McLeodUSA Reports Second Quarter 2002 Results; Competitive Telco EBITDA of $6.0 million, Improved $10.9 Million From First Quarter.Business Editors CEDAR RAPIDS Cedar Rapids, city (1990 pop. 108,751), seat of Linn co., E central Iowa, on the Cedar River; inc. as a city 1856. The second largest city in Iowa, it is named for the surging rapids in the river. , Iowa--(BUSINESS WIRE)--July 31, 2002 McLeodUSA McLeodUSA, based in Hiawatha, Iowa, is one of the nation’s largest independent CLECs (competitive local exchange carriers). The company also has offices in Tulsa, Oklahoma, and The Woodlands, Texas. Incorporated (Nasdaq:MCLD MCLD Milestone Control Log Document ), one of the nation's largest independent competitive local exchange carriers, today reported financial and operating results for the quarter ended June June: see month. 30, 2002. McLeodUSA completed its Plan of Reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. on April 16, 2002, as planned, and adopted the principles of fresh-start reporting. Under the provisions of fresh-start reporting, a new entity has been deemed created for financial reporting purposes. In conformity with fresh-start accounting principles, the Company recorded a $1.5 billion reorganization charge to adjust the historical carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its assets and liabilities to fair market value reflecting the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the Company's $1.15 billion estimated reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. equity value as of April 16, 2002. McLeodUSA also recorded a $2.4 billion gain on the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of bondholder Bondholder A firm often has stockholders and bondholders. In a liquidation, the bondholders have first priority. bondholder An individual or institution that owns bonds in a corporation or other organization. debt on April 16, 2002, pursuant to the Company's Plan of Reorganization. In addition, the Company has presented certain groups of assets held for disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. under the provisions of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 144 "Accounting for the Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. or Disposal of Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets." As a consequence of the reorganization occurring as of April 16, 2002, the second quarter financial results, as required, have been separately presented under the label "Predecessor predecessor - parent McLeodUSA" for the period from April 1 through April 16, 2002, and "Reorganized McLeodUSA" for the period from April 17 through June 30, 2002. The total operating results for the three months ended June 30, 2002, can be derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. by adding the amounts under the columns for the 16-day period ended April 16, 2002, and the 75-day period ended June 30, 2002. Total revenues for the quarter were $254.5 million and gross margin was $103.0 million. SG&A expenses for the quarter were $97.0 million including a charge of $8.3 million for receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed reserves as a result of WorldCom's bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filing. Combined reported net income, including the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain on the cancellation of debt partially offset by the fresh-start accounting charge, was $924.8 million. Combined EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the presentation requirements of SFAS 144 and excluding the fresh-start one-time, non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , the Company's reported revenues, cost of sales and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. reflect competitive Telco operations only, which will be the ongoing business operation of McLeodUSA. For comparative purposes, the financial results for the competitive Telco business for prior quarters are detailed in the attached comparative financial statement and the following comments are based on that information. For the quarter ended June 30, 2002, total competitive Telco revenues of $254.5 million were essentially flat, as expected, with $259.4 million of competitive Telco revenues in the first quarter of 2002 as the Company realigned the sales force in accordance with the results of its central office profitability study completed in the first quarter of 2002. Total competitive Telco revenues were down from $307.1 million in the second quarter of 2001 due primarily to lower IRU Iru (ī`r  ), in the Bible, Caleb's eldest son. sales and lower international long distance
volume. Gross margin was $103.0 million or 40.5% of revenue, as compared
to $86.2 million or 33.2% of revenue in the first quarter of 2002, and
$112.4 million or 36.6% of revenue in the second quarter of 2001. The
improvements in gross margin performance were related to cost reduction
and process improvement initiatives. SG&A was $97.0 million,
including the WorldCom The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. charge, as compared to $91.1 million in the first
quarter of 2002, and $114.1 million in the second quarter of 2001.
EBITDA was $6.0 million as compared to $(4.9) million in the first
quarter of 2002, and $(1.7) million in the second quarter of 2001. The
Company ended the quarter with $78.5 million in cash on hand."Our second quarter results met our expectations reflecting continued progress in the execution of our strategic plan to achieve profitability in our 25-state footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. . Despite a difficult environment for the telecom industry, we generated positive EBITDA in our core Telco business as we significantly improved gross margins and reduced SG&A expense," said Chris CHRIS Chemical Hazards Response Information System (US DoD) CHRIS California Historical Resources Information System CHRIS Computerized Human Resources Information System CHRIS Command Human Resources Intelligence System A. Davis, Chairman and Chief Executive Officer. "These positive results reflect our continuing cost reduction and process improvement initiatives. We are very pleased with the progress we continue to make in these areas as we build a strong foundation for future growth." For comparative purposes only, including discontinued operations and excluding one-time non-cash restructuring and fresh-start accounting charges associated with the reorganization, total earnings before interest, taxes, depreciation and amortization for McLeodUSA for the six months ended June 30, 2002, was $51.8 million. In the second quarter, McLeodUSA continued to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its refocused strategic plan announced in the fourth quarter of 2001. The Company has sold, or is under contract to sell, its non-core businesses, as well as its Directory Publishing business and Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Telephone Company ("ICTC ICTC Indiana County Technology Center (Indiana, Pennsylvania) ICTC Isabella County Transportation Commission (Michigan) ICTC International Cities, Town Centres and Communities (Australia) "), for an estimated total of $208 million of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. cash to the Company. Upon completion of these transactions, the Company's total debt will have been reduced from nearly $4 billion to $715 million, and ongoing annual interest expense will be reduced by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $315 million to approximately $50 million. Also in the quarter, the Company continued its programs to improve operational productivity and efficiency. Reductions in overall business customer installation and provisioning intervals continued with average business installation intervals of 26 days versus 34 days in the first quarter, and 53 days in the fourth quarter of 2001. Additional customer traffic was successfully migrated to the Company's on-net/on-switch platforms to improve margins, resulting in a platform mix at the end of the quarter of 21% resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. , 37% UNE-M/P and 42% UNE-L UNE-L Unbundled Network Element - Loop . The Company also met its June 30th completion date for the consolidation of customer service and service delivery facilities from 11 to 3. Finally, substantial progress was made in the quarter in the completion of workforce development plans for the entire organization, which address required core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
In the third quarter of 2002, McLeodUSA expects to continue to execute its plan to achieve future profitable growth by completing the alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
The details of the one-time financial charges and gains recorded in the second quarter of 2002 are as follows: -- Further strengthening of the management team with the addition of Ken Burckhardt as Executive Vice President and Chief Financial Officer and Director. -- Added three current or former CEOs to the McLeodUSA Board of Directors with broad experience in telecommunications, networking and local market sales. These additions included Dr. Jeong Kim, founder and former Chairman & CEO of Yurie Systems and former President of Lucent Optical Networking Group; Farid Suleman, CEO of Citadel Communications and former President and CEO of Infinity Broadcasting; and Juan Villalonga, former Chairman & CEO of Telefonica Group. -- Signed agreements to sell non-core ILEC and certain overbuild CLEC and cable operations in South Dakota, southwestern Minnesota and northwestern Iowa for approximately $88 million; and Greene County, a non-core cable services provider for approximately $19 million. Both of these transactions are expected to close within the third quarter subject to final regulatory approvals. -- Signed an agreement to sell Illinois Consolidated Telephone Company, a central Illinois-based independent local exchange carrier, as well as certain related telecommunications businesses to Homebase Acquisition Corp. for $271 million. As part of the comprehensive recapitalization completed on April 16, 2002, McLeodUSA agreed to sell ICTC with the first $225 million of net proceeds designated to reduce the Term A and Term B loans under the May 2000 Credit Agreement as amended. The Company will retain the balance of the proceeds. The transaction is subject to regulatory approvals and certain other closing conditions including completion of senior debt financing by Homebase. Prior significant announcements made in the quarter include: -- Further strengthening of the management team with the addition of Ken Burckhardt as Executive Vice President and Chief Financial Officer and Director. -- Added three current or former CEOs to the McLeodUSA Board of Directors with broad experience in telecommunications, networking and local market sales. These additions included Dr. Jeong Kim, founder and former Chairman & CEO of Yurie Systems and former President of Lucent Optical Networking Group; Farid Suleman, CEO of Citadel Communications and former President and CEO of Infinity Broadcasting; and Juan Villalonga, former Chairman & CEO of Telefonica Group. -- Signed agreements to sell non-core ILEC and certain overbuild CLEC and cable operations in South Dakota, southwestern Minnesota and northwestern Iowa for approximately $88 million; and Greene County, a non-core cable services provider for approximately $19 million. Both of these transactions are expected to close within the third quarter subject to final regulatory approvals. -- Signed an agreement to sell Illinois Consolidated Telephone Company, a central Illinois-based independent local exchange carrier, as well as certain related telecommunications businesses to Homebase Acquisition Corp. for $271 million. As part of the comprehensive recapitalization completed on April 16, 2002, McLeodUSA agreed to sell ICTC with the first $225 million of net proceeds designated to reduce the Term A and Term B loans under the May 2000 Credit Agreement as amended. The Company will retain the balance of the proceeds. The transaction is subject to regulatory approvals and certain other closing conditions including completion of senior debt financing by Homebase. Conference Call McLeodUSA will host a conference call on Wednesday Wednesday: see week. , July July: see month. 31, 2002, at 10 a.m. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time to discuss second quarter results and the information contained in this release. The call may be accessed at 888-271-9098 (U.S.) or 706-634-6027 (International). A replay will be available approximately 2 hours after completion of the call at 800-642-1687 (U.S.) or 706-645-9291 (International), Conference ID No. 4892001. The audio replay will be available through midnight EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday, August 7, 2002. The call will also be Webcast live and available via replay at: http://www.mcleodusa.com/ir/streamingmedia.php3. About McLeodUSA McLeodUSA provides integrated communications services, including local services, in 25 Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. and Rocky Mountain states Rocky Mountain States A region of the western United States including Colorado, Idaho, Montana, Nevada, Utah, and Wyoming. . The Company is a facilities-based telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. provider with, as of June 30, 2002, 43 ATM switches, 55 voice switches, 507 collocations, 525 DSLAMs and 4,740 employees. Visit the Company's Web site at www.mcleodusa.com. Some of the statements in this press release include statements about our future expectations. Statements that are not historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " for the purpose of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Such statements include projections of financial and operational results and goals, including closing of sales of businesses, revenue, EBITDA, profitability, savings and cash. These forward-looking statements are subject to known as well as unknown risks and uncertainties that may cause actual results to differ materially from our expectations. Our expectations are based on various factors and assumptions and reflect only our predictions. Factors that could cause actual results to differ materially from the forward-looking statement include technological, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. , public policy or other developments in our industry, availability and adequacy of capital resources, current and future economic conditions, the existence of strategic alliances, our ability to generate cash, our ability to implement process and network improvements, our ability to attract and retain customers, our ability to migrate traffic to appropriate platforms, our ability to close on sales of businesses and changes in the competitive climate in which we operate. These and other risks are described in more detail in our most recent Annual Report on the Form 10K and Form 10K/A K/A Knowledge and Abilities both filed with the SEC. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.
McLeodUSA Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except for per share data)
(UNAUDITED)
Reorganized Predecessor Predecessor
McLeodUSA McLeodUSA McLeodUSA
----------- ----------- -----------
April 17, April 1, Three
2002 2002 months
to to ended
June 30, April 16, June 30,
2002 2002 2001
----------- ----------- -----------
Revenues:
Communication services $ 207.2 $ 47.3 $ 328.3
Other ---- ---- 3.6
----------- ----------- -----------
Total revenue 207.2 47.3 331.9
Operating expenses:
Cost of service (exclusive
of depreciation shown
separately below) 119.4 32.1 215.9
Selling, general and
administrative 79.5 17.5 116.7
Depreciation and amortization 59.5 17.4 142.5
Reorganization charges, net ---- 1,539.6 ----
Restructuring charge ---- (6.8) 28.2
----------- ----------- -----------
Total operating expenses 258.4 1,599.8 503.3
----------- ----------- -----------
Operating loss (51.2) (1,552.5) (171.4)
----------- ----------- -----------
Nonoperating income (expense):
Interest income 0.3 ---- 2.1
Interest expense, net of
amounts capitalized (8.5) (1.8) (57.5)
Other income (expense) 1.1 (1.0) 80.4
Gain on the cancellation of debt ---- 2,372.8 ----
----------- ----------- -----------
Total nonoperating income
(expense) (7.1) 2,370.0 25.0
----------- ----------- -----------
Income (loss) before
discontinued operations (58.3) 817.5 (146.4)
Discontinued operations:
Income from discontinued
operations (including gain on
disposal of $148.3 for the
period April 1, 2002 to
April 16, 2002) 13.0 152.6 14.7
----------- ----------- -----------
Net income (loss) $ (45.3) $ 970.1 $ (131.7)
Preferred stock dividend (1.1) ---- (13.6)
----------- ----------- -----------
Net income (loss) applicable
to common shares (46.4) 970.1 (145.3)
----------- ----------- -----------
Basic and diluted income (loss)
per common share:
Income (loss) before
discontinued operations $ (0.22) $ 1.30 $ (0.26)
Discontinued operations 0.05 0.25 0.02
----------- ----------- -----------
Income (loss) per common share $ (0.17) $ 1.55 $ (0.24)
----------- ----------- -----------
Weighted average common shares
outstanding 276.3 627.7 617.2
=========== =========== ===========
McLeodUSA Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except for per share data)
(UNAUDITED)
Reorganized Predecessor Predecessor
McLeodUSA McLeodUSA McLeodUSA
----------- ----------- -----------
April 17, January 1, Six months
2002 2002 ended
to June 30, to April 16, June 30,
2002 2002 2001
----------- ----------- -----------
Revenues:
Communication services $ 207.2 $ 311.4 $ 629.1
Other ---- ---- 6.7
----------- ----------- -----------
Total revenue 207.2 311.4 635.8
Operating expenses:
Cost of service (exclusive of
depreciation shown
separately below) 119.4 211.2 406.9
Selling, general and
administrative 79.5 108.9 230.8
Depreciation and amortization 59.5 126.3 264.3
Reorganization charges, net ---- 1,596.8 ----
Restructuring charge ---- (6.8) 28.2
----------- ----------- -----------
Total operating expenses 258.4 2,036.4 930.2
----------- ----------- -----------
Operating loss (51.2) (1,725.0) (294.4)
----------- ----------- -----------
Nonoperating income (expense):
Interest income 0.3 0.4 8.7
Interest expense, net of
amounts capitalized (8.5) (33.6) (113.6)
Other income (expense) 1.1 2.0 77.1
Gain on the cancellation of debt ---- 2,372.8 ----
----------- ----------- -----------
Total nonoperating income
(expense) (7.1) 2,341.6 (27.8)
----------- ----------- -----------
Income (loss) before
discontinued operations (58.3) 616.6 (322.2)
Discontinued operations:
Income from discontinued
operations (including gain on
disposal of $148.3 for the
period January 1, 2002 to
April 16, 2002) 13.0 167.1 17.4
----------- ----------- -----------
Net income (loss) $ (45.3) $ 783.7 $ (304.8)
----------- ----------- -----------
Preferred stock dividend (1.1) (4.8) (27.2)
----------- ----------- -----------
Net income (loss) applicable
to common shares (46.4) 778.9 (332.0)
----------- ----------- -----------
Basic and diluted income (loss)
per common share:
Income (loss) before
discontinued operations $ (0.22) $ 0.97 $ (0.57)
Discontinued operations 0.05 0.27 0.03
----------- ----------- -----------
Income (loss) per common share $ (0.17) $ 1.24 $ (0.54)
----------- ----------- -----------
Weighted average common shares
outstanding 276.3 627.7 617.2
=========== =========== ===========
McLeodUSA Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
Reorganized Predecessor
McLeodUSA McLeodUSA
--------------- --------------
As of 6/30/02 As of 12/31/01
(Unaudited)
--------------- --------------
ASSETS
Current Assets
Cash, cash equivalents, and available
for sale securities $ 78.5 $ 141.6
Trade receivables, net 125.5 150.8
Inventory 3.3 4.4
Prepaid expense and other 29.1 25.2
Assets held for sale 444.1 760.1
--------------- --------------
Total Current Assets 680.5 1,082.1
--------------- --------------
Non-current Assets
Property and equipment, net 1,269.4 2,459.0
Goodwill and other intangibles, net 472.4 1,107.9
Other investments 0.4 28.1
Other non-current assets 23.5 78.0
--------------- --------------
Total Non-current Assets 1,765.7 3,673.0
--------------- --------------
Total Assets $ 2,446.2 $ 4,755.1
=============== ==============
LIABILITIES AND EQUITY
Current Liabilities
Current maturities of long-term
debt and debt classified as current $ 5.7 $ 2,994.5
Accounts payable 54.0 81.5
Deferred revenue, current portion 13.0 13.2
Customer deposits 2.7 3.0
Other current liabilities 187.0 380.5
Liabilities related to discontinued
operations 69.3 130.3
--------------- --------------
Total Current Liabilities 331.7 3,603.0
--------------- --------------
Long-term Liabilities
Long-term debt, excluding
current maturities 942.6 945.5
Deferred revenue less current portion 14.9 16.4
Other long-term liabilities 53.4 7.1
--------------- --------------
Total Long-term Liabilities 1,010.9 969.0
--------------- --------------
Redeemable Convertible Preferred Stock 169.3 156.1
Stockholders' Equity 934.3 27.0
--------------- --------------
Total Liabilities and Equity $ 2,446.2 $ 4,755.1
=============== ==============
McLeodUSA Incorporated and Subsidiaries
Comparison of Selected Competitive Telco Operations
(In millions)
(UNAUDITED)
Second Qtr. First Qtr. Second Qtr.
2002 2002 2001
----------------------------------------------------------------------
Revenues
As reported $ 254.5 $ 264.1 $ 331.9
Non-core business dispositions (a) ---- (4.7) (24.8)
------- -------- --------
Ongoing Telco revenues $ 254.5 $ 259.4 $ 307.1
----------------------------------------------------------------------
Cost of Goods Sold
As reported $ 151.5 $ 179.1 $ 215.9
Non-core business dispositions (a) ---- (5.9) (21.2)
------- -------- --------
Ongoing Telco cost of goods sold $ 151.5 $ 173.2 $ 194.7
----------------------------------------------------------------------
Margin
As reported $ 103.0 $ 85.0 $ 116.0
Non-core business dispositions (a) ---- 1.2 (3.6)
------- -------- --------
Ongoing Telco margin $ 103.0 $ 86.2 $ 112.4
% Revenue 40.5% 33.2% 36.6%
----------------------------------------------------------------------
Selling, General & Administrative
Expenses
As reported $ 97.0 (b) $ 91.4 $ 116.7
Non-core business dispositions (a) ---- (0.3) (2.6)
------- ------- --------
Ongoing Telco SG&A expenses $ 97.0 $ 91.1 $ 114.1
----------------------------------------------------------------------
Depreciation & Amortization
As reported $ 76.9 $ 108.9 $ 142.5
Non-core business dispositions (a) ---- (0.9) (4.3)
------- -------- --------
Ongoing Telco depreciation and
amortization $ 76.9 $ 108.0 $ 138.2
----------------------------------------------------------------------
EBITDA
As reported $ 6.0 $ (6.4) $ (0.7)
Non-core business dispositions (a) ---- 1.5 (1.0)
----- ------- -------
Ongoing Telco EBITDA $ 6.0 $ (4.9) $ (1.7)
% Revenue 2.4% -1.9% -0.6%
(a) Non-core business dispositions include Splitrock, Ruffalo Cody and
Devise
(b) Includes charge of $8.3 million for receivables reserves for
WorldCom
McLeodUSA Incorporated and Subsidiaries
Discontinued Operations - Condensed Statement of Operations
(In millions)
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
------------------------------------
2002(a) 2001 2002(a) 2001
-------- -------- -------- --------
Total Revenues $ 58.4 $141.7 $183.3 $270.9
-------- -------- -------- --------
Cost of goods sold 18.9 58.1 63.9 113.3
Selling, general and administrative 18.9 48.7 67.2 99.2
Depreciation and amortization 3.1 19.8 20.2 39.9
-------- -------- -------- --------
Total operating expenses 40.9 126.6 151.3 252.4
-------- -------- -------- --------
Operating income 17.5 15.1 32.0 18.5
Non-operating loss (0.2) (0.4) (0.2) (1.1)
-------- -------- -------- --------
Net income $ 17.3 $ 14.7 $ 31.8 $ 17.4
======== ======== ======== ========
EBITDA $ 20.6 $ 34.9 $ 52.2 $ 58.4
======== ======== ======== ========
(a) Excludes gains associated with the sale of businesses.
McLeodUSA Incorporated and Subsidiaries
Selected Telecommunications Statistical Data
6/30/2001 3/31/2002 6/30/2002
---------- ---------- ----------
Active central offices 1,740 1,809 1,779
Collocations 372 499 507
Switches owned
CO / LD 49 59 55
ATM / Frame Relay 38 43 43
DSLAMs installed 512 526 525
Total Competitive:
Customers 419,133 469,532 461,951
Access Units / Customer 2.8 2.7 2.7
Revenue per Customer / Month
Local $116.05 $109.76 $103.46
Long distance 67.52 46.20 44.94
Private line & data 25.30 26.23 25.34
---------- ---------- ----------
Total $208.87 $182.19 $173.74
========== ========== ==========
Platform Distribution
Resale 30% 23% 21%
UNE-P 45% 38% 37%
UNE-L 25% 39% 42%
---------- ---------- ----------
Total 100% 100% 100%
========== ========== ==========
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