SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 24, 1997
McLEODUSA INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 0-20763 42-1407240
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
6400 C Street C Street, S.W., P.O. Box 3177, Cedar Rapids, IA 52401-3177
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 364-0000
EXPLANATORY NOTE
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Pursuant to Items 7(a)(4) and 7(b)(2) of Form 8-K under the Securities
Exchange Act of 1934, McLeodUSA Incorporated (the "Company") hereby amends Item
7(b) of its Current Report on Form 8-K, filed with the Securities and Exchange
Commission (the "Commission") on October 9, 1997 (the "Form 8-K"), to add pro
forma financial information for the Company reflecting the acquisition of
Consolidated Communications Inc. ("CCI"). The Company acquired CCI on September
24, 1997 pursuant to an Agreement and Plan of Reorganization dated as of June
14, 1997. Item 7(c) of the Form 8-K is also hereby amended to add the
accompanying Financial Data Schedule and the consent of Arthur Andersen LLP.
Item 7. Financial Statements and Exhibits
- ------ ---------------------------------
(b) Pro Forma Financial Information.
Included herewith is the following unaudited pro forma
financial information for the Company:
Pro forma condensed consolidated statements of operations for the year
ended December 31, 1996.
Pro forma condensed consolidated statements of operations for the nine
months ended September 30, 1996.
(c) Exhibits.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule.
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: November 21, 1997 McLEODUSA INCORPORATED
By: /s/ Blake O. Fisher, Jr.
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Blake O. Fisher, Jr.
Chief Financial Officer and
Treasurer
-3-
Pro Forma Financial Information
The following unaudited pro forma financial information has been
prepared to give effect to the acquisitions of Ruffalo, Cody & Associates, Inc.
("Ruffalo, Cody") and Telecom*USA Publishing Group, Inc. ("McLeodUSA
Publishing") by the Company in July 1996 and September 1996, respectively (the
"Acquisitions") and the acquisition of CCI by the Company in September 1997
(the "CCI Acquisition"). The Unaudited Pro Forma Condensed Consolidated
Statements of Operations reflect the Acquisitions and the CCI Acquisition using
the purchase method of accounting, and assume that the Acquisitions and the CCI
Acquisition were consummated at the beginning of the periods presented. The
unaudited pro forma financial information is derived from and should be read in
conjunction with the Consolidated Financial Statements of the Company, Ruffalo,
Cody, McLeodUSA Publishing and CCI and the related notes thereto included in the
Company's Form S-4 (File No. 333-34227), filed with the Commission on August 22,
1997 and which were incorporated by reference into the Form 8-K. The pro forma
adjustments are based upon available information and certain adjustments that
management believes to be reasonable.
The unaudited pro forma financial information is provided for
informational purposes only and is not necessarily indicative of the operating
results that would have occurred had the Acquisitions and the CCI Acquisition
been consummated at the beginning of the periods presented, nor is it
necessarily indicative of future results or financial position.
4
MCLEODUSA INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
YEAR ENDED DECEMBER 31, 1996
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RUFFALO, CODY ADJUSTMENTS PRO FORMA
MCLEODUSA & ASSOCIATES, MCLEODUSA FOR FOR
INCORPORATED(1) INC.(2) PUBLISHING(3) ACQUISITIONS ACQUISITIONS
--------------- ------------- -------------- ------------ --------------
OPERATIONS
STATEMENT DATA:
Revenue.......... $ 81,323 $8,891(5) $38,410 $ -- $128,624
-------- ------ ------- ------- ---------
Operating
expenses:
Cost of service.. 52,624 4,529 14,481 -- 71,634
Selling, general
and
administrative... 46,044 3,550 17,822 -- 67,416
Depreciation and
amortization..... 8,485 293 1,725 2,253(6) 12,756
Other............ 2,380 -- -- 2,588(8) 4,968
-------- ------ ------- ------- ---------
Total operating
expenses........ 109,533 8,372 34,028 4,841 156,774
-------- ------ ------- ------- ---------
Operating income
(loss)........... (28,210) 519 4,382 (4,841) (28,150)
Interest income
(expense), net... 5,369 (6) (1,119) 1,011(9) 5,255
Other non-
operating income
(expense)........ 495 -- (489) -- 6
Income taxes..... -- (182) (1,120) 1,302(10) --
-------- ------ ------- ------- ---------
Net income
(loss)........... $(22,346) 331 $ 1,654 $(2,528) $ (22,889)
======== ====== ======= ======= =========
Loss per common
and common
equivalent
share............ $(0.52) $ (0.53)
======== =========
Weighted average
common and common
equivalent shares
outstanding...... 43,019 43,214
======== =========
OTHER FINANCIAL
DATA:
EBITDA(11)....... $(17,345) $ 812 $ 6,107 $ -- $ (10,426)
YEAR ENDED DECEMBER 31, 1996
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CONSOLIDATED ADJUSTMENTS PRO FORMA
COMMUNICATIONS FOR CCI FOR CCI
INC.(4) ACQUISITION ACQUISITION
-------------- ----------- -----------
OPERATIONS
STATEMENT DATA:
Revenue.......... $250,974 $ -- $379,598
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Operating
expenses:
Cost of service.. 123,952 -- 195,586
Selling, general
and
administrative... 79,714 -- 147,130
Depreciation and
amortization..... 22,517 14,605(7) 49,878
Other............ -- 7,600(8) 12,568
-------- -------- --------
Total operating
expenses........ 226,183 22,205 405,162
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Operating income
(loss)........... 24,791 (22,205) (25,564)
Interest income
(expense), net... (3,779) -- 1,476
Other non-
operating income
(expense)........ 2,940 -- 2,946
Income taxes..... (8,862) 8,862(10) --
-------- -------- --------
Net income
(loss)........... $ 15,090 $(13,343) $(21,142)
======== ======== ========
Loss per common
and common
equivalent
share............ $ (0.41)
========
Weighted average
common and common
equivalent shares
outstanding...... 51,703
========
OTHER FINANCIAL
DATA:
EBITDA(11)....... $ 47,308 $ -- $ 36,882
5
NINE MONTHS ENDED SEPTEMBER 30, 1997
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ADJUSTMENTS PRO FORMA
CONSOLIDATED FOR FOR
MCLEODUSA COMMUNI- CCI CCI
INCORPORATED CATIONS INC.(12) ACQUISITION ACQUISITION
------------ ---------------- ----------- -----------
OPERATIONS
STATEMENT DATA:
Revenue.......... $131,595 $194,305 $ -- $325,900
-------- -------- --------
Operating
expenses:
Cost of service.. 80,680 100,364 -- 181,044
Selling, general
and
administrative.. 83,428 65,063 -- 148,491
Depreciation and
amortization.... 15,708 17,913 10,954 (7) 44,575
Other............ 2,689 -- 5,618 (8) 8,307
-------- -------- -------- --------
Total operating
expenses....... 182,505 183,340 16,572 382,417
-------- -------- -------- --------
Operating income
(loss).......... (50,910) 10,965 (16,572) (56,517)
Interest income
(expense), net.. (2,686) (2,972) -- (5,658)
Other non-
operating
income.......... 40 1,082 -- 1,122
Income taxes..... -- (3,477) 3,477 (10) --
-------- -------- -------- --------
Net income
(loss).......... $(53,556) $ 5,598 $(13,095) $(62,175)
======== ======== ======== ========
Loss per common
and common
equivalent
share........... $ (1.02) $ (1.01)
======== ========
Weighted average
common and
common
equivalent
shares
outstanding..... 52,752 61,054
======== ========
OTHER FINANCIAL
DATA:
EBITDA(11)....... $(32,513) $ 28,878 $ -- $ (3,635)
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(1) Includes operations of Ruffalo, Cody from July 16, 1996 to December 31,
1996 and operations of McLeodUSA Publishing from September 21, 1996 to
December 31, 1996.
(2) Includes operations of Ruffalo, Cody from January 1, 1996 to July 15,
1996.
(3) Includes operations of McLeodUSA Publishing from January 1, 1996 to
September 20, 1996.
(4) Includes operations of CCI from January 1, 1996 to December 31, 1996.
(5) Includes revenue from a material agreement with a major long distance
carrier to provide telemarketing services. Over 40% of Ruffalo, Cody's
revenues in 1996 were derived from this agreement. The major long
distance carrier terminated this agreement, effective December 31, 1996.
(6) To adjust depreciation and amortization to include amortization of
intangibles acquired in the Company's acquisitions of Ruffalo, Cody and
McLeodUSA Publishing. Intangibles acquired in these acquisitions are
being amortized over periods ranging from 5 years to 25 years.
(7) To adjust depreciation and amortization to include amortization of
intangibles acquired in connection with the CCI Acquisition. The
intangibles acquired in connection with the CCI Acquisition will be
amortized over periods ranging from 3 to 30 years.
(8) To recognize the costs associated with the directories in progress at the
time of the Company's acquisition of McLeodUSA Publishing and CCI.
(9) To eliminate the interest expense recorded on McLeodUSA Publishing
convertible debentures that were converted to shares of McLeodUSA
Publishing common stock immediately prior to the acquisition of McLeodUSA
Publishing by the Company.
(10) Net income (loss) includes pro forma adjustments for income taxes due to
the availability of net operating loss carryforwards and a valuation
allowance.
(11) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. The Company has included EBITDA
data because it is a measure commonly used in the industry. EBITDA is not
a measure of financial performance under generally accepted accounting
principles and should not be considered an alternative to net income as a
measure of performance or to cash flows as a measure of liquidity.
(12) Includes operations of CCI from January 1, 1997 to September 24, 1997.
6
Exhibit Index
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23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule.
7