Exhibit 99.1
Press Release issued January 26, 2000 ********************
LOGO of McLeodUSA appears here
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, PO Box 3177
Cedar Rapids, IA 52406-3177
Press and Investor Contact: Bryce E. Nemitz
bnemitz@mcleodusa.com
Phone: (319) 790-7800
FAX: (319) 790-7767
FOR IMMEDIATE RELEASE
---------------------
McLeodUSA Reports Record Results
for Fourth Quarter and 1999
For the year:
. Total revenues increase from $604 million to $909 million
. EBITDA exceeds $59 million, an increase of $39 million or 195 percent
. Total route miles of fiber surpasses 10,000; 2,900 added during year
. 35 percent of total lines now on-switch / on-net
. Sales headcount increases from 350 to 900
Cedar Rapids, Iowa -- January 26, 2000 -- McLeodUSA Incorporated (Nasdaq:
MCLD) today reported results for fourth quarter and fiscal year 1999. Revenues
were a record $908.8 million for the year ended December 31, 1999, compared to
$604.1 million for 1998, an increase of 50 percent. Competitive
telecommunications revenues, which includes local and long distance, and private
line and data, grew 72 percent for the year. EBITDA (earnings before interest,
taxes, depreciation and amortization) for the year was a positive $59.0 million,
compared with $20.0 million for 1998.
Commenting on 1999 results, Clark McLeod, chairman and CEO stated, "It was
a significant year for McLeodUSA customers, shareholders and employees." He
continued, "Our employee base grew to over 8,100 as a result of strong organic
growth and the successful integration of several strategic and sizable
acquisitions. In addition, we added 10 states to our market area creating a 21-
state target footprint for our local services and increasing our ten-year market
opportunity four-fold. We strengthened our Board of Directors significantly by
adding Peter Claudy, Roy Wilkens, Anne Bingaman, Ted
Forstmann and Erskine Bowles. In addition, the Forstmann Little investment of $1
billion allows us to concentrate less on financing and more on execution as we
look toward the new year."
Steve Gray, president and CEO of Local Services added, "Our operational
statistics highlight our progress for the year:
. local lines in service grew 71 percent from 398,000 to 679,000;
. fiber route miles increased 41 percent from 7,120 to 10,036;
. white and yellow page directory distribution grew 46 percent, printing
nearly 20 million books reaching 39 million people; and
. new lines sold during the final quarter of the year increased 141
percent over the same period one year ago."
Fourth Quarter Results
- ----------------------
The Company reported fourth quarter revenues of $263.9 million
compared to revenues of $165.5 million for the same quarter of 1998.
Competitive telecommunications revenues grew 94 percent over the prior year
fourth quarter total. EBITDA was a positive $24.0 million in fourth quarter,
compared to $15.1 million in third quarter 1999 and $10.1 million for fourth
quarter 1998.
Commenting on fourth quarter results, Gray stated, "Our fourth quarter
performance capped a year packed with both operational and strategic
accomplishments." He continued, "I am particularly pleased with the remarkable
increase in our on-switch/on-net traffic for CLEC business customers, up 29
percent for the quarter and more than 20x for the year. In addition, the impact
of our expanded sales force resulted in the sale of nearly 30 percent more local
lines in successive quarters."
Recent Announcements
- --------------------
On January 7, McLeodUSA announced a planned acquisition of Splitrock
Services Inc. (Nasdaq: SPLT) of Houston, Texas. Upon closing, McLeodUSA will
have an advanced fiber optic network spanning 26,000 miles, 27 voice switches,
679,000 local lines, and ATM switches at all 350 installed points-of-presence
across the country.
In the same announcement, McLeodUSA announced the creation of two
operational units: Data Services and Local Services. Roy A. Wilkens has joined
the Company as president and CEO of the newly created Data Services operation,
which will function under the Splitrock name and address the national data
market. Steve Gray will lead the Local Services operation as president and CEO,
focusing on the Company's 21-state CLEC region. Following regulatory and
shareholder approval, the merger is expected to close within the next few
months.
Concluding, Mr. McLeod stated, "Our 1999 accomplishments, as well as our
announced Splitrock addition, have heightened our expectations for 2000. We
will focus on our 21-state geography for integrated communications services,
opening new markets and deepening our penetration in existing markets. And,
once the Splitrock deal is done, we will enter the national stage as a data
connections company in 50 states, able to reach 90 percent of the U.S.
population with advanced Internet access services."
McLeodUSA, founded in June of 1991, is a provider of integrated
telecommunications services to business and residential customers. The
Company's telecommunications customers are located in 12 Midwest and Rocky
Mountain states, with 9 additional expansion states to be added. McLeodUSA is a
facilities-based telecommunications provider with 27 switches, 679,000 local
lines, 8,100 employees, and over 10,000 route miles of fiber optic network. In
the next 12 months, the Company's publishing subsidiaries plan to distribute 24
million copies of competitive directories in 22 states, expected to reach nearly
41 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,"
"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 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.
# # #
McLeodUSA Incorporated and Subsidiaries
---------------------------------------
Consolidated Statement of Operations
(In thousands except for per share data)
(UNAUDITED)
Three Months Ended Twelve Months Ended
-------------------------------- ---------------------------------
December 31 December 31
-------------------------------- ---------------------------------
1999 1998 1999 1998
------------- ------------- -------------- -------------
Revenues:
Telecommunications:
Local and long distance $144,551 $ 74,522 $ 456,030 $ 271,217
Local exchange services 20,596 18,441 78,380 67,785
Private line and data 22,244 11,527 80,089 40,110
Network maintenance and equipment 10,383 8,836 36,263 32,885
Other telecommunications 8,225 6,919 30,106 27,794
------------ ------------ ------------- ------------
Total telecommunications revenue 205,999 120,245 680,868 439,791
Directory 53,015 40,785 209,186 144,876
Telemarketing 4,903 4,474 18,738 19,479
------------ ------------ ------------- ------------
Total revenues 263,917 165,504 908,792 604,146
Operating expenses:
Cost of service 129,647 84,013 457,085 323,208
Selling, general and administrative 110,302 71,352 392,687 260,931
Depreciation and amortization 60,112 25,444 190,695 89,107
Other ---- ---- ---- 5,575
------------ ------------ ------------- ------------
Total operating expenses 300,061 180,809 1,040,467 678,821
------------ ------------ ------------- ------------
Operating loss (36,144) (15,305) (131,675) (74,675)
Non-operating income (expense):
Interest income 19,471 6,926 42,624 26,000
Interest (expense) (34,389) (23,641) (136,868) (78,234)
Other (1,918) 208 5,637 1,997
------------ ------------ ------------- ------------
Total non-operating income (expense) (16,836) (16,507) (88,607) (50,237)
------------ ------------ ------------- ------------
Loss before income taxes (52,980) (31,812) (220,282) (124,912)
Income taxes ---- ---- ---- ----
------------ ------------ ------------- ------------
Net loss (52,980) (31,812) (220,282) (124,912)
Preferred stock dividend (13,602) ---- (17,727) ----
------------ ------------ ------------- ------------
Net loss applicable to common shares $(66,582) $(31,812) $ (238,009) $(124,912)
============ ============ ============= ============
Net loss per common share (/1/) $(0.43) $(0.25) $(1.61) $(0.99)
============ ============ ============= ============
Weighted average common shares outstanding 155,805 126,778 147,710 125,614
(/1/) ============ ============ ============= ============
EBITDA $ 23,968 $ 10,139 $ 59,020 $ 20,007
============ ============ ============= ============
(/1/) As adjusted for the two-for-one stock split announced June 30, 1999
effected in the form of a dividend.
McLeodUSA Incorporated and Subsidiaries
Consolidated Statement of Operations
(In thousands except for per share data)
(UNAUDITED)
Three Months Ended
------------------
3/31/99 6/30/99 9/30/99 12/31/99
-------- -------- -------- ---------
Revenues:
Telecommunications:
Local and long distance $ 81,072 $105,527 $124,880 $ 144,551
Local exchange services 17,632 19,787 20,365 20,596
Private line and data 15,321 20,625 21,899 22,244
Network maintenance and equipment 8,120 8,355 9,405 10,383
Other telecommunications 5,814 8,346 7,721 8,225
---------- ---------- ---------- -----------
Total telecommunications revenue 127,959 162,640 184,270 205,999
Directory 49,424 55,203 51,544 53,015
Telemarketing 3,726 4,819 5,290 4,903
---------- ---------- ---------- -----------
Total revenues 181,109 222,662 241,104 263,917
Operating expenses:
Cost of service 92,459 113,048 121,931 129,647
Selling, general and administrative 79,811 98,528 104,046 110,302
Depreciation and amortization 35,110 43,598 51,875 60,112
Other --- --- --- ---
---------- ---------- ---------- -----------
Total operating expenses 207,380 255,174 277,852 300,061
---------- ---------- ---------- -----------
Operating loss (26,271) (32,512) (36,748) (36,144)
Non-operating income (expense):
Interest income 8,260 6,754 8,139 19,471
Interest (expense) (29,464) (36,216) (36,799) (34,389)
Other (1) 563 6,993 (1,918)
---------- ---------- ---------- -----------
Total non-operating income (expense) (21,205) (28,899) (21,667) (16,836)
---------- ---------- ---------- -----------
Loss before income taxes (47,476) (61,411) (58,415) (52,980)
Income taxes --- --- --- ---
---------- ---------- ---------- -----------
Net loss (47,476) (61,411) (58,415) (52,980)
Preferred stock dividend --- --- (4,125) (13,602)
---------- ---------- ---------- -----------
Net loss applicable to common shares $(47,476) $(61,411) $(62,540) $ (66,582)
========== ========== ========== ===========
Net loss per common share /(1)/ $ (0.36) $ (0.41) $ (0.41) $ (0.43)
========== ========== ========== ===========
Weighted average common shares outstanding /(1)/ 132,242 149,802 152,677 155,805
========== ========== ========== ===========
EBITDA $ 8,839 $ 11,086 $ 15,127 $ 23,968
========== ========== ========== ===========
/(1)/ As adjusted for the two-for-one stock split announced June 30, 1999
effected in the form of dividend.
McLeodUSA Selected Statistical Data:
4Q99 vs. 4Q98 4Q99 vs. 3Q99
12/31/99 12/31/98 % Change 9/30/99 % Change
-------- -------- -------- ------- --------
Sales cities 110 68 62% 110 0%
Central offices leased 393 321 22% 366 7%
Collocations 158 40 295% 143 10%
Switches owned
CO / LD 27 9 200% 27 0%
ATM / Frame Relay 13 --- --- 13 0%
Cities served 592 269 120% 538 10%
Route miles 10,036 7,120 41% 9,412 7%
Total
Local lines in service 678,900 397,600 71% 616,400 10%
Business 472,000 252,700 87% 420,800 12%
On-switch / net 134,400 30,100 347% 110,700 21%
Residential 206,900 144,900 43% 195,600 6%
On-switch / net 103,800 69,500 49% 99,600 4%
Local customers 279,600 186,200 50% 260,500 7%
Business 88,200 49,600 78% 78,900 12%
Residential 191,400 136,600 40% 181,600 5%
Competitive
Local lines in service 579,000 306,200 89% 516,200 12%
Business 442,700 227,100 95% 391,400 13%
On-switch / net 105,100 4,500 2,236% 81,300 29%
Residential 136,300 79,100 72% 124,800 9%
On-switch / net 33,200 3,700 797% 28,800 15%
Local line customers 202,800 114,600 77% 183,300 11%
Business 79,700 42,300 88% 70,300 13%
Residential 123,100 72,300 70% 113,000 9%
Local lines per business customer 5.6 5.4 5.6
Local lines sold during quarter 104,300 43,300 141% 80,900 29%
Business 84,600 34,700 144% 59,000 43%
Residential 19,700 8,600 129% 21,900 (10)%
New local lines in service during quarter 62,800 31,100 102% 60,600 4%
Business 51,300 29,400 74% 50,400 2%
On-switch / net 23,800 --- --- 21,300 12%
Residential 11,500 1,700 576% 10,200 12%
On-switch / net 4,400 500 780% 2,500 76%
ILEC
Local lines in service 99,900 91,400 9% 100,200 0%
Business 29,300 25,600 14% 29,400 0%
Residential 70,600 65,800 7% 70,800 0%
Local line customers 76,800 71,600 7% 77,200 (1)%
Business 8,500 7,300 16% 8,600 (1)%
Residential 68,300 64,300 6% 68,600 0%