UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the Quarterly Period Ended September 30, 2004 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period to |
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Commission file number 0-20763 |
McLEODUSA INCORPORATED
(Exact name of registrant as specified in its charter)
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Delaware |
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42-1407240 |
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(State of Incorporation) |
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(IRS Employer Identification No.) |
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McLeodUSA
Technology Park |
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52406-3177 |
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(Address of principal executive office) |
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(Zip Code) |
319-364-0000
(Registrant’s telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No o
The number of shares outstanding of each class of the issuer’s common stock as of October 29, 2004:
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Common Stock Class A: ($0.01 par value) |
190,703,965 shares |
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Common Stock Class B: ($0.01 par value) |
78,203,135 shares |
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Common Stock Class C: ($0.01 par value) |
35,546,879 shares |
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McLEODUSA INCORPORATED AND SUBSIDIARIES
INDEX
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Condensed
Consolidated Balance Sheets |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
McLEODUSA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
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September 30, |
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December 31, |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
26.1 |
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$ |
56.5 |
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Trade receivables, net |
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60.3 |
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65.6 |
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Prepaid expenses and other |
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25.2 |
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22.4 |
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Assets held for sale |
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2.0 |
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2.0 |
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Total current assets |
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113.6 |
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146.5 |
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Property and equipment |
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Land and buildings |
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78.0 |
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78.6 |
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Communications networks |
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1,102.1 |
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996.3 |
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Furniture, fixtures and equipment |
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202.9 |
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196.8 |
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Networks in progress |
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84.5 |
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171.6 |
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Total property and equipment |
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1,467.5 |
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1,443.3 |
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Less accumulated depreciation |
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649.4 |
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435.6 |
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Net property and equipment |
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818.1 |
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1,007.7 |
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Intangibles and other assets |
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Goodwill |
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— |
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245.1 |
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Other intangibles, net |
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156.0 |
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201.8 |
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Other |
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24.1 |
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29.5 |
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Total intangibles and other assets |
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180.1 |
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476.4 |
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TOTAL ASSETS |
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$ |
1,111.8 |
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$ |
1,630.6 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Current maturities of long-term debt |
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$ |
40.4 |
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$ |
27.1 |
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Accounts payable |
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35.1 |
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30.5 |
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Accrued payroll and payroll related expenses |
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20.4 |
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20.6 |
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Other accrued liabilities |
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79.8 |
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100.9 |
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Deferred revenue, current portion |
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6.7 |
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6.9 |
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Liabilities related to discontinued operations |
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0.3 |
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1.1 |
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Total current liabilities |
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182.7 |
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187.1 |
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Long-term debt, less current maturities |
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724.7 |
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717.3 |
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Deferred revenue, less current portion |
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17.2 |
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15.1 |
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Other long-term liabilities |
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60.8 |
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58.3 |
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Total liabilities |
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985.4 |
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977.8 |
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Redeemable convertible preferred stock |
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McLeodUSA Preferred Series A, redeemable, convertible, $0.01 par value; 10,000,000 authorized and issued; 4,432,741 and 7,377,149 outstanding at September 30, 2004 and December 31, 2003, respectively |
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80.4 |
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131.1 |
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Stockholders’ equity |
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McLeodUSA Common, Class A $0.01 par value; 1,886,249,986 authorized, 190,664,756 and 175,527,257 issued and outstanding at September 30, 2004 and December 31, 2003, respectively |
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1.9 |
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1.8 |
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McLeodUSA Common, Class B $0.01 par value; 78,203,135 authorized, issued and outstanding at September 30, 2004 and December 31, 2003 |
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0.8 |
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0.8 |
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McLeodUSA Common, Class C $0.01 par value; 35,546,879 authorized, issued and outstanding at September 30, 2004 and December 31, 2003 |
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0.3 |
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0.3 |
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McLeodUSA Preferred Series B, $0.01 par value; 10 authorized, issued and outstanding at September 30, 2004 and December 31, 2003 |
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— |
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McLeodUSA Warrants |
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22.6 |
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22.6 |
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Additional paid-in capital |
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1,043.9 |
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993.3 |
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Accumulated deficit |
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(1,023.5 |
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(497.1 |
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Total stockholders’ equity |
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46.0 |
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521.7 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
1,111.8 |
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$ |
1,630.6 |
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The accompanying notes are an integral part of these condensed consolidated financial statements
3
McLEODUSA INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
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Three months ended September 30, |
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2004 |
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2003 |
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Revenues |
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$ |
168.1 |
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$ |
211.0 |
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Operating expenses: |
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Cost of service (exclusive of depreciation and amortization shown separately below) |
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94.1 |
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117.4 |
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