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EXHIBIT 99.2
Description of Slides Regarding McLeodUSA Investor and Analyst Conference and
Webcast on November 8, 2000.
Slide 01
Agenda. . .
9:45 Welcome Steve Gray
10:05 Macro View Clark McLeod
10:25 Publishing Art Chistoffersen
10:55 --Break--
11:10 Local Service Steve Gray
Steve Shirar
11:50 --Lunch Break--
McLeodUSA logo.
Slide 02
Agenda. . .
12:15 ENGN Roy Wilkens
1:15 Financial Lyle Patrick
1:40 Q & A Panel Steve Gray
Lyle Patrick
Roy Wilkens
2:45 Closing Clark McLeod
3:00 Adjourn
McLeodUSA logo.
Slide 03
Safe Harbor. . .
Some of the statements contained in this slide 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. The "forward-looking" information is based on various factors and
was derived using numerous assumptions. Actual events or results may differ
substantially. Important factors that could cause actual events or results to be
materially different from the forward-looking statements include availability of
financing and regulatory approvals, the number of
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potential customers in a target market, the existence of strategic alliances or
relationships, our developments in the
McLeodUSA logo.
Slide 04
Safe Harbor. . .
industry, changes in the competitive climate in which we operate and the
emergence of future opportunities. These and other applicable risks are
summarized under "Risk Factors" in the McLeodUSA Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, in which is filed with the Securities
and Exchange Commission.
McLeodUSA and CapRock will file a proxy statement / prospectus and other
documents regarding the proposed acquisition referenced in the following
information with SEC. Investors and security holders are urged to read the proxy
statement / prospectus, when it becomes available, because it will contain
important information. A definitive proxy statement / prospectus will be sent to
security holders of CapRock seeking their approval of the transaction.
McLeodUSA logo.
Slide 05
Safe Harbor. . .
In addition, McLeodUSA will file a registration statement with the SEC to
register certain of its notes to be offered in an exchange offer for outstanding
CapRock notes. CapRock noteholders are urged to read the exchange offer
prospectus, when it becomes available, because it will contain important
information. Investors and security holders may obtain a free copy of the
definitive proxy statement / prospectus, exchange offer prospectus (when they
are available) and other documents filed by McLeodUSA and CapRock with the SEC
at its web site at www.sec.gov. The definitive statement / prospectus, exchange
-----------
offer prospectus and other documents may also be obtained for free by directing
a request to:
CapRock Communications, Inc. or McLeodUSA
At 972-982-9550 at 319-790-7800
McLeodUSA logo.
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The following slides were presented by Art Christoffersen:
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Slide 06
Large McLeodUSA logo.
Simply the Best logo.
Slide 07
Large McLeodUSA logo.
Publishing Company
Simply the Best logo.
Slide 08
Huge Growth Opportunity . . .
[On the left side of the slide is a green arrow pointing up. The year 2000 is at
the bottom of the arrow. The year 2010 is at the top of the arrow. The text "$13
Billion" is below the arrow. The text "$20 Billion" is above the arrow. On the
right side of the slide is a pie chart designating "84% RBOCs", "6% Other" and
"10% Competitive".
McLeodUSA logo. . . . little competition
Slide 09
RBOC Control. . .
[On the left side of the slide is a stack of four competitor phone books with
the McLeodUSA directory standing upright on top of the other books. To the right
of this is the following text:]
o Consistent Annual Rate Increases
o Over 50% EBITDA Margins
McLeodUSA logo. . . . stabilizes opportunity
Slide 10
Attractive Markets . . .
[On the left two-thirds of the slide appears a map of the continental United
States, showing the 48 states therein. The two letter postal state abbreviation
symbols "OR," "CA," "NV," "ID," "MT," "WY," "UT," "CO," "OK," "KS," "NE," "SD,"
"ND," "MN," "WI," "IA," "MO," "AR,"
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"MS," "TN," "FL," "KY," "IL," "IN," "OH," "MI," appear within the respective
boundaries of the state which each symbol represents. There is yellow shading in
each of these states that have abbreviations with several states fully shaded in
yellow and other shaded in part. The yellow shading represents areas covered by
McLeodUSA directories. To the right of the diagram is the following text:]
o 2nd/3rd Tier Focus
o 100% SME
o CLEC Positioning
Below the diagram is the text "Illustration Only".
McLeodUSA logo. . . . very vulnerable
Slide 11
Customer Centric Product . . .
[To the left side of the slide is a picture of the McLeodUSA directory open to a
yellow page ad with another large McLeodUSA directory and another small
McLeodUSA directory lying partially on top. The text "Display Ads--
Paper/Internet" is above this picture. The text "31 Million Directories" is
below it. To the right side is the following text:]
o Color Ads & Maps
o Larger Text
o 3 vs 4 Columns
McLeodUSA logo. . . . competitive differentiation
Slide 12
Coverage. . .
[On the left side of the slide is a map of part of Illinois indicating Rockford
and surrounding communities. To the right of the map is the text "Local Shopping
Area (Drive-to Decisions)". Below is a key designating the red area as
"Rockford--Ameritech". Rockford, Loves Park, Machesney Park and Harlem areas are
highlighted in red and constitute about 15% of the total mapped area.]
McLeodUSA logo. . . . economic market vs RBOC exchange
Slide 13
Coverage. . .
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[On the left side of the slide is a map of part of Illinois indicating Rockford
and surrounding communities. To the right of the map is the text "Local Shopping
Area (Drive-to Decisions)". Below is a key designating the red area as
"Rockford--Ameritech" and the green area as "Freeport-GTE". Rockford, Loves
Park, Machesney Park and Harlem areas are highlighted in red. Seward and
Pecatonica areas are highlighted in green and constitute about 10% of the total
mapped area.]
McLeodUSA logo. . . . economic market vs RBOC exchange
Slide 14
Coverage. . .
[On the left side of the slide is a map of part of Illinois indicating Rockford
and surrounding communities. To the right of the map is the text "Local Shopping
Area (Drive-to Decisions)". Below is a key designating the red area as
"Rockford--Ameritech" and the green area as "Freeport-GTE" and the blue area as
"Belvidere--GTE". Rockford, Loves Park, Machesney Park and Harlem areas are
highlighted in red. Seward and Pecatonica areas are highlighted in green.
Shirland, Harrison, Rockton, Roscoe, Capron, Caledonia, Argyle, Poplar Grove,
Belvidere, Garden Prairie, Cherry Valley, Irene, New Milford, Winnebago, Byron,
Stillman Valley and Davis Junction areas are highlighted in blue and constitute
about 75% of the total mapped area (covering the Rockford area on three sides).]
McLeodUSA logo. . . . economic market vs RBOC exchange
Slide 15
Coverage. . .
[On the left side of the slide is a map of part of Illinois indicating the same
Rockford and surrounding communities as the prior three slides which full area
is highlighted in yellow. To the right of the map is the text "Local Shopping
Area (Drive-to Decisions)". Below is McLeodUSA logo.]
McLeodUSA logo. . . . economic market vs RBOC exchange
Slide 16
Contiguous Markets. . .
[On the left two-thirds of the slide appears a map of the continental United
States, showing the 48 states therein. In the following states are the following
percentages: Oregon 16%; Idaho 87%, 3%; Montana 99%; Wyoming 100%, 37%; Colorado
98%, 18%; North Dakota 100%, 34%; South Dakota 100%, 35%; Nebraska 82%, 7%;
Kansas 43%, Minnesota 100%, 28%; Iowa
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100%, 46%, Missouri 86%, 10%; Arkansas 27%; Mississippi 5%; Florida 14%,
Tennessee 23%; Ohio 11%; Indiana 92%, 11%; Illinois 56%, 32%; Wisconsin 68%, 21%
and Michigan 74%, 15%. To the right of this diagram is the following text:]
o Brand Awareness
o Catalog of Services
o Relationships Annually Renewed
McLeodUSA logo. . . . positions CLEC entry
Slide 17
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Nebraska; Iowa; Illinois and Indiana. To the right of the diagram is the text
"New Markets (Books); Buy, Build." On the bottom left of the diagram is the year
"1990". Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 18
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Nebraska; Iowa; Illinois and Indiana. The total area highlighted includes more
territory than the previous slide. To the right of the diagram is the text "New
Markets (Books); Buy, Build." On the bottom left of the diagram is the year
"1991". Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 19
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Nebraska; Iowa; Illinois and Indiana. The total area highlighted includes more
territory than the previous slide. To the right of the diagram is the text "New
Markets (Books); Buy, Build." On the bottom left of the diagram is the year
"1992". Below the diagram is the text "Illustration Only."]
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McLeodUSA logo. . . . contiguous markets
Slide 20
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Wyoming; Colorado; Utah; Nebraska; Iowa; Missouri; Illinois and Indiana. The
total area highlighted includes more territory than the previous slide. To the
right of the diagram is the text "New Markets (Books); Buy, Build." On the
bottom left of the diagram is the year "1993". Below the diagram is the text
"Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 21
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Wyoming; Colorado; Utah; Nebraska; Iowa; Missouri; Illinois and Indiana. The
total area highlighted includes more territory than the previous slide. To the
right of the diagram is the text "New Markets (Books); Buy, Build." On the
bottom left of the diagram is the year "1994". Below the diagram is the text
"Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 22
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Wyoming; Colorado; Utah; Nevada; Idaho; Montana; Nebraska; Iowa; Missouri;
Illinois and Indiana. The total area highlighted includes more territory than
the previous slide. To the right of the diagram is the text "New Markets
(Books); Buy, Build." On the bottom left of the diagram is the year "1995".
Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
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Slide 23
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; South Dakota;
Wyoming; Colorado; Utah; Nevada; Idaho, Montana; Nebraska; Iowa; Missouri;
Arkansas; Illinois and Indiana. The total area highlighted includes more
territory than the previous slide. To the right of the diagram is the text "New
Markets (Books); Buy, Build." On the bottom left of the diagram is the year
"1996". Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 24
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; North Dakota; South
Dakota; Wyoming; Colorado; Utah; Nevada; Idaho, Montana; Nebraska; Iowa;
Missouri; Arkansas; Illinois; Indiana; Ohio and Michigan. The total area
highlighted includes more territory than the previous slide. To the right of the
diagram is the text "New Markets (Books); Buy, Build." On the bottom left of the
diagram is the year "1997". Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 25
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; North Dakota; South
Dakota; Wyoming; Colorado; Utah; Nevada; Idaho, Montana; Nebraska; Iowa;
Missouri; Arkansas; Tennessee; Illinois; Indiana; Ohio and Michigan. The total
area highlighted includes more territory than the previous slide. To the right
of the diagram is the text "New Markets (Books); Buy, Build." On the bottom left
of the diagram is the year "1998". Below the diagram is the text "Illustration
Only."]
McLeodUSA logo. . . . contiguous markets
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Slide 26
Staged Growth. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; North Dakota; South
Dakota; Wyoming; Colorado; Utah; Nevada; Idaho, Montana; Nebraska; Iowa;
Missouri; Arkansas; Kansas; Tennessee; Illinois; Indiana; Ohio; Michigan and
Florida. The total area highlighted includes more territory than the previous
slide. To the right of the diagram is the text "New Markets (Books); Buy,
Build." On the bottom left of the diagram is the year "1999". Below the diagram
is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 27
Staged Growth . . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The following states have highlighted areas in
the state designating covered markets: Wisconsin; Minnesota; North Dakota; South
Dakota; Wyoming; Colorado; Utah; Nevada; Idaho; Oregon; California; Montana;
Nebraska; Iowa; Missouri; Arkansas; Kansas; Tennessee; Illinois; Indiana; Ohio;
Michigan; Florida; Oklahoma; Mississippi and Kentucky. The total area
highlighted includes more territory than the previous slide. To the right of the
diagram is the text "New Markets (Books); Buy, Build." On the bottom left of the
diagram is the year "2000". Below the diagram is the text "Illustration Only."]
McLeodUSA logo. . . . contiguous markets
Slide 28
Formula Based. . .
[On the left side of the slide appears a bar graph. On the horizontal axis are
the years "91", "96", "01" with the text "Year" below. Above the year 91 is a
graph bar indicating "3". Above the year 96 is a graph bar indicating "7". Above
the year 01 is a graph bar indicating "31". Above the graph is the text
"Directories Distributed (MM)". To the right of the graph is the following
text:]
o 100% Annual Canvassing
o Face-to-Face Sales
o Eyeballs - Books/Web
McLeodUSA logo. . . . replicable/scalable
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Slide 29
Increasing Penetration. . .
[On the left side of the slide is a bar graph. On the horizontal axis are the
years "91", "96", "01" with the text "Year" below it. Above the year 91 is a
graph bar indicating "$0.7". Above the year 96 is a graph bar indicating "$6".
Above the year 01 is a graph bar indicating "$55". Above the graph is the text
"Directory Consolidated EBITDA (MM)".]
[On the right side of the slide is a line graph. On the horizontal axis are the
numbers "1", "5", "10" with the text "Years in Market" below it. On the vertical
axis are the numbers "0", "10", "30", "50" with the text "Percent" above it. At
the number 0 is a white horizontal line with the text "Break Even". There is a
yellow curved line from the number 1 on the horizontal axis below the break even
line which curves in an upward direction, intersecting with year 5 on the
horizontal axis and about 3 percent on the vertical axis, and it ending at year
10 on the horizontal axis and 50 percent on the vertical axis. The text "Same
Store EBITDA Growth" is above the curved line.]
McLeodUSA logo. . . . builds profits
Slide 30
Geographic Expansion. . .
[On the left side of the slide is a bar graph. On the horizontal axis are the
years "91", "96", "01" with the text "Year" below it. Above the year 91 is a
graph bar indicating "4". Above the year 96 is a graph bar indicating "11".
Above the year 01 is a graph bar indicating "50". Above the graph is the text
"Population Served (MM)".]
[On the right side of the slide is another bar graph. On the horizontal axis are
the years "91", "96", "01" with the text "Year" below it. Above the year 91 is a
graph bar indicating "$20". Above the year 96 is a graph bar indicating "$50".
Above the year 01 is a graph bar indicating "$300". To the left of the graph is
the text "Revenue (MM)".]
McLeodUSA logo. . . . results are impressive
Slide 31
Tenured Team. . .
[On the left side of the slide is a bar graph. On the horizontal axis are the
years "91", "96", "01" with the text "Year" below it. Above the year 91 is a
graph bar indicating "300". Above the
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year 96 is a graph bar indicating "600". Above the year 01 is a graph bar
indicating "2500". Above the graph is the text "Employees". To the right of the
graph is the following text:]
o Opportunity
o Culture/Community
o Performance
McLeodUSA logo. . . . key to successful execution
Slide 32
McLeodUSA Publishing. . .
o Opportunity
- Very Large, Very Profitable
o Plan/Execution
- Replicable, Scalable, Successful
o Mission
- Number One in Local Services
McLeodUSA logo. . . . simply the best
Slide 33
Large McLeodUSA logo.
Simply the Best logo.
The following slides were presented by Steve Gray and Steve Shirar:
------------------------------------------------------------------
Slide 34
Large McLeodUSA logo.
Simply the Best logo.
Local Services
Slide 35
McLeodUSA. . .
o Opportunity . . . Unprecedented
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o Plan . . . Value Creation
o Execution . . . Formula Based
McLeodUSA logo. . . . simply the best
Slide 36
Incumbent Markets, Most Attractive . . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The two letter postal state abbreviation symbols
"WA," "OR," "ID," "MT," "WY," "UT," "AZ," "NM," "CO," "TX," "OK," "KS," "NE,"
"SD," "ND," "MN," "WI," "IA," "MO," "AR," "LA," "IL," "IN," "OH," "MI," appear
in bold type within the respective boundaries of the state which each symbol
represents. The following states are highlighted yellow: WA, OR, ID, MT, WY, UT,
AZ, NM, CO, KS, NE, SD, ND, MN, WI, IA, MO, IL, IN, OH, and MI. The following
states are highlighted purple: TX, OK, AR, and LA. Above the diagram is the text
"$240B Market opportunity". Below the diagram is the text "Illustration Only".
Below the diagram to the left is the text "*10 Year". To the right of the
diagram is the following text:]
o Local Services
o Layered-On Products
o Business Focused
McLeodUSA logo. . . . most vulnerable
Slide 37
Plan of Attack, Straight Forward. . .
o Capture Marketshare
o Control Network / Systems
o Integrate Marketshare and Network
McLeodUSA logo. . . . unchanged
Slide 38
Qwest Agreement Optimizes. . .
[On the left side of the slide is a picture of a swinging pendulum. To the left
of the pendulum is the text "Incumbent Facilities". On the pendulum is the text
"Speed Functional Cost". To the
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right of the pendulum is the text "McLeodUSA Facilities". On the right side of
the slide is the following text:]
o Strategic
o Economics
o Momentum
McLeodUSA logo. . . . return on capital
Slide 39
Large McLeodUSA logo.
Simply the Best logo.
Local Services - Execution
Slide 40
Customer Focused. . .
[On the left side of the slide appears a map of the continental United States,
showing the 48 states therein. The two letter postal state abbreviation symbols
"WA," "OR," "ID," "MT," "WY," "UT," "AZ," "NM," "CO," "TX," "OK," "KS," "NE,"
"SD," "ND," "MN," "WI," "IA," "MO," "AR," "LA," "IL," "IN," "OH," "MI," appear
in bold type within the respective boundaries of the state which each symbol
represents. The following states are highlighted yellow: WA, OR, ID, MT, WY, UT,
AZ, NM, CO, KS, NE, SD, ND, MN, WI, IA, MO, IL, IN, OH, and MI. The following
states are highlighted purple: TX, OK, AR, and LA. The following numerical
percentages appear within the following states: Idaho "3%", Wyoming "37%", Utah
"5%", Colorado "18%", North Dakota "34%", South Dakota "35%", Nebraska "7%",
Minnesota "28%", Iowa "46%", Missouri "10%", Wisconsin "21%", Illinois "32%",
Michigan "15%, Indiana "10%". There is a star in Utah and Indiana. Below the
diagram is the text "Illustration Only". Below the diagram to the left is a star
indicating Indianapolis, IN and Salt Lake City, UT. To the right of the diagram
is the following text:]
o Positioning
o Product / Distribution
o Platform / Systems
McLeodUSA logo. . . . number #1, most admired
Slide 41
Distribution Formula. . .
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[On the left side of the slide is a green arrow pointing upwards. The text
"2000" is at the bottom of the arrow and the text "2001" is at the top of the
arrow. Below the arrow is the text "1250". Above the arrow is the text "1850".
Below this diagram is the text "Sales Team".]
[On the right side of the slide are the following states with the two letter
postal state abbreviation symbols "WA," "OR," "ID," "MT," "WY," "UT," "AZ,"
"NM," "CO," "TX," "OK," "KS," "NE," "SD," "ND," "MN," "WI," "IA," "MO," "AR,"
"LA," "IL," "IN," "OH," "MI," which appear in bold type within the respective
boundaries of the state which each symbol represents. The following states are
highlighted yellow: WA, OR, ID, MT, WY, UT, AZ, NM, CO, KS, NE, SD, ND, MN, WI,
IA, MO, IL, IN, OH, and MI. The following states are highlighted purple: TX, OK,
AR, and LA. There are stars across these states indicating the location of our
sales offices. Above the diagram is the text "136 Sales Offices". Below the
diagram is the text "Illustration Only".]
McLeodUSA logo. . . . proven to penetrate
Slide 42
Best Formula. . .
[There are five green boxes across the bottom of the slide with white arrows
pointing to the right connecting each box. The text "10 Year Plan", "Territory
Plan", "Staffing", "Prospecting", "Sales" is in each box. Above the Sales box is
a white arrow pointing upward to a green box with the text "Upgrades". There is
a white arrow pointing diagonally left in an upward direction to a green box
with the text "Customer Service". There is a white arrow pointing downwards from
the Customer Service box to a green box with the text "Field Service (Account
Mgmt)". There is also a white arrow pointing diagonally left in a downward
position connecting the Upgrades box with the Field Service box. Associated with
these boxes is the text "'Beat Cop' Customer Process".]
McLeodUSA logo. . . . in the industry
Slide 43
Multiple Platforms. . .
Platforms Products
--------- --------
UNE Local
-----
UNE-M First Mile
XDSL
T1 Other Services
--------------
Direct Build Long Distance
Wireless Internet
Intranet
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Private Line
Web Hosting
E-Commerce
McLeodUSA logo. . . . multiple products
Slide 44
Customer Retention Team. . .
[On the left side of the slide is a picture of a customer service representative
seated at a desk with a computer. Above the picture is the text "One-Call
Resolution". To the right of the picture is the following text:]
o Real People
o Relationship Focused
o 0.5% Churn
McLeodUSA logo. . . . industry's best
Slide 45
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture.]
McLeodUSA logo. . . . manage transactions
Slide 46
Proprietary Systems . . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale".]
McLeodUSA logo. . . . manage transactions
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Slide 47
Proprietary Systems . . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling".]
McLeodUSA logo. . . . manage transactions
Slide 48
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text ""Customer Service".]
McLeodUSA logo. . . . manage transactions
Slide 49
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text ""Customer Service". Below and
slightly to the left is the text "Call Processing".]
McLeodUSA logo. . . . manage transactions
Slide 50
Proprietary Systems . . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text "Customer
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Service". Below and slightly to the left is the text "Call Processing". On the
bottom left is the text "Bundled Services Billing".]
McLeodUSA logo. . . . manage transactions
Slide 51
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text ""Customer Service". Below and
slightly to the left is the text "Call Processing". On the bottom left is the
text "Bundled Services Billing". Above is the text "Customized Billing".]
McLeodUSA logo. . . . manage transactions
Slide 52
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text ""Customer Service". Below and
slightly to the left is the text "Call Processing". On the bottom left is the
text "Bundled Services Billing". Above is the text "Customized Billing". Above
is the text "Finance And Accounting".]
McLeodUSA logo. . . . manage transactions
Slide 53
Proprietary Systems. . .
[In the center of the slide is a circular picture of an employee at a desk with
a computer. The picture is framed with arrows rotating in the circular shape.
The text "Data Management" overlays the arrows. The text "Beat Cop" is to the
top right of the picture. Below is the text "The Sale". Below is the text "Order
Tracking and Scheduling". Below is the text ""Customer Service". Below and
slightly to the left is the text "Call Processing". On the bottom left is the
text "Bundled Services Billing". Above is the text "Customized Billing". Above
is the text "Finance And Accounting". Above is the text "Asset and Network".]
22
<PAGE>
McLeodUSA logo. . . . manage transactions
Slide 54
1999 2000* Change
---- ----- ------
Customers 280K 375K 34%
Revenue/Customer $911 $1,035 14%
Total Lines 579K 1 Million + 73%
Lines Sold 330K 450K 37%
Sales Team 900 1,450 61%
Sales Offices 110 136 24%
*2000 Estimates Include CapRock
McLeodUSA logo. . . . building momentum
Slide 55
Large McLeodUSA logo.
Simply the Best logo.
The following slides were presented by Roy Wilkens:
--------------------------------------------------
Slide 56
Large McLeodUSA logo
The Next Generation National Network
Roy Wilkens
Slide 57
Market Values Data
[Below this text is a graph. Vertical axis has numbers "0", "20", "40", "60",
"80", "100", "120". Horizontal axis has text "CLEC" and "ILEC" in gray arrows
pointing down to another graph. Above CLEC is a green graph bar filled to 51%
and a yellow graph bar filled up 49% totaling 100%. Above ILEC is green graph
bar filled to 12% and a yellow graph bar filled up 88%,
23
<PAGE>
totaling 100%. To the right of the graph is a key indicating yellow "Voice,
Other" and green "Data". To the left of the graph is text "Data as Percent of
Revenues. Above graph is text "Aggregate Industry Averages".]
[Below graph is another graph. Vertical axis has numbers "0", "5", "10", "15",
"20", "25", "30", "35", "40", "45". Horizontal axis has text "CLEC" and "ILEC".
Above CLEC is a green graph bar filled to 38.5. Above ILEC is a green graph bar
filled to 3.2. To the right of the graph is a key indicating green "Mkt
Cap/Rev". To the left of the graph is text "Market Cap over Revenues".]
Slide courtesy Cisco Systems
McLeodUSA logo. Sources: New Paradigm Resources Group, Paine Webber, Yahoo
Finance
Represents aggregation across CLEC industry and ILEC industry
Note: Market Cap for 7/7/00; trailing 12 month revenues (usually through
12/31/99)
Slide 58
Current CLEC Market
[Below this text is an outline of the continental United States with a graph
overlaying it. On the left side the text "Data Networks" at the top of a yellow
vertical axis, one-half down the vertical axis the text "DSL" with an orange
arrow horizontally across the graph with the text "Traditional CLEC Products"
below it. Three-fourths down the vertical axis the text "PRI" and at the bottom
of the vertical axis the text "Voice". A yellow horizontal axis with the text
"Local", "Regional" and "National" are spaced along the horizontal axis. At the
intersection of the horizontal and the vertical axis is a white arrow across the
graph at a 45 degree angle with the text "Customers" above it.]
McLeodUSA logo. CLECs Must Provide National Data
Slide 59
Current Bandwidth Market
[Below this text in the lower left corner is a picture of an old computer in a
circular shape with the text "Legacy" above it. Slightly above that in the
center is a picture of a jack-in-a-box with fibers coming out in a circular
shape with the text "Technology" below it. In the lower right corner is a
picture of a shovel inserted in the ground in a circular shape with the text
"Construction" above it.]
McLeodUSA logo. Lack of Focus on Providing Services
24
<PAGE>
Slide 60
Building a National Infrastructure
[Below this text an outline of the continental United States with the following
text overlying it.]
o Fiber Coverage
- Fiber is Available and Affordable Tier 1
- Leverage Existing Fiber Coverage Tier 2 & 3
o Service Opportunity
- Difference is in the Delivery
- End to End Product Control
o Platform for Growth
- Strong CLEC Growth Foundation
- Opportunity for Bandwidth Revenue
McLeodUSA logo. One Functional Network
Slide 61
Product Stack-Unlimited Possibilities
[Below this text to the right side is a triangle with text on different levels
from the top down as follows: "?", "B2B Gateways", "Voice & Data Convergence",
"DS-0 and DS-1 PL", "Collocate and Web Hosting", and "High Capacity PL DS-3 to
OC-192". To the left of the triangle is the following text in a splashed effect:
"Video To The Desktop", "Wireless Local Broadband", "On-Demand Voice Lines",
"Local Waves", Lambda On Demand", "Optical Dial Tone".]
McLeodUSA logo. A Base for CLEC Growth
Slide 62
Strategic Vision-Customer Focus
[Below this text is a picture sectioned into four quadrants with the text "On-
Demand" Customized Services" in the center. In the first quadrant is the text
"Technology". In the second quadrant is the text "Scalability". In the third
quadrant is the text "Efficiency". In the forth quadrant is the text "Quality".]
McLeodUSA logo. Simply The Best National Network
Slide 63
External Resources
25
<PAGE>
o Advances in Engineering
- Transmission Systems
- Fiber Types
- DWDM Line Systems
o OSS Possibilities
- Rules Based Architecture
- More Intelligent NMS
o Technology Savvy Customer
- Internet Ready Client
- Increasing Non-Traditional High Bandwidth Users
McLeodUSA logo. A Window Of Opportunity
Slide 64
Utilizing Our Fiber Resources
[Centered on the slide is a diagram of the continental United Sates. In yellow
print are lines illustrating McLeodUSA's fiber routes. To the right of the
diagram is the text "31,000 Route Miles". To the bottom right of the diagram is
a key designating a yellow line for fiber routes. To the bottom left of the
diagram is the text "Illustration Only".]
McLeodUSA logo. A Strong National Foundation
Slide 65
Capitalizing On National POPs
[Centered on the slide is a diagram of the continental United Sates showing
various POP sites across the United States. There are photographs of buildings
in a few major cities in which McLeodUSA has POP sites, including San Francisco,
Dallas, Atlanta, and New York. To the right of the diagram is a key designating
gray circles as "Point of Presence". Below the diagram is the text
"Illustration Only".]
McLeodUSA logo. Dense US Coverage
Slide 66
Moving Closer to the Customer
26
<PAGE>
[Centered on the slide is a diagram of the continental United Sates with various
dots designating our Local City Networks. To the right of the diagram is the
text "Over 100 Local Networks". To the lower right of the diagram is the text
"Illustration Only."]
McLeodUSA logo. Providing End to End Services
Slide 67
Experienced Team
o Instrumental in Industry Firsts
- DWDM - 1991
- Optical Switching - 1995
- Frame Relay Service - 1991
- Digital Private Line Business Model - 1986
o Innovative Supplier Strategies
- Patented Optical Technology
- Created Cutting Edge Carrier Solutions
- Redefined the Wholesale Business
McLeodUSA logo. Proven Industry Execution
Slide 68
Proven Individuals
Chris Ryan Technology
Larry Littlefield Financial
Charlie Emde Information Systems
Todd Wilkens Engineering
Gary Dupler Planning and Construction
Mike Edl Operations
John Barnett Wholesale Sales
Mike Predovic Facilities
McLeodUSA logo. Building Upon Past Success
Slide 69
A Clean Slate
o Building A New Network for Today and Tomorrow
o Turning Fiber Into Services
o No Legacy Systems or Bureaucracy
o Flexibility Focus
27
<PAGE>
o Leverage Experience
McLeodUSA logo. Doing It Right The First Time
Slide 70
Avoiding the Hype
ISDN Phone Lines--A new Super Powerful Telephone Technology. - Omni Jan. '93
Why Bundling Its Consumer Services Hasn't Benefited AT&T - WSJ Oct. 2000
A Ring Structure Has Come to be the Architecture of Choice - Mgmt Science Nov-94
SMDS Takes Center Stage - Telephony Jan-94
Bell Service Bundling as Residential Competitive Key - Telecom Report Nov 97
Tomorrows Network Today--Use of Sonet Ring and ATM Technology - Data Comm. Sept.
'95
SONET Vs ATM an Either or Choice - Comm. News July '97
McLeodUSA logo. Going Back To The Basics
Slide 71
Focusing on Providing Service
The Customer
[Below this text is a balancing scale that is balanced with colored blocks on
the left side with the text "The Network" below it. On the right side are
colored circles with the text "The Systems" below it.]
McLeodUSA logo. Increasing Customer Utility
Slide 72
Utilizing Technology Evolution
Digital Linear 45MB
Ring
28
<PAGE>
FR 1GB
ATM Mesh 10GB
Switch
[These words are set forth on the slide and arrows point to "Mesh Switch" which
is encircled by a wrapped ball.]
McLeodUSA logo. Heading for Optical Networking
Slide 73
Today's Technology-Ring Networks
[Below this text is an outline of the continental United States with an oval
circle around the western part of the United States, an oval circle around the
southwestern part of the United States, an oval circle around the central part
of the United States, an oval circle around the southeastern part of the United
States, an oval circle around the east central part of the United States and an
oval circle around the northeastern part of the United States.]
McLeodUSA logo. A Seemingly Simple Solution
Slide 74
The Real Picture of a Ring-Based Network
[Below this text is an outline of the continental United States with four oval
circles stacked upon each other connected with red dots around the western part
of the United States, four oval circles stacked upon each other connected with
red dots around the southwestern part of the United States, four oval circles
stacked upon each other connected with red dots around the central part of the
United States, an oval circle with red dots around the southeastern part of the
United States, five oval circles stacked upon each other connected with red dots
around the east central part of the United States and four oval circles stacked
upon each other connected with red dots around the northeastern part of the
United States. There is one large oval circle including the western,
southwestern and central parts of the United States. There is one oval circle
including the east central and northeastern parts of the United States.]
McLeodUSA logo. Multiple Individual Systems
Slide 75
Utilizing Technology--A Simplified Approach
[Below this text is an outline of the continental United States with an oval
circle around the western part of the United States, an oval circle around the
southwestern part of the United
29
<PAGE>
States, an oval circle around the central part of the United States, an oval
circle around the southeastern part of the United States, an oval circle around
the east central part of the United States and an oval circle around the
northeastern part of the United States. All of these oval circles are connected
to the adjoining oval circle by a smaller black circle outlined in orange with
an orange "x" in each circle.]
McLeodUSA logo. A Truly Intelligent Network
Slide 76
Meeting Dynamic Customer Needs
[Below this text in the center of the slide is a picture of a swinging pendulum.
On the left side of the pendulum is an arrow pointing upwards with the text
"Capacity & Cost". The text "More" is below it. On the right side of the
pendulum is an arrow pointing downwards with the text "Capacity & Cost". The
text "Less" is below it. The text "Restoration" is on the swinging pendulum.]
McLeodUSA logo. Embracing Change as Constant
Slide 77
Optical Economics
[On the left side of the slide is a graph. On the horizontal axis are the
following years "1984", "1994", "1998" and "2002". On the vertical axis at a
curve is "50 Mb" above the year 1984, "2.5 Gb" above the year 1994, "320 Gb"
above the year 1998, and "6.4 Tb" above the year 2002. There is a green arrow
following the curve up to 6.4 Tb, pointing nearly straight up over 2002. There
is a red arrow from 1984 to 2002 rising at a much more modest rate with the text
"Moore's Law". Above the graph is the text "Transport Capacity". Below the graph
is the text "Outstripping Moore's Law. . ."]
[On the right side of the slide is another graph. On the horizontal axis are the
years "1993", "1998" and "2002". Above the year 1993 is a graph bar to the top
of the graph. Above the year 1998 is a graph bar about one-fifth the size. Above
the year 2002 is a graph bar about one-twentieth the size of the year 1993 graph
bar. There is a gray arrow pointing down from the year 1993 graph bar to the
year 2002 graph bar. The text "Cost per Gigabit-Mile" is at the top of the
graph. The text "And Creating Wealth For our customers" is below the graph.]
Slide Courtesy of Nortel Networks
McLeodUSA logo.
30
<PAGE>
Slide 78
Business Plan Capital Allocation
[In the center of the slide is a bar graph. On the left side is a vertical axis
with "0%" on the bottom, "10%", "20%", "30%", "40%", "50%", "60%", "70%", "80%",
"90%" at the top. To the right of the axis is a three-dimensional block up to
80%. Below is the text "Equipment". To the right of that is a three- dimensional
block up to about 7.5%. Below is the text "Fiber". To the right of that is a
three-dimensional block up to about 2.5%. Below is the text "Systems". To the
right of that is a three-dimensional block up to about 10%. Below is the text
"POP & Other". Over these bars is the following text: "Fiber is a Small Part of
Providing the Total Service Package".]
McLeodUSA logo. Emphasis on Optronics
Slide 79
Fundamental IT Systems
[Below this text is a purple box centered with the text "WEB Based Customer
Interface". Below that are five blue boxes with the following vertical text in
each box: "Pricing", "Order Entry", "Provisioning", "Fault", "Billing". Below is
a purple box with the text "Facilities Inventory System". Below is a purple box
with the text "Network Elements-NMS".]
McLeodUSA logo. A Solid System for the 21st Century
Slide 80
Product Stack--Initial PL Focus
[Below this text to the right side is a triangle with text on different levels
from the top down as follows: "?", "B2B Gateways", "Voice & Data Convergence",
"DS-0 and DS-1 PL", "Collocate and Web Hosting", and "High Capacity PL DS-3 to
OC-192". To the left of the triangle is the following text in a splashed effect:
"Wireless Local Broadband", "Video To The Desktop", "On-Demand Voice Lines",
"Local Waves", Lambda On Demand", "Optical Dial Tone".]
McLeodUSA logo. Funded Development
Slide 81
The Flex Product Line
[In the center of the slide is a balloon with the following text inside:
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<PAGE>
o Flat Rate Network Entry Point
o Dynamic Circuit Allocation
o Multiple Restoration Options
o High Speed Connectivity
o On-Line Customer Interface
On the right side of the balloon are three pipes extending out to three circles
with buildings and trees in each. On the left side of the balloon are two pipes
extending out to two circles with buildings and trees in each.]
McLeodUSA logo. Maximizing Customer Control
Slide 82
Customer Service Web Interface
[Pictured on the slide is the McLeodUSA FlexView login page with a picture of
the McLeodUSA FlexView homepage slightly overlapping it.]
McLeodUSA logo. Utilizing the Internet as a Tool
Slide 83
Customer Service Web Interface
[Pictured on the slide is the McLeodUSA FlexView Order Management web page with
a picture of the McLeodUSA FlexView New Order web page slightly overlapping
it.]
McLeodUSA logo. Promoting Ease of Use
Slide 84
Customer Service Web Interface
[Pictured on the slide is the McLeodUSA FlexView New Order web page with a
picture of the McLeodUSA FlexView New Order Process Order web page slightly
overlapping it.]
McLeodUSA logo. A Better Way to Do Business
32
<PAGE>
Slide 85
Traditional PL Service Speeds
[Below this text centered on the slide is a bar graph. The vertical axis has 12
lines evenly spaced with vertical text "50Mbps Steps". The horizontal axis has
"6", "12", "18", "24", "30" and "36" evenly spaced with the text "Months of
Service" below it. There is a yellow bar with text "DS-3" between 0 and 12
months and rising up to the first 50Mbps line. There is a yellow bar with text
"OC-3" between 12 and 24 months and rising up to the third 50Mbps line. There is
a yellow bar with text "OC-12" between 24 and 36 months and rising up to the
12th 50Mbps line.]
McLeodUSA logo. Large and Painful Upgrades
Slide 86
Flex Products: Easier Customer Growth
[Below this text is a bar graph. The vertical axis has 12 lines evenly spaced
with vertical text "50Mbps Steps". The horizontal axis has "6", "12", "18",
"24", "30" and "36" evenly spaced with the text "Months of Service" below it.
There is a light yellow bar between 0 and 6 months and up to the first 50Mbps
line. There is a yellow bar between 6 and 12 months and up to the second 50Mbps
line. There is a dark yellow bar between 12 and 18 months and up to the third
50Mbps line. There is a peach bar between 18 and 24 months and up to the fifth
50Mbps line. There is an orange bar between 24 and 30 months and up the seventh
50Mbps line. There is a yellow bar between 30 and 36 months and up the 10th
50Mbps line. To the right of the graph is the following text:]
o OC-12 Port
o OC-12 Local Access
o Step Up Circuits Gradually as Needed
McLeodUSA logo. A Focus on Flexibility
Slide 87
Improving on the Bottom Line
o Fiber Cost is no longer a barrier
o POP facilities provide control and growth
o Electronics are success based
o PPE investment for solid MRR
McLeodUSA logo. A Strong Investment for the Future
33
<PAGE>
Slide 88
Execution: Moving Aggressively
o Assembled High Performance Team
o Funded Project (Sept-00)
o 15,000+ Route Miles 1st half 2001
o Mesh Vendor Determined Nov. 00
o POP Facilities
- Over 75% Identified
o Basic IT System Year End 2000
o National Flex Products End of 2001
McLeodUSA logo. Focused on Our Goals
Slide 89
Conclusions
Providing Service to Customers
[Below this text is an outline of the continental United States with lines
depicting our routes of fiber optic cable.]
McLeodUSA logo. Renewing Our Root Commitment
Slide 90
Conclusions
Providing Service to Customers Providing a CLEC Foundation
[Below this text is an outline of the continental United States with lines
depicting our routes of fiber optic cable.]
McLeodUSA logo. Growing our Core Business
Slide 91
Conclusions
34
<PAGE>
Providing Service to Providing a CLEC Providing New
Customer Foundation Revenue Sources
[Below this text is an outline of the continental United States with lines
depicting our routes of fiber optic cable. The text "Simply The Best National
Network" overlying the United States.]
McLeodUSA logo. Capitalizing on Opportunity
Slide 92
Large McLeodUSA logo.
The following slide were presented by J. Lyle Patrick:
-----------------------------------------------------
Slide 93
Large McLeodUSA logo.
Slide 94
Presentation Outline. . .
o Opportunity
o Plan
o Execution
McLeodUSA logo.
Slide 95
Opportunity. . .
o Focus on Incumbent
o Penetrate Markets, Leverage People and Assets
o Compete Effectively and Economically
McLeodUSA logo. . . . the core is local services
35
<PAGE>
Slide 96
Become The New Local Services Company . . .
US West MCLD
------- ----
Lines Served(1) $17M $725K
Gross Telco PP&E(in service)(2) $29B $636M
Gross Telco PP&E per Line $1,726 $877
Monthly Revenue per Line $60 $62
Monthly EBITDA per Line $24 $12
Recovery Period (Months) 72 73
(1) 1999/2000 Average
(2) Beginning of Year Balance
McLeodUSA logo. . . . and more
Slide 97
McLeodUSA Advantages. . .
o Penetrating Markets, Gaining and Keeping Share
o More Advanced and Efficient Network / Systems
o New Product Opportunities
o Multiple Platform Market Entry, Choose Where We Build
o Lower Cost, Higher Return
McLeodUSA . . . a clean slate, simply the best
Slide 98
Attractive Economics - 1997 . . .
o Large and Growing Market
- Lines and Subscribers: 17.5M
o Demand-Driven Capital Expenditures
- Average CAPEX and Marketing Cost per Line: $750
o High Margins + Recurring Revenues = Attractive Returns
- Average Revenue per Line: $780 (per year)
- EBITDA Margin: 35% (Wall Street Estimate)
- Average Customer Life: 10 Years
36
<PAGE>
- Cash on Cash I.R.R.: 35%
McLeodUSA logo. . . . attractive today
Slide 99
Cash Flow & EBITDA. . .
[On this slide is a graph. On the vertical axis are the numbers "-4", "0", "4",
"8", "12". Above the vertical axis is the text "Percent". On the horizontal axis
are the years "97", "98", "99", "00", "01", "02", "03", "04", "05", "06". To the
right of the graph is a key indicating a red line for "Cash Flow", a yellow line
for "EBITDA", a green line for "Cash Flow (Cumulative)" and a blue line for
"EBITDA (Cumulative)". On the graph the red line representing Cash Flow starts
at 0 at year 97, drops down to about -1 at year 00, then slightly continues to
curve up to about 2 at year 06. The yellow line representing EBITDA starts at 0
at year 97, maintains near 0 until year 01 where it slightly continues to curve
up to about 4 at year 06. The green line representing Cash Flow (Cumulative)
starts at 0 at year 97, continues to drop slightly down to about -4 at years 01,
02, 03 and then slightly continues to curve up to about 1 at year 06. The blue
line representing EBITDA (Cumulative) starts at 0 at year 97, maintains 0 until
year 00 or 01 where it slightly continues to curve up to 12 at year 06.]
McLeodUSA logo. . . . and it gets better
Slide 100
Plan Metrics Continuously Monitored . . .
o Revenue Trend . . . Increasing
- Capture and Retain Share
- Grow Revenue per Customer
o Cost Trend . . . Decreasing
- Costs of Sales % Decrease
- SG&A% Decrease
o Cash
- Invest, Don't Spend
McLeodUSA logo. . . . all improving
37
<PAGE>
Slide 101
The Process/Plan . . .
o Operate and Report by Specific Markets
o 48 CLEC and 260 Publishing Market Units
o Forecast and Account by Market Unit, Revenue, EBITDA, Cash Flow and CAPEX
o Best Monitoring of a Strategic Asset . . . Cash
McLeodUSA logo. . . . by market
Slide 102
Unit Execution. . .
[On the left side of the slide appears a graph. On the vertical axis are the
numbers "0", "200", "400", "600", "800". Above the vertical axis is the text
"Thousands". On the horizontal axis are the years "96", "97", "98", "99", "00".
Below the horizontal axis is the text "Year". Above the year 96 is a graph bar
indicating "65". Above the year 97 is a graph bar indicating "193". Above the
year 98 is a graph bar indicating "306". Above the year 99 is a graph bar
indicating "579". Above the year 00 is a graph bar indicating "803". To the left
of the 99 and 00 graph bars and above the 96, 97 and 98 graph bars is the text
"90% CAGR". Above the graph is the text "CLEC Lines".]
[On the right side of the slide appears a graph. On the vertical axis are the
numbers "0", "15", "35". Above the vertical axis is the text "Millions". On the
horizontal axis are the years "96", "97", "98", "99", "00". Below the horizontal
axis is the text "Year". Above the year 96 is a graph bar indicating "7". Above
the year 97 is a graph bar indicating "10". Above the year 98 is a graph bar
indicating "14". Above the year 99 is a graph bar indicating "19". Above the
year 00 is a graph bar indicating "31". To the left of the 99 and 00 graph bars
and above the 96, 97 and 98 graph bars is the text "45% CAGR". Above the graph
is the text "Books Distributed".]
McLeodUSA logo. . . . consistent, impressive growth
Slide 103
Revenue & EBITDA . . .
[On the left side of the slide appears a graph. On the vertical axis are the
numbers "0", "0.4", "0.8", "1.2", "1.6". Above the vertical axis is the text "$
Billions". On the horizontal axis are the years "96", "97", "98", "99", "00".
Below the horizontal axis is the text "Year". Above the year 96 is a graph bar
indicating "$.08". Above the year 97 is a graph bar indicating "$0.3". Above the
year 98 is a graph bar indicating "$0.6". Above the year 99 is a graph bar
indicating "$0.9". Above the year 00 is a graph bar indicating "$1.4". To the
left of the 99 and 00 graph bars and above the 96, 97 and 98 graph bars is the
text "103% CAGR". Above the graph is the text "Revenue".]
38
<PAGE>
[On the right side of the slide appears a graph. On the vertical axis are the
numbers "-40", "0", "40", "80", "120". Above the vertical axis is the text "$
Millions". On the horizontal axis are the years "96", "97", "98", "99", "00".
Below the horizontal axis is the text "Year". Above the year 96 is a graph bar
indicating "$-17". Above the year 97 is a graph bar indicating "$-32". Above
the year 98 is a graph bar indicating "$20". Above the year 99 is a graph bar
indicating "$59". Above the year 00 is a graph bar indicating "$115". Above
the graph is the text "EBITDA".]
McLeodUSA logo. . . . 18 quarters met or exceeded expectations
Slide 104
Sources and Uses. . .
[On the left side of the slide appears a pie chart. Above the pie chart is the
text "Sources $1.7 Billion". The pie chart is depicted as follows: "$600M"
indicating "Cash". "$725M" indicating "Bank Revolver". "$375M" indicating
"Operating Capital(1)" Below the pie chart is the text "(1) EBITDA Net of
Interest & Working Capital".]
[On the right side of the slide appears a pie chart. Above the pie chart is the
text "Uses $1.7 Billion". The pie chart is depicted as follows: "$1.7 Billion
indicating "CAPEX".
Centered above both pie charts is the text "4Q00-2002".]
McLeodUSA logo. . . . funded plan
Slide 105
1999 2000% %
---- ----- ---
Revenues $241M $366M 52%
EBITDA $15M $15M* --
Lines Sold 81K 117K 44%
Rev/Customer $892 $1,034 16%
*Post Splitrock Dilution
McLeodUSA logo. . . . aggressive growth, positive EBITDA
39
<PAGE>
Slide 106
McLeodUSA Financial History . . .
1996 2000 CAGR
---- ---- ----
Lines 65K 803K 90%
Books 7M 31M 45%
Revenue $81M $1.38B 103%
EBITDA $(17)M $50M --
Per Share $3.3 $17.19* 52%
*As of November 3, 2000
McLeodUSA logo. . . . speaks for itself
Slide 107
McLeodUSA Tier 3. . .
[In the center of the slide appears a graph. On the vertical axis are the
numbers "0", "20", "40". Above the vertical axis is the text "% Share". On the
horizontal axis are the numbers "0", "2", "4", "6", "8", "10". Below the
horizontal axis is the text "Year". There appears a green graph line starting at
0,0 and curving slightly upward ending at 40% share in year 10. There are the
following points marked on the graph (with the first number in each pair being
the % share and the second number being the year): an orange diamond at 0, .2; a
green triangle at 0, .4; a red diamond at 0, .6; a red triangle at 5, .4; a red
square at 10, .8; a yellow triangle at 15, 3; a green square at 14, 3.5; a red
circle at 16, 4; a green diamond at 20, 3.5; a green circle at 21, 3.4; a blue
diamond at 27, 2; a yellow square at 35, 6.5; and a yellow circle at 43; 6.8.
Above the graph is the text "10 Year".]
McLeodUSA logo. . . . meeting and exceeding
Slide 108
McLeodUSA Tier 2 . . .
[In the center of the slide appears a graph. On the vertical axis are the
numbers "0", "15", "30". Above the vertical axis is the text "% Share". On the
horizontal axis are the numbers "0", "2", "4", "6", "8", "10". Below the
horizontal axis is the text "Year". There appears a green graph line starting at
0,0 and curving slightly upward ending at 40% share in year 10. There are the
following points marked on the graph (with the first number in each pair being
the % share and the second number being the year): a red triangle at 0, .3; a
yellow triangle at 0, .5; a yellow diamond at 1,1; a red diamond at 5, 3; a red
circle at 5, 3.8. Above the graph is the text "10 Year".]
McLeodUSA logo. . . . meeting and exceeding
40
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Slide 109
McLeodUSA Tier 1 . . .
[In the center of the slide appears a graph. On the vertical axis are the
numbers "0", "10", "20". Above the vertical axis is the text "% Share". On the
horizontal axis are the numbers "0", "2", "4", "6", "8", "10". Below the
horizontal axis is the text "Year". There appears a green graph line starting
at 0,0 and curving slightly upward ending at 20% share in year 10. There are
the following points marked on the graph (with the first number in each pair
being the % share and the second number being the year): a yellow circle at 0,
.2; a yellow square at 0, .3; a green diamond at 0, .5; a red square at 1, .5; a
blue square at 1, 1.8; a yellow diamond at 2, 2.8; a red diamond at 2, 4.2; a
green triangle at 4, 1.8; a red triangle at 5, 1.2; a red circle at 8, 2; a
yellow triangle at 12, 3.7. Above the graph is the text "10 Year".]
McLeodUSA logo. . . . meeting and exceeding
Slide 110
Service Platforms... Average
Centrex*
--------
Revenues $61.78
CGS/SG&A $53.93
EBITDA $7.86
Cust. Acquisition Cost/CAPEX $350.00
Months to Recover 45
Months to Recover (DCF) 58
Iowa Centrex (DCF) 28
*Rates Pre Qwest Agreement Oct. 2000
McLeodUSA logo.
Average Average
Slide III Centrex* UNE*
Service Platforms... ------- -------
Revenues $61.78 $67.83
41
<PAGE>
CGS/SG&A $53.93 $51.85
EBITDA $7.86 $15.98
Cust. Acquisition Cost/CAPEX $350.00 $769.00
Months to Recover 45 48
Months to Recover (DCF) 58 62
Iowa Centrex (DCF) 28
Minneapolis UNE(DCF) 42
*Rates Pre Qwest Agreement Oct. 2000
McLeodUSA logo.
Slide 112
Service Platforms
Average Average Average
Centrex* UNE* UNE-M
-------- ------- -------
Revenues $61.78 $67.83 $67.83
CGS/SG&A $53.93 $51.85 $49.77
EBITDA $7.86 $15.98 $18.06
Cust. Acquisition Cost/CAPEX $350.00 $769.00 $350.00
Months to Recover 45 48 19
Months to Recover (DCF) 58 62 20
*Rates Pre Qwest Agreement Oct. 2000
McLeodUSA logo. . . . improving economics
Slide 113
Large McLeodUSA logo.
42
