed underwritten secondary
offering of up to nine million shares of its Class A common stock by several
stockholders.
This announcement is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offering of these securities will be made only by
means of a prospectus.
CONTACT: McLeodUSA Incorporated
Press & Investor Contact: Bryce Nemitz
(319) 790-7800
http://www.mcleodusa.com
