EXHIBIT 99.1
[MCLEODUSA LOGO APPEARS HERE]
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MCLEODUSA REPORTS CONTINUED STRONG RESULTS
Lines Sold Increase 373%; Lines in Service Increase 117%
Cedar Rapids, IA, July 30, 1997--McLeodUSA Incorporated (NASDAQ/NMS:MCLD), a
provider of integrated telecommunications services, today reported record second
quarter results for 1997. Revenues were $46.5 million for the quarter ended
June 30, 1997, an increase of 234 percent compared to revenues of $13.9 million
for the second quarter of 1996. Net loss for the quarter was $16.5 million or a
loss of $0.31 per share, compared to net loss of $4.5 million or a loss of $0.11
per share for the second quarter of 1996. EBITDA loss for the second quarter was
$9.4 million, compared with EBITDA loss of $3.2 million a year ago.
Revenues increased 30 percent over the $35.7 million total posted in the first
quarter of the year. Net loss increased 24 percent from the most recent quarter
loss of $13.4 million, however EBITDA was the same as the prior quarter at $9.4
million.
Commenting on the quarterly results, Steve Gray, president and chief operating
officer explains, "Our financial performance continues to improve quarter by
quarter. Our revenues more than tripled from the same quarter a year ago. Our
telecommunications business contributed $24.2 million, $20.3 million came from
advertising sales in telephone directories, and $2.0 million from telemarketing
sales. The cyclical variations of the publishing business resulted in a strong
second quarter contribution as compared to the most recent quarter of $14.2
million."
Gray continued, "I am very pleased with our continued strong telecommunications
sales performance. We sold over 37,000 new local lines in the second quarter, up
65 percent from the 22,000 lines sold last quarter. That number is evenly split
between business and residential, showing strength in both markets. One year
ago, we sold 7,900 lines in the second quarter, representing a year-over-year
growth rate of 373 percent. Additionally, we added 26,000 net new lines
bringing the total local lines in service to more than 103,000, a 117 percent
increase over this time a year ago, and a 34 percent increase over last quarter.
Our sales performance with our Primeline(R) product for the home market has been
stellar. Last quarter we had 9,455 Primeline customers; we now have 23,617, an
increase of 150 percent in just three months."
McLeodUSA now provides integrated services using 283 U S West and Ameritech
central offices serving 164 cities. The Company leased 56 additional central
office switches in second quarter. The number of central offices increased 277
percent in the last year and cities served increased 204 percent. McLeodUSA now
operates sales offices in 53 cities, up 66 percent from one year ago.
"The key strategic event of our second quarter was the announcement of our
planned merger with Consolidated Communications Inc. (CCI) of Mattoon,
Illinois," stated Clark McLeod, chairman and CEO. "The combined management team
is highly energized about being the first Super Regional CLEC, creating a
14-state facilities-oriented telecommunications provider with 6 switches, and
more than 206,500 local lines, 4,400 employees, 3,900 route miles of fiber
optics network, and publishing 12 million competitive phone directories a year."
McLeod continued, "Since our announcement on June 16, we have completed our due
diligence review, made all regulatory filings and hope to receive regulatory
approval within the next few months. In addition, early termination of the
Hart-Scott-Rodino waiting period for the merger has been granted by the Federal
Trade Commission and the Department of Justice. Upon closing of the transaction,
I am confident we will be in a position to begin our combined operations
aggressively."
On July 15, 1997, McLeodUSA announced the completion of a $225 million private
debt offering of ten-year, 9.25 percent notes due July 15, 2007. The proceeds
will be used for acquisitions, joint ventures and strategic alliances;
accelerated sales and marketing activities; and development and construction of
infrastructure.
The McLeodUSA Publishing Company serves 81 markets in 17 states. Of the 7.7
million copies now in consumers' hands, nearly half carry the McLeodUSA name
and brand identity. Gray: "We continue to see markedly better results in the
markets where our name appears on the book, underscoring the synergistic value
of the directory acquisition made a year ago."
On the subject of regulatory issues during second quarter, Gray commented, "In
two of our expansion states, Minnesota and Colorado, where we believe U S West
had attempted to establish roadblocks against competition, both state
commissions rejected the actions of U S West. Also, we don't expect the recent
8th Circuit Court decision assigning pricing jurisdiction to the states to have
a significant impact on McLeodUSA. It is much more important that the RBOCs live
up to their performance obligations than whether state or federal agencies have
pricing jurisdiction."
Clark McLeod summarized: "We achieved many significant milestones since our last
quarterly release. We exceeded 100,000 local lines in service; grew our customer
count by 72 percent during the quarter and 253 percent for the year;
attained the 3,000 mile mark in network constructed; announced a definitive
agreement to merge with CCI later this year; and completed $225 million in
additional financing; all while moving one thousand of our telecommunications
employees to our new headquarters in the McLeodUSA Technology Park. By all
measures, second quarter was a hallmark quarter for the Company."
McLeodUSA, founded in June of 1991, is a provider of integrated
telecommunications services to businesses and residential customers. The
Company's telecommunications customers are located primarily in Iowa, Illinois,
Minnesota, Wisconsin and the Dakotas. In the next 12 months, McLeodUSA
Publishing will distribute over 10 million copies of 109 directories in 19
states, reaching a population of 17 million.
The statements contained in this release are forward-looking statements that
involve risks and uncertainties, including, but not limited to revision of
expansion plans, 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
Company's business, changes in the competitive climate in which the Company
operates and the emergence of future opportunities, all of which could cause
actual results and experiences of McLeodUSA Incorporated to differ materially
from anticipated results and expectations expressed in the forward-looking
statements contained herein. These and other applicable risks are summarized
under the caption "Business-Risk Factors" and elsewhere in the Company's Annual
Report on Form 10-K for its fiscal year ended December 31, 1996, which is filed
with the Securities and Exchange Commission.
PrimeLine(R) is a registered trademark of McLeodUSA Incorporated.
MCLEODUSA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except for per share data)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
-------- -------- -------- --------
Revenue $ 46,523 $ 13,918 $ 82,270 $ 26,406
Operating expenses:
Cost of service 27,563 9,474 48,763 18,724
Selling, general and administrtive 28,398 7,631 52,383 13,976
Depreciation and amortization 5,231 1,604 9,353 2,573
Other 999 - 2,607 -
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TOTAL OPERATING EXPENSES 62,191 18,709 113,106 35,273
======== ======== ======== ========
OPERATING LOSS (15,668) (4,791) (30,836) (8,867)
Non-operating income (Expense):
Inteest income 6,199 504 10,452 505
Interest (expense) (7,039) (256) (9,486) (521)
Other 12 _ 19 _
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TOTAL NON-OPERATING INCOME (EXPENSE) (828) 248 985 (16)
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LOSS BEFORE INCOME TAXES (16,496) (4,543) (29,851) (8,883)
Income Taxes - - - -
NET LOSS $(16,496) $ (4,543) $(29,851) $ (8,883)
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Loss per common and common equivalent share $ (0.31) $ (0.11) $ (0.57) $ (0.23)
-------- -------- -------- --------
Weighted average common and common equivalent shares
outstanding 52,583 39,968 52,456 38,512
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EBITDA $ (9,438) $ (3,187) $(18,876) $ (6,294)
MCLEODUSA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except for per share data)
(UNAUDITED)
THREE MONTHS ENDED
9/30/96 12/31/96 3/31/97 6/30/97
-------- -------- -------- --------
Revenue $ 19,091 $ 35,826 $ 35,747 $ 46,523
Operating expenses:
Cost of service 12,969 20,931 21,200 27,563
Selling, general and administrative 11,650 20,418 23,985 28,398
Depreciation and amortization 2,161 3,751 4,122 5,231
Other - 2,380 1,608 999
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 26,780 47,480 50,915 62,191
-------- -------- -------- --------
OPERATING LOSS (7,689) (11,654) (15,168) (15,668)
Non-operating income (expense):
Interest income 2,899 2,630 4,253 6,199
Interest (expense) (23) (122) (2,447) (7,039)
Other 278 218 7 12
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TOTAL NON-OPERATING INCOME (EXPENSE) 3,154 2,726 1,813 (828)
LOSS BEFORE INCOME TAXES (4,535) (8,928) (13,355) (16,496)
Income Taxes - - - -
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NET LOSS $ (4,535) $ (8,928) $(13,355) $(16,496)
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Loss per common and common equivalent share $ (0.10) $ (0.18) $ (0.26) $ (0.31)
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Weighted average common and common equivalent
shares outstanding 46,233 48,707 52,327 52,583
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EBITDA $ (5,528) $ (5,523) $ (9,438) $ (9,438)
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MCLEODUSA SELECTED STATISTICAL DATA:
2Q97 vs. 2Q97 vs.
2Q96 1Q97
6/30/97 6/30/96 % Change 3/31/97 % Change
-------- ------- -------- ------- --------
Sales cities 53 32 66% 45 18%
Central offices leased 283 75 277% 227 25%
Cities served 164 54 204% 138 19%
Route miles 3,021 832 263% 2,576 17%
Employees 2,882 603 378% 2,362 22%
Local lines in service 103,332 47,699 117% 77,228 34%
Business 77,842 47,530 64% 67,388 16%
Residential 25,490 169 14,983% 9,840 159%
Local line customers 38,850 10,992 253% 22,610 72%
Business 15,233 10,069 51% 13,155 16%
Residential 23,617 923 2,459% 9,455 150%
Lines per business customer 5.1 4.7 9% 5.1 --
Lines sold during quarter 37,265 7,871 373% 22,642 65%
Business 19,306 7,443 159% 10,666 81%
Residential 17,959 428 4,096% 11,976 50%
CONSOLIDATED COMMUNICATIONS INC.
OPERATIONS SUMMARY
(In thousands)
UNAUDITED(1)
Three Six
Annual Months Ended Months Ended
1996 6/30/97 6/30/97
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Revenue $ 250,974 $ 64,163 $ 127,564
Operating Expenses:
Cost of service 123,952 32,294 64,575
Selling, general and administrative 79,714 20,946 41,052
Depreciation and amortization 22,517 6,135 12,209
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Total operating expenses 226,183 59,375 117,836
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Operating Income 24,791 4,788 9,728
Nonoperating income (expense):
Interest income 910 496 1,234
Interest (expense) (4,689) (1,472) (2,835)
Gain on sale of securities 2,798 320 668
Other income 142 23 44
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Total nonoperating income (expense) (839) (633) (889)
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Income before income taxes 23,952 4,155 8,839
Income Taxes 8,862 1,260 3,095
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Net Income $ 15,090 $ 2,895 $ 5,744
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EBITDA/(2)/ $ 47,308 $ 10,923 $ 21,937
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/(1)/ The above operations summary represents financial information derived from
the internal records of Consolidated Communications, Inc. ("CCI") for the twelve
months ended December 31, 1996 and the three and six month periods ended June
30, 1997. These results are not necessarily indicative of the operating results
that would have been achieved by CCI had the merger of CCI and McLeodUSA been in
effect on the dates indicated, nor do these results reflect any effect of
purchase accounting entries that will be made as a result of the merger, nor are
these results necessarily indicative of future operating results. The above
classifications are also subject to change as the future CCI results are
consolidated with McLeodUSA results.
/(2)/ EBITDA repesents operating income before depreciation and amortization.
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