-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J8/sdsb+3FdOPN/e5TGAtouARvirXZVPfE7KbKEzHA1Py8XvG6eitK5vfh7dxKSI YcOMNepXwp6mYug0OdvQ+Q== 0000928385-00-000076.txt : 20000202 0000928385-00-000076.hdr.sgml : 20000202 ACCESSION NUMBER: 0000928385-00-000076 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000107 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCLEODUSA INC CENTRAL INDEX KEY: 0000919943 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 421407240 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20763 FILM NUMBER: 511012 BUSINESS ADDRESS: STREET 1: 6400 C ST SW STREET 2: PO BOX 3177 CITY: CEDAR RAPIDS STATE: IA ZIP: 52406-3177 BUSINESS PHONE: 3193640000 MAIL ADDRESS: STREET 1: 6400 C ST SW STREET 2: PO BOX 3177 CITY: CEDAR RAPIDS STATE: IA ZIP: 52406-3177 FORMER COMPANY: FORMER CONFORMED NAME: MCLEOD INC DATE OF NAME CHANGE: 19960403 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest even reported): January 7, 2000 McLEODUSA INCORPORATED (Exact name of registrant as specified in its charter)
Delaware 0-20763 42-1407240 (State or Other (Commission (IRS Employer Jurisdiction of Incorporation) File Number) Identification Number)
McLeodUSA Technology Park 6400 C Street S.W., P.O. Box 3177 Cedar Rapids, IA 52406-3177 (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (319) 364-0000 INFORMATION TO BE INCLUDED IN THE REPORT Item 5. Other Events McLeodUSA recently made available various slides regarding its proposed acquisition of Splitrock Services, Inc. The contents of these slides are described in Exhibits 99.1 and 99.2 to this Current Report on Form 8-K and incorporated herein by reference. Some of the statements contained in this Current Report on Form 8-K discuss future expectations, contain projection 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, these so-called forward- looking statements can be identified by words like "may," "will," "should," "expects," "plans," "anticipates," "believes," estimates," "predicts," "potential," or "continue" or the negative of those words and other comparable words. These statements only reflect the prediction of the Company. Actual events or results may differ substantially. Important factors that could cause actual results of the Company 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 the Company operates and the emergence of future opportunities, all of which could cause actual results and experience of the Company 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 "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, which is filed with the Securities and Exchange Commission. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. Description. - ------------ (c) Exhibits. 99.1 Description of slides regarding the proposed acquisition of Splitrock made available on January 7, 2000. 99.2 Description of slides regarding the proposed acquisition of Splitrock made available the week of January 10, 2000. 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: January 20, 2000 McLEODUSA INCORPORATED By: /s/ Randall Rings ----------------- Randall Rings Vice President, Secretary and General Counsel 3 EXHIBIT INDEX 99.1 Description of slides regarding the proposed acquisition of Splitrock made available on January 7, 2000. 99.2 Description of slides regarding the proposed acquisition of Splitrock made available the week of January 10, 2000. 4 EX-99.1 2 EXHIBIT 99.1 Exhibit 99.1 Description of Slides Regarding McLeodUSA's Proposed Acquisition of Splitrock. Slide 01 Large McLeodUSA logo and Splitrock logo Slide 02 A Great Deal. . . Consideration Stock 34M (shares)* Fixed Exchange Ratio ($30-31) Debt (net) $150M Enterprise value 2.1B Key Terms No Cap or Collar Provisions Voting Agreement (55% shares) 3-year Shareholder Agreement Purchase Accounting Expected Close - 2Q00 *13% Fully Diluted McLeodUSA logo . . .accelerating data rollout Slide 03 McLeodUSA. . . . [Below this text Local Business Lines, and on the left side of the slide appears a map of the continental United States, showing the 48 states therein. The two letter postal state abbreviation symbols "WA," "OR," "ID," "MT," "WY," "UT," "AZ," "NM," "CO," "KS," "NE," "SD," "ND," "MN," "WI," "IA," "MO," "IL," "IN," "OH," "MI," appear in bold type within the respective boundaries of the state which each symbol represents. The following numerical percentages appear within the following states: Michigan "8%," Illinois "31%," Wisconsin "14%," Minnesota "19%," Iowa "43%," Nebraska "1%," South Dakota "30%," North Dakota "26%," Wyoming `25%," Colorado "12%,". Stars and numerical percentages associated therewith are located in the states of Indiana "7%" and Missouri "37%". The following years appear within the following states: Ohio 2001, Kansas 2000, New Mexico 2000, Arizona 2000, Utah 2000, Oregon 2000, Washington 2000, Idaho 2000 and Montana 2000. Below the map on the left side appears a legend showing a star with the text "Springfield, MO" and "Indianapolis, IN" to its right. Below the map on the left side appears text "Excludes Tier 1 Markets". Beside the map on the right side text is listed with bullet points: High Marketshare Lowest Attrition, 10,000 Mile Network, Best Systems Customer & Network, Brand - 24M Directories] McLeodUSA logo . . .great plan, great execution Slide 04 SPLITROCK Next Generation. . . [Centered in the slide is a diagram of the 48 continental United States and Alaska and Hawaii. Above the diagram is a legend showing ATM POPs - 350. Inside the Diagram are sporadic dots showing the 350 ATM POPs. Beside the diagram is text listed with bullet points: 90% U.S. Coverage 800 Cities, 16,000 Mile Fiber (Level 3, 2001), ATM-to-the-Edge All Products All Locations.] McLeodUSA logo . . .data connections company Slide 05 Drivers to Growth. . . Time to Market (arrow pointing right) SPLT Network Now Systems (arrow pointing right) SPLT + MCLD/WilTel Execution (arrow pointing right) Wilkens, SPLT Team, More McLeodUSA logo . . .keys to the opportunity Slide 06 Experienced and Focused. . . [Organizational chart listing the Chief Executive Office. In the first row in one box is Clark McLeod with his title as Chairman & CEO of McLeodUSA Incorporated his Focus: External. In the second row are two boxes the first is Steve Gray with his title Pres/CEO CLEC Focus: Regional/Retail. The second box lists Roy Wilkens with his title of Pres/CEO Data Focus: National/Data.] McLeodUSA logo . . .the formula for execution Slide 07 Roy Wilkens. . . . President/CEO McLeodUSA Data - January 2000 . Founder/CEO WilTel 1985-1997 . Completed first transcontinental fiber build . Largest and most respected wholesaler . Premier data company in the United States (first nationwide frame relay service) . Acquired by WorldCom 1995 (CEO WilTel and Vice Chairman WorldCom 1995-97) . Appointments . National Security Telecommunications Advisory Council (both President Bush and President Clinton) . Past chairman of Comptel . TRA voted Wilkens most influential person (Telecom, last 15 years) McLeodUSA logo . . .a leader in telecommunications Slide 08 Network Combination. . . [Centered on the slide is a diagram of the continental United Sates. In dark print are lines connecting McLeodUSA's current switch and fiber routes along with current switch sites. In light print are lines of Splitrock's current fiber route, core sites, hub sites and network centers. To the right of the diagram is a key listing a light star as McLeodUSA's current switch site, a dark star listing McLeodUSA's future switch site, and a dark line listing the fiber route. Below the McLeodUSA key is a key for Splitrock listing light triangle for Core sites, a light circle for hub sites, a light line for fiber route, and a light triangle with a circle around it for the network center. Below this diagram is the text illustration only. Above the diagram is text 26,000 Fiber Miles.] McLeodUSA logo . . .a perfect fit Slide 09 Benefit of McLeodUSA and Splitrock. . . In-Region Customer - Retail (arrow up) Rev. (arrow down) Cost More Data Products, ATM-to-the Edge/TM/ X X More Customer Types (S,M,L) X X Product Use Out-of-Region, Travel X X Out-of-Region Termination, Data & Voice X
Out-of-Region Customers - National Data 1st, 2nd, 3rd Tier Coverage - 90% USA X X All Products, 800 Cities X X
McLeodUSA logo . . .both top and bottom line Slide 10 Stock Price Exchange Ratio. . . [Two line graphs appear. One listing the Splitrock Daily Closing price: 08/02/99 Through 01/06/00. Numbers, shown as prices, up the left side are even numbers showing "10," "12," "14," "16," "18," "20," "22," "24," "26". Along the bottom line are the months "Sept," "Oct," "Nov," "Dec," "Jan 2000." The second graph lists Exchange Ratio: 08/02/99 through 01/06/00. Numbers up the left side shown as Exchange Ratio are listed at "0.30," "0.35," 0.40," 0.45," "0.50," "0.55," "0.60". Along the bottom are months with the first letter abbreviation and a day of the week number above it, starting with A 6 and showing a point for each week until J 6 2000. Above the "J 6" is a dot with the words Deal Price 5 day avg.] McLeodUSA logo . . .great timing Slide 11 McLeodUSA and Splitrock. . . Right Assets Right Management Right Execution Right Time McLeodUSA logo . . .right combination Slide 12 Large McLeodUSA logo and Splitrock logo EX-99.2 3 EXHIBIT 99.2 Exhibit 99.2 Description of slides regarding McLeodUSA's proposed acquisition of Splitrock. Slide 01 Large McLeodUSA logo and Splitrock logo Slide 02 McLeodUSA. . . Presentation Clark McLeod Lyle Patrick Q & A Steve Gray Roy Wilkens Bill Wilson McLeodUSA logo . . .conference participants Slide 03 A Great Deal. . . Consideration Stock 34M (shares)* Fixed Exchange Ratio ($30-31) Debt (net) $150M Enterprise value 2.1B Key Terms No Cap or Collar Provisions Voting Agreement (55% shares) 3-year Shareholder Agreement Purchase Accounting Expected Close - 2Q00 *13% Fully Diluted McLeodUSA logo . . .accelerating data rollout Slide 04 McLeodUSA. . . . [Below this text Local Business Lines, and on the left side of the slide appears a map of the continental United States, showing the 48 states therein. The two letter postal state abbreviation symbols "WA," "OR," "ID," "MT," "WY," "UT," "AZ," "NM," "CO," "KS," "NE," "SD," "ND," "MN," "WI," "IA," "MO," "IL," "IN," "OH," "MI," appear in bold type within the respective boundaries of the state which each symbol represents. The following numerical percentages appear within the following states: Michigan "8%," Illinois "31%," Wisconsin "14%," Minnesota "19%," Iowa "43%," Nebraska "1%," South Dakota "30%," North Dakota "26%," Wyoming `25%," Colorado "12%,". Stars and numerical percentages associated therewith are located in the states of Indiana "7%" and Missouri "37%". The following years appear within the following states: Ohio 2001, Kansas 2000, New Mexico 2000, Arizona 2000, Utah 2000, Oregon 2000, Washington 2000, Idaho 2000 and Montana 2000. Below the map on the left side appears a legend showing a star with the text "Springfield, MO" and "Indianapolis, IN" to its right. Below the map on the left side appears text "Excludes Tier 1 Markets". Beside the map on the right side text is listed with bullet points: High Marketshare Lowest Attrition, 10,000 Mile Network, Best Systems Customer & Network, Brand - 24M Directories] McLeodUSA logo . . .great plan, great execution
Slide 05 McLeodUSA....... Employees [arrow pointing right] 8,000(E) Geography [arrow pointing right] 21 States Product [arrow pointing right] Voice(Local/LD), Data, Directories Customer [arrow pointing right] 670,000(E) Local Lines Network [arrow pointing right] 10,000(E) Inter/Intra Route Miles Revenue [arrow pointing right] $1 Billion of Revenue* EBITDA [arrow pointing right] Positive for 8 Quarters
*4Q(E) Annualized McLeodUSA logo . . .explosive growth Slide 06 M&A, Experienced, Successful. . . [Merger and Acquisition timeline diagram, starting with the year 1996 continuing until 2000 and showing corporate logos of business acquired or, in the case of Splitrock, proposed to be acquired. Telecom*USA Publishing Company is shown in 1996, Consolidated Communications was is shown in 1997, Dakota Telecommunications Group is shown in 1998, Ovation Communications is shown in 1999, Access is shown in 1999, Splitrock is shown in 2000.] McLeodUSA logo . . .integrating, leveraging people and assets Slide 07 SPLITROCK Next Generation. . . [Centered in the slide is a diagram of the 48 continental United States and Alaska and Hawaii. Above the diagram is a legend showing ATM POPs - 350. Inside the Diagram are sporadic dots showing the 350 ATM POPs. Beside the diagram is text listed with bullet points: 90% U.S. Coverage 800 Cities, ATM-to- the-Edge/TM/ All Products All Locations, Peering.] McLeodUSA logo . . .data connections company Slide 08 SplitRock....... Employees [arrow pointing right] 420 Geography [arrow pointing right] 50 States Product [arrow pointing right] Dial, Dedicated Data Customers [arrow pointing right] Prodigy, InfiNeT, Exodus, Juno, Focal, Enhanced Wholesale Network [arrow pointing right] Leased, Plus Level 3 IRU Revenue [arrow pointing right] $95M of Revenue* EBITDA [arrow pointing right] ($48M)*
*3Q Annualized McLeodUSA logo . . .focused on network deployment Slide 09 Incredible Growth Today. . . [Two graphs appear below this text. The heading on the graph on the left is "U.S. Revenue." The heading on the graph on the right is "U.S. Bandwidth." The U.S. Revenue graph shows, for the years 1990 to beyond 2005, actual and projected U.S. revenues from combined data and voice communications of about $110 billion in 1990, $170 billion in 1995, $300 billion in 2000, $500 billion in 2005, and over $700 billion before 2010, while U.S. revenues for voice communications above is shown as about $90 billion in 1990, $110 billion in 1995, $160 in 2000, $260 billion in 2005 and over $300 billion in 2010. The U.S. Bandwidth graph shows, from 1990 to beyond 2005, actual and projected growth of bandwidth for voice communications increasing from about 1/2x in 1990 to nearly 1x before 2010 while the combined growth of bandwidth for voice and data shown as about 1/2x in 1990, 3/4x in 1995, 1 3/4x in 200 and over 5x before 2005. Underneath the two graphs is the text $300 Billion Voice + $300 Billion Data.] McLeodUSA logo . . .explosive future growth Slide 10 Drivers to Growth. . . . People . Time to Market . Assets . 350 ATM POPs . Peering . 16,000 Mile Network . Systems McLeodUSA logo . . .keys to the opportunity Slide 11 Experienced and Focused. . . [Organizational chart listing the Chief Executive Office. In the first row in one box is Clark McLeod with his title as Chairman & CEO of McLeodUSA Incorporated his Focus: External. In the second row are two boxes the first is Steve Gray with his title Pres/CEO CLEC Focus: Regional/Retail. The second box lists Roy Wilkens with his title of Pres/CEO Data Focus: National/Data.] McLeodUSA logo . . .the formula for execution Slide 12 Roy Wilkens. . . . President/CEO McLeodUSA Data - January 2000 . Founder/CEO WilTel 1985-1997 . Completed first transcontinental fiber build . Largest and most respected wholesaler . Premier data company in the United States (first nationwide frame relay service) . Acquired by WorldCom 1995 (CEO WilTel and Vice Chairman WorldCom 1995-97) . Appointments . National Security Telecommunications Advisory Council (both President Bush and President Clinton) . Past chairman of Comptel . TRA voted Wilkens most influential person (Telecom, last 15 years) McLeodUSA logo . . .a leader in telecommunications Slide 13 Data Architecture. . . . IP Dial/Dedicated . Private Line . ATM . Frame Relay . Voice . Optical Wave . Web Hosting McLeodUSA logo . . .ATM-to-the-Edge/TM/ Slide 14 Metcalfe's + Moore's + McLeod's Laws. . . [Pictured are three bar graphs. Up the left side are the words Different Call Combinations with the numbers 30,000 and 60,000. Along the bottom is the title #ATM POPs (ATMP) with the amounts of 50, 100, and 350. The bar reaches 1,225 above 50, 4,950 above 100, and 61,075 above 350. Above the bar is the following equation: McLeod's Law = ((ATMP - 1) x (ATMP)) divided by 2. Beside the graph on the right is a bullet point with the text More city pair combinations on- net.] McLeodUSA logo . . .SPLITROCK, rare and valuable asset Slide 15 Network Combination. . . [Centered on the slide is a diagram of the continental United Sates. In dark print are lines connecting McLeodUSA's current switch and fiber routes along with current switch sites. In light print are lines of Splitrock's current fiber route, core sites, hub sites and network centers. To the right of the diagram is a key listing a light star as McLeodUSA's current switch site, a dark star listing McLeodUSA's future switch site, and a dark line listing the fiber route. Below the McLeodUSA key is a key for Splitrock listing light triangle for Core sites, a light circle for hub sites, a light line for fiber route, and a light triangle with a circle around it for the network center. Below this diagram is the text illustration only. Above the diagram is text 26,000 Fiber Miles.] McLeodUSA logo . . .a perfect fit Slide 16 Great Today. . . Today Advance ATM-to-the-Edge/TM/ Most Pervasive Robust Provisioning & Operating Systems 1Q2001 26,000 Miles of Fiber SPLT + MCLD/WilTel System Integration McLeodUSA logo . . .awesome tomorrow Slide 17 Benefit of McLeodUSA and Splitrock. . . In-Region Customer - Retail (arrow up) Rev. (arrow down) Cost More Data Products, ATM-to-the Edge/TM/ X X More Customer Types (S,M,L) X X Product Use Out-of-Region, Travel X X Out-of-Region Termination, Data & Voice X Out-of-Region Customers - National Data 1st, 2nd, 3rd Tier Coverage - 90% USA X X All Products, 800 Cities X X
McLeodUSA logo . . .both top and bottom line Slide 18 Lyle Patrick Chief Financial Officer McLeodUSA logo Slide 19 Proforma Combination Scenarios. . . [Two graphs appear below. The heading of the graph on the left is "Revenue." The heading on the graph to the right is "EBITDA." The graphs show for a ten year period the amounts, that McLeodUSA revenue and EBITDA, and then combined McLeodUSA and Splitrock revenue and EBITDA, are projected to increase. The Revenue graph shows McLeodUSA growing from about $1.2 Billion in year 0 to $4.5 Billion in year 5 and $12 Billion in year 10, while the combined McLeodUSA and Splitrock revenues are shown as about $1.4 Billion in year 0, $5.5 Billion in year 5 and $14 Billion in year 10. The EBITDA graph shows McLeodUSA growing from about $0.1 Billion in year 0 to $1.4 Billion in year 5 and $4.8 Billion in year 10, while the combined McLeodUSA and Splitrock EBITDA are about $0.1 Billion in year 0, $1.7 Billion in year 5, and $5.6 Billion in year 10. Below the graphs on the left side of the slide is the text "Salomon/Smith Barney".] McLeodUSA logo . . .current estimates, pre-synergies Slide 20 Adding Value. . . Synergy Opportunity Regional Data up 35% Voice/Data O&T On-Net Regional Capex Execution Step Up People Focus Addressable Market McLeodUSA logo . . .accelerating data opportunity Slide 21 McLeodUSA Opportunity. . . Total Telecom Revenue 2009 $600 Billion In-Region, 21 State $120B Out-of-Region wholesale National Data Opportunity $240B ----- MCLD Addressable Market $360B McLeodUSA logo . . .tripling in size Slide 22 Capital Uses. . . [Two pie graphs appear. The one on the left is Sources, the one on the right is Uses for the years 2000-2002. The Sources chart on the left is $2.5 Billion divided between four different sections. Forstmann Little represents $1 Billion, $900M is Add'l Funding, $400M is Cash, and $200M is Operating Capital*. The footnote beneath the graph indicates: *EBITDA Net of Interest & Working Capital. The Uses graph on the right is $2.5 Billion is divided into four different sections. 16 States require $1.4 Billion, $500M is for SPLT, $400M is for Western States, and $200M is for Ohio.] McLeodUSA logo . . .100% plant and equipment Slide 23 Stock Price Exchange Ratio. . . [Two line graphs appear. One listing the Splitrock Daily Closing price: 08/02/99 Through 01/06/00. Numbers, shown as prices, up the left side are even numbers showing "10," "12," "14," "16," "18," "20," "22," "24," "26". Along the bottom line are the months "Sept," "Oct," "Nov," "Dec," "Jan 2000." The second graph lists Exchange Ratio: 08/02/99 through 01/06/00. Number up the left side shown as Exchange Ratio are listed at "0.30," "0.35," 0.40," 0.45," "0.50," "0.55," "0.60". Along the bottom are months with the first letter abbreviation and a day of the week number above it, starting with A 6 and showing a point for each week until J 6 2000. "J 6" is a dot with the words Deal Price 5 day avg.] McLeodUSA logo . . .great timing Slide 24 McLeodUSA and Splitrock. . . Right Assets Right Management Right Execution Right Time McLeodUSA logo . . .right combination Slide 25 McLeodUSA Investment of $100. . . [Two bars representing Shareholder Investment showing an investment in McLeodUSA of $100 in June 96 has grown to a value of $590 in Dec. 99. The Closing price Dec. 31, 1999.] McLeodUSA logo . . .first 3.5 years Slide 26 Large McLeodUSA logo and Splitrock logo -----END PRIVACY-ENHANCED MESSAGE-----