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EXHIBIT 99.1
[McLeodUSA logo] [MCLD: A Nasdaq-100 Company logo]
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, PO Box 3177
Cedar Rapids, IA 52406-3177
Investor Contact: Bryce E. Nemitz
Press Contact: Bruce A. Tiemann
[email protected]
Phone: (319) 790-7800
FAX: (319) 790-7767
FOR IMMEDIATE RELEASE
McLeodUSA Reports Solid Results for Third Quarter 2000
(.) EBITDA significantly exceeds expectations
(.) Revenues surpass market expectations
(.) Retail data services introduced
(.) CapRock Communications acquisition announced
(.) 117,300 lines sold; 80,100 new lines in service
Cedar Rapids, Iowa - October 25, 2000 - McLeodUSA Incorporated (Nasdaq: MCLD),
one of the nation's top telecommunications companies, today reported results for
the quarter ended September 30, 2000. Total revenues were a record $366.6
million for the quarter, compared to $241.1 million for the same period one year
ago, an increase of 52 percent. EBITDA (earnings before interest, taxes,
depreciation and amortization) for the quarter was $15.1 million, up from $1.1
million last quarter and approximately 90 percent above consensus market
expectations. Net loss per common share for the quarter was $0.24 before the
extraordinary charge for early retirement of debt acquired in the Splitrock
merger.
McLeodUSA President and COO Steve Gray stated, "Operationally, we posted another
solid quarter, exceeding market expectations for both revenue and EBITDA. Most
notably, our revenue total in sequential quarters rose 13 percent for
telecommunications revenue and more than 10 percent for total revenues. We
generated sales of more than 117,000 new lines and installed in excess of 80,000
lines. Our team's ability to optimize synergies as we integrate our voice and
data networks, along with continuing to improve our competitive margins,
contributed very positively to our EBITDA results."
"A particular highlight of our quarter," said Gray, "was the announcement of our
intention to acquire CapRock Communications, a Dallas-based CLEC with a six-
state target market and
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adding four new states to the McLeodUSA marketplace. When this transaction
closes, we expect to have more than 23,000 route miles of fiber and pass the one
million access line milestone. The CapRock team and service area will become the
fourth geographic region in the McLeodUSA 25-state footprint. We look forward to
closing this deal and realizing the synergistic value of our combined
companies."
During the quarter, McLeodUSA Publishing Company acquired three Minnesota
directories serving the Twin Cities area from Smart Pages of Lansing, Michigan.
These three directories will reach a population of approximately 2.5 million
when they publish mid-year 2001, increasing the total competitive directories
published over the next 12 months to 30 million. By this time next year,
McLeodUSA directories will reach 51 million people in 26 states with five of
those states covered ubiquitously by McLeodUSA directories.
McLeodUSA introduced a family of retail data products during the quarter. As of
quarter end, the Company had approximately 30,000 Internet subscribers, 3,000
broadband customers and 140 DSLAMs installed.
Clark McLeod, Chairman and CEO of McLeodUSA, summarized, "Our results once again
demonstrate that a company with a great strategy, executed by an industry-
leading management team, and backed by a fully funded business plan can thrive
in this sector today. The opportunistic acquisition of CapRock Communications
this quarter is another strong example of the viability of the McLeodUSA plan.
The senior management team is looking forward to our Investor / Analyst
Conference and live Webcast on November 8 where we will unveil our next
generation network, our successful and replicable competitive provider business
model, and our overall vision for 2001 and beyond."
Quarterly Conference Call
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An audio conference call will be held at 11 a.m. Eastern, Thursday, October 26
to discuss quarterly results as well as other important Company matters. The
U.S. number for the call is 877-883-0253; international callers should phone
712-271-0059. The passcode for the live call is "McLeodUSA." Replay of the
call will be available at 800-925-1644 (domestic) and 402-530-8062
(international).
The live conference call will also be Webcast at:
www.mcleodusa.com/aboutmcleodusa/investorrelations/webcasts.php3
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and the audio replay will be available at the same location beginning at 1 p.m.
Eastern on October 26.
Investor / Analyst Conference and Webcast
-----------------------------------------
McLeodUSA will host an Investor /Analyst Conference in New York City on
Wednesday, November 8. The presentation will be Webcast live. The event will
begin at 9:45 a.m. Eastern and conclude at 3 p.m. The entire senior management
team of McLeodUSA will be present. Additional details about the Webcast will be
issued by November 1 in a press release.
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About McLeodUSA
---------------
McLeodUSA provides selected telecommunications services to customers nationwide.
Integrated communications including local services are currently available in
several Midwest and Rocky Mountain states; long distance and advanced data
services are available in all 50 states. McLeodUSA is a facilities-based
telecommunications provider with 375 ATM switches, 37 voice switches, nearly
905,000 local lines, and 9,500 employees. The Company recently expanded its
marketplace for advanced data and Internet services to all 50 states through the
acquisition of Splitrock Services, Inc. The network acquired in the Splitrock
transaction is capable of transmitting integrated next-generation data, video
and voice services, reaching 800 cities and 90 percent of the U.S. population.
In the next 12 months, McLeodUSA will distribute 30 million directories in 26
states, serving a population of 51 million. McLeodUSA Incorporated is a Nasdaq-
100 company traded as MCLD. The Company's Web site is available at
www.mcleodusa.com.
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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,"
"projects," "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 events or 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, 1999, which is filed with the Securities and
Exchange Commission.
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McLeodUSA Incorporated and Subsidiaries
Consolidated Statement of Operations
(In thousands, except for per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 30 September 30
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Telecommunications $ 278,168 $ 163,554 $ 721,636 $ 416,057
Local exchange services 21,646 20,365 63,762 57,784
Directory 60,766 51,895 185,330 157,199
Other 6,065 5,290 15,999 13,835
----------- ----------- ----------- -----------
Total revenues 366,645 241,104 986,727 644,875
Operating expenses:
Cost of service 204,186 121,931 548,612 327,438
Selling, general and administrative 147,342 104,046 403,905 282,385
Depreciation and amortization 113,641 51,875 276,834 130,583
----------- ----------- ----------- -----------
Total operating expenses 465,169 277,852 1,229,351 740,406
----------- ----------- ----------- -----------
Operating loss (98,524) (36,748) (242,624) (95,531)
Non-operating income (expense):
Interest income 12,197 8,139 43,060 23,153
Interest (expense) (40,657) (36,799) (113,597) (102,479)
Other (744) 6,993 1,227 7,555
Total non-operating income (expense) (29,204) (21,667) (69,310) (71,771)
----------- ----------- ----------- -----------
Loss before income taxes and extraordinary
charge (127,728) (58,415) (311,934) (167,302)
Income taxes ---- ---- ---- ----
----------- ----------- ----------- -----------
Net loss before extraordinary charge (127,728) (58,415) (311,934) (167,302)
Extraordinary charge for early retirement of debt (24,446) ---- (24,446) ----
----------- ----------- ----------- -----------
Net loss (152,174) (58,415) (336,380) (167,302)
Preferred stock dividend (13,602) (4,125) (40,806) (4,125)
Net loss applicable to common shares $ (165,776) $ (62,540) $ (377,186) $ (171,427)
=========== =========== =========== ===========
Net loss per common share:
Loss before extraordinary charge $ (0.24) $ (0.14) $ (0.65) $ (0.39)
Extraordinary charge $ (0.04) ---- $ (0.04) ----
----------- ----------- ----------- -----------
Net loss per common share /(1)/ $ (0.28) $ (0.14) $ (0.69) $ (0.39)
=========== =========== =========== ===========
Weighted average common shares outstanding /(1)/ 583,326 458,031 547,313 434,946
=========== =========== =========== ===========
EBITDA $ 15,117 $ 15,127 $ 34,210 $ 35,052
=========== =========== =========== ===========
</TABLE>
/(1)/ As adjusted for the April 24, 2000 three-for-one stock split effected in
the form of a stock dividend.
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McLeodUSA Incorporated and Subsidiaries
Consolidated Statement of Operations
(In thousands, except for per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------
12/31/99 3/31/00 6/30/00 9/30/00
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Telecommunications $ 185,403 $ 197,311 $ 246,157 $ 278,168
Local exchange services 20,596 21,609 20,507 21,646
Directory 53,015 64,802 59,762 60,766
Other 4,903 4,577 5,357 6,065
--------- --------- --------- ---------
Total revenues 263,917 288,299 331,783 366,645
Operating expenses:
Cost of service 129,647 148,059 196,367 204,186
Selling, general and administrative 110,302 122,218 134,345 147,342
Depreciation and amortization 60,112 60,632 102,561 113,641
--------- --------- --------- ---------
Total operating expenses 300,061 330,909 433,273 465,169
--------- --------- --------- ---------
Operating loss (36,144) (42,610) (101,490) (98,524)
Non-operating income (expense):
Interest income 19,471 15,321 15,542 12,197
Interest (expense) (34,389) (30,970) (41,970) (40,657)
Other (1,918) (199) 2,170 (744)
--------- --------- --------- ---------
Total non-operating income (expense) (16,836) (15,848) (24,258) (29,204)
--------- --------- --------- ---------
Loss before income taxes and extraordinary
charge (52,980) (58,458) (125,748) (127,728)
Income taxes ---- ---- ---- ----
--------- --------- --------- ---------
Net loss before extraordinary charge (52,980) (58,458) (125,748) (127,728)
Extraordinary charge for early retirement of debt ---- ---- ----- (24,446)
--------- --------- --------- ---------
Net loss (52,980) (58,458) (125,748) (152,174)
Preferred stock dividend (13,602) (13,602) (13,602) (13,602)
--------- --------- --------- ---------
Net loss applicable to common shares $ (66,582) $ (72,060) $(139,350) $(165,776)
========= ========= ========= =========
Net loss per common share:
Loss before extraordinary charge $ (0.14) $ (0.15) $ (0.24) $ (0.24)
Extraordinary charge ---- ---- ---- $ (0.04)
--------- --------- --------- ---------
Net loss per common share /(1)/ $ (0.14) $ (0.15) $ (0.24) $ (0.28)
========= ========= ========= =========
Weighted average common share outstanding /(1)/ 467,415 479,723 578,572 583,326
========= ========= ========= =========
EBITDA $ 23,968 $ 18,022 $ 1,071 $ 15,117
========= ========= ========= =========
</TABLE>
/(1)/ As adjusted for the April 24, 2000 three-for-one stock split effected in
the form of a stock dividend.
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McLeodUSA Selected Statistical Data:
9/30/00 6/30/00 9/30/99
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Sales cities 124 115 110
Central offices leased 656 530 366
Collocations 242 230 143
Switches owned
CO / LD 37 37 27
ATM / Frame Relay 375 361 13
Route miles /(1)/ 16,944 12,827 9,412
Total
Lines in service 904,600 823,800 616,400
On-switch / net 360,000 320,800 210,300
Customers 347,100 324,000 260,500
Competitive
Lines in service 803,000 722,900 516,200
On-switch / net 258,400 219,900 110,100
Customers 269,100 246,600 183,300
Lines sold during quarter 117,300 110,500 80,900
New lines installed during quarter 80,100 73,400 60,600
On-switch / net 38,500 43,100 23,800
ILEC
Lines in service 101,600 100,900 100,200
Customers 78,000 77,400 77,200
/(1)/ Route miles total for 9/30/00 includes 5,798 Level 3 route miles accepted
to date.
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Frequently Asked Questions:
Financial (Note: Numbers are preliminary and unaudited; in millions)
---------
What are the third quarter numbers for:
(.) Cash and Available Cash $1,305
(.) PP&E
(.) Gross $2,506
(.) Net $2,162
(.) Long Term Debt $2,371
(.) CAPEX $ 317
(.) Outstanding shares 585
(.) Fully diluted shares 836
Of the EBITDA total for the quarter, how much was attributable
to competitive operations? Approximately $9.7 million of the
$15.1 million total
Network
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What are the third quarter numbers for:
(.) Intracity route miles 28% of total route miles
(.) Intercity route miles 72% of total route miles
(.) Average fibers per mile 50
(.) Buildings connected 1,254
(.) DSLAMs installed to date 140
Marketshare
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What percentage of competitive local lines installed during third
quarter were in the core states of IA and IL?
Current Quarter Cumulative
(.) IA and IL 26% 39%
(.) Outside IA and IL 74% 61%
What is the McLeodUSA marketshare penetration of local business
lines in markets served?
(.) Above 40% penetration IA
(.) 30 - 39% penetration IL, ND, SD, WY
(.) 20 - 29% penetration MN, WI
(.) 10 - 19% penetration CO, MI, MO
