EXHIBIT 99.3
[LOGO OF MCLEODUSA APPEARS HERE]
________________________________________________________________________________
MCLEODUSA: SUPER REGIONAL RESULTS
SIGNIFICANT MILESTONES IN THIRD QUARTER
Cedar Rapids, IA - October 29, 1997 -- McLeodUSA Incorporated (NASDAQ/NMS:MCLD),
the first Super Regional Competitive Local Exchange Carrier, today reported
record third quarter results for 1997. Revenues for the integrated
telecommunications services provider were $49.3 million for the quarter ended
September 30, 1997, an increase of 158 percent compared to revenues of $19.1
million for the third quarter of 1996. Net loss for the quarter was $23.7
million or a loss of $0.45 per share, compared to net loss of $4.5 million or a
loss of $0.10 per share for the third quarter of 1996. EBITDA loss for the third
quarter was $13.6 million, compared with EBITDA loss of $5.5 million a year ago.
Telecommunications revenues contributed $36 million to the quarter, up 49
percent from $24.2 million last quarter. The anticipated cyclical variations of
the publishing business resulted in a third quarter contribution of $11.1
million from advertising sales in directories, 45 percent lower than second
quarter, traditionally its strongest quarter of the year. As a result, total
revenues increased 6 percent over the $46.5 million total posted in the second
quarter of the year. EBITDA loss was $13.6 million, up from $9.4 in the prior
quarter.
Commenting on the quarter, Clark McLeod, chairman and CEO stated, "The most
significant event of the quarter was the completion of our merger with
Consolidated Communications Inc. (CCI) in just over three months. We now have
nearly 4,700 employees focused on the continued execution of our strategy. Our
accomplishments on the three key elements of that core strategy were
significant:
. First, our progress in building market share was outstanding. In fact, we
installed more lines during the quarter than in all four quarters of 1996.
. Second, we built 701 and acquired 895 route miles of network this quarter.
The miles added equals 75 percent of the total miles constructed in 1996.
. Third, two weeks after our merger was completed, we successfully linked
the CCI and McLeodUSA networks, providing the opportunity to migrate
customers to our network during 1998 for long distance service. In
addition, this positions us for migration of local service to our network
and switches in 1999 and 2000."
Reporting key operational accomplishments, competitive local line sales totaled
48,413 for the quarter, up 472 percent over the same period last year. McLeodUSA
now has 244,005 local lines in service which includes the lines of the former
Consolidated Communications Inc. The combined company provides service from 350
central offices, serving 212 cities; both numbers are up 300 percent from the
third quarter last year. Of the 35,287 total local lines upgraded during the
quarter, 16,283 were business lines of which 40 percent were in the expansion
states of Wisconsin, Minnesota, North Dakota and South Dakota.
Steve Gray, president and COO: "We continue our outstanding performance in
adding local lines, central offices and cities served. McLeodUSA added sales
offices in North Dakota, South Dakota, Wisconsin and Wyoming during the quarter,
and we began selling local service in Colorado where we have five offices to
date. We believe the accumulation of market share largely represents an
investment that will generate income in the future. Completing our merger on
September 24 gave us one week of combined financial results to add to our third
quarter numbers. Our anticipated peak EBITDA loss occurred this quarter as
expected." Commenting on network progress, Gray stated, "With the addition of
our acquired miles, we have now exceeded the 4,000 mile mark for the McLeodUSA
network and have our sights set on 5,000 by year end."
In the twelve months ended September 30, the combined publishing subsidiaries
published 12.4 million competitive directories in 139 markets in 19 states,
serving a population of 21.6 million. Gray: "Our telephone directories continue
to be an instrumental tool for strengthening our brand and extending our brand
reach. At quarter end, 76 percent of the directories from our original
publishing subsidiary carry the McLeodUSA name, and 86 percent of those contain
a catalog of our services. We have already begun the process of rebranding the
50 CCI competitive directories, beginning with the Decatur, Illinois book
distributed only days after the merger was completed. We continue to see
markedly better results in the markets where our name appears on the book,
underscoring the synergistic value of our directory business and further fueled
by the competitive books acquired in the CCI merger."
Summarizing the quarter, McLeod stated: "We reached significant milestones this
quarter: our merger completion, local lines in service, and success in expanding
to new markets. These results indicate that our strategy remains intact and on
target."
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 North and South Dakota. In September 1997 McLeodUSA
completed a merger with Consolidated Communications Inc. of Mattoon, IL,
creating the first Super Regional Competitive Local Exchange Carrier. The
combined firm is a 14-state facilities-oriented telecommunications provider with
6 switches, and more than 244,000 local lines, 4,650 employees, and 4,600 route
miles of fiber optics network. In the next 12 months, the Company's publishing
subsidiaries will distribute over 14.4 million copies of competitive directories
in 21 states, reaching a population of 25 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.
MCLEODUSA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except for per share data)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Telecommunications:
Local and long distance $ 26,783 $10,991 $ 60,182 $ 28,934
Private line and data 2,848 2,604 7,517 8,115
Network maintenance and equipment 6,396 1,475 11,815 4,427
-------- ------- -------- --------
Total telecommunications revenue 36,027 15,070 79,514 41,476
Directory 11,073 --- 45,560 ---
Telemarketing 2,225 4,021 6,521 4,021
-------- ------- -------- --------
TOTAL REVENUES 49,325 19,091 131,595 45,497
Operating expenses:
Cost of service: 31,917 12,969 80,680 31,693
Selling, general and administrative 31,045 11,650 83,428 25,626
Depreciation and amortization 6,355 2,161 15,708 4,734
Other 82 --- 2,689 ---
-------- ------- -------- --------
TOTAL OPERATING EXPENSES 69,399 26,780 182,505 62,053
-------- ------- -------- --------
OPERATING LOSS (20,074) (7,689) (50,910) (16,556)
Non-operating income (expense):
Interest income 7,618 2,899 18,070 3,404
Interest (expense) (11,270) (23) (20,756) (544)
Other 21 278 40 278
-------- ------- -------- --------
TOTAL NON-OPERATING INCOME (EXPENSE) (3,631) 3,154 (2,646) 3,138
-------- ------- -------- --------
LOSS BEFORE INCOME TAXES (23,705) (4,535) (53,556) (13,418)
Income Taxes --- --- --- ---
-------- ------- -------- --------
NET LOSS $(23,705) $(4,535) $(53,556) $(13,418)
-------- ------- -------- --------
Loss per common and common equivalent share $ (0.45) $ (0.10) $ (1.02) $ (0.33)
-------- ------- -------- --------
Weighted average common and
common equivalent shares outstanding 53,335 46,233 52,752 41,188
-------- ------- -------- --------
EBITDA $(13,637) $(5,528) $(32,513) $(11,822)
-------- ------- -------- --------
MCLEODUSA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except for per share data)
(UNAUDITED)
Three Months Ended
------------------
12/31/96 3/31/97 6/30/97 9/30/97
-------- ------- ------- -------
Revenues:
Telecommunications:
Local and long distance $ 12,465 $ 14,848 $ 18,551 $ 26,783
Private line and data 2,157 2,413 2,256 2,848
Network maintenance and equipment 1,509 1,985 3,434 6,396
--------- -------- -------- --------
Total telecommunications revenue 16,131 19,246 24,241 36,027
Directory 15,152 14,214 20,273 11,073
Telemarketing 4,543 2,287 2,009 2,225
--------- -------- -------- --------
TOTAL REVENUES 35,826 35,747 46,523 49,325
Operating expenses:
Cost of service 20,931 21,200 27,563 31,917
Selling, general and administrative 20,418 23,985 28,398 31,045
Depreciations and amortization 3,751 4,122 5,231 6,355
Other 2,380 1,608 999 82
--------- -------- -------- --------
TOTAL OPERATING EXPENSES 47,480 50,915 62,191 69,399
--------- -------- -------- --------
OPERATING LOSS (11,654) (15,168) (15,668) (20,074)
Non-operating income (expense):
Interest income 2,630 4,253 6,199 7,618
Interest (expense) (122) (2,447) (7,039) (11,270)
Other 218 7 12 21
--------- -------- -------- --------
TOTAL NON-OPERATING INCOME (EXPENSE) 2,726 1,813 (828) (3,631)
--------- -------- -------- --------
LOSS BEFORE INCOME TAXES (8,928) (13,355) (16,496) (23,705)
Income Taxes --- --- --- ---
--------- -------- -------- --------
NET LOSS $ (8,928) $(13,355) $(16,496) $(23,705)
--------- -------- -------- --------
Loss per common and common equivalent share $ (0.18) $ (0.26) $ (0.31) $ (0.45)
--------- -------- -------- --------
Weighted average common and
common equivalent shares outstanding 48,707 52,327 52,583 53,335
--------- -------- -------- --------
EBITDA $ (5,523) $ (9,438) $ (9,438) $(13,637)
--------- -------- -------- --------
MCLEODUSA SELECTED STATISTICAL DATA:
3Q97 VS. 3Q97 VS.
3Q96 2Q97
9/30/97 9/30/96 % CHANGE 6/30/97 % CHANGE
------- ------- -------- ------- --------
Sales cities 60 32 88% 53 13%
Central offices 350 86 307% 283 24%
Cities served 212 53 300% 164 29%
Route miles 4,617 1,696 172% 3,021 53%
Total local lines in service 244,005 55,993 336% 103,332 136%
Business 128,201 54,661 135% 77,842 65%
Residential 115,804 1,332 8594% 25,490 354%
Total local customers 135,357 12,929 947% 38,850 248%
Business 25,155 10,958 130% 15,233 65%
Residential 110,202 1,971 5491% 23,617 367%
CLEC Local lines in service 154,197 55,993 175% 103,332 49%
Business 104,137 54,661 91% 77,842 34%
Residential 50,060 1,332 3658% 25,490 96%
CLEC Local line customers 63,897 12,929 394% 38,850 65%
Business 18,280 10,958 67% 15,233 20%
Residential 45,617 1,971 2214% 23,617 93%
CLEC Lines per business customer 5.7 5 14% 5.1 12%
CLEC Lines sold during quarter 48,413 8,461 472% 37,265 30%
Business 19,797 7,329 170% 19,306 3%
Residential 28,616 1,132 2428% 17,959 59%
New CLEC Lines in service
during quarter 50,865 8,294 513% 26,104 95%
Business 26,295 7,131 269% 10,454 152%
Residential 24,570 1,163 2013% 15,650 57%
ILEC Local lines in service 89,808 NA NA NA NA
Business 24,064 NA NA NA NA
Residential 65,744 NA NA NA NA
ILEC Local line customers 71,460 NA NA NA NA
Business 6,875 NA NA NA NA
Residential 64,585 NA NA NA NA
Employees 4,690 1,815 158% 2,882 63%