SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
COMMISSION FILE NUMBER: 0-27442
OMNIPOINT CORPORATION
(Exact Name of Registrant as specified in its charter)
DELAWARE 04-2969720
(State or other jurisdiction of (IRS employer
incorporation or organization) identification No.)
2000 NORTH 14TH STREET, SUITE 550
ARLINGTON, VA 22201
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 522-7778
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 [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 50,345,515 shares of common
stock were outstanding as of July 31, 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Note 1)
<TABLE>
<CAPTION>
OMNIPOINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<S> <C> <C>
June 30, 1996 December 31,
(unaudited) 1995
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $127,487 $57,784
Prepaids and other assets (Note 3) 1,613 5,040
Inventory 1,747 1,310
----------- -----------
Total current assets 130,847 64,134
Fixed assets, net (Note 4) 65,326 18,957
FCC deposit - 40,000
Other assets - 879
Licensing costs, net of accumulated amortization of $13,460
and $9,116 as of June 30, 1996 and December 31, 1995,
respectively 334,058 338,402
Unissued license payment (Note 8) 25,457 -
Deferred financing costs and other intangible assets, net of
accumulated amortization of $1,464 and $987 as of
June 30, 1996 and December 31, 1995,respectively 12,069 12,618
------------ -----------
Total assets $567,757 $474,990
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $2,905 $3,331
Accrued expenses (Note 5) 2,755 4,593
Accrued interest payable 125 388
Capital lease obligations - current portion 129 182
Credit agreement - 36,500
Convertible Subordinated Notes - 16,250
Deferred revenue 1,050 4,300
Loan payable under financing agreement - current portion 13,105 -
----------- -----------
Total current liabilities 20,069 65,544
Capital lease obligations - long term portion 40 106
Loan payable under financing agreement 71,429 31,758
Senior notes 17,552 16,485
New York MTA license obligation (Note 6) 347,518 347,518
Commitments and contingencies (Note 7 and 9)
Redeemable convertible preferred stock, $.01 par value, 5,750,000 shares
authorized at December 31, 1995:
Series A; 666,667 shares issued and outstanding at December 31, 1995
(at liquidation preference) - 1,500
Series B; cumulative preferred stock; 1,651,714 shares issued
and outstanding at December 31, 1995 (liquidation
preference of $17,244 at December 31, 1995), net of
issuance costs - 15,919
Series C; cumulative preferred stock; 1,866,338 shares issued
and outstanding at December 31, 1995 (liquidation
preference of $29,106 at December 31, 1995),
net of issuance costs - 26,708
Stockholders' equity (deficit):
<PAGE>
Common stock, par value, $.01 per share;
75,000,000 shares authorized; 24,658,618 shares
issued and outstanding at December 31, 1995 and 45,799,128
shares issued and outstanding at June 30, 1996 458 247
Additional paid-in capital 209,669 29,860
Accumulated deficit (96,911) (59,498)
Unearned compensation (891) (23)
Notes receivable (1,176) (1,134)
------------- ----------
Total stockholders' equity (deficit) 111,149 (30,548)
------------- ----------
Total liabilities and stockholders' equity $567,757 $474,990
============== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share data)
<S> <C> <C> <C> <C>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- ---------------------------------
1996 1995 1996 1995
---------------- -------------- --------------- ----------------
Revenues $ - $ - $ - $ -
Operations expenses:
Research and development 8,507 2,859 13,418 5,177
Sales, general, and administrative 5,019 2,630 10,039 4,414
Depreciation and amortization 3,094 2,690 6,595 5,381
---------------- -------------- --------------- ----------------
Total operating expenses 16,620 8,179 30,052 14,972
---------------- -------------- --------------- ----------------
Loss from operations (16,620) (8,179) (30,052) (14,972)
---------------- -------------- --------------- ----------------
Other income (expense):
Interest income 1,313 102 2,711 153
Interest expense related to the New York MTA
License obligation reversed in
December 1995 (Note 6) - (8,062) - (15,713)
Interest expense (6,203) (291) (10,072) (622)
---------------- -------------- --------------- ----------------
Net loss $ (21,510) $(16,430) $ (37,413) $ (31,154)
================ ============== =============== ================
Loss per share $ (0.47) $ (0.52) $ (0.87) $ (0.99)
================ ============== =============== ================
Weighted average common shares outstanding 45,620 31,369 43,045 31,357
================ ============== =============== ================
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<S> <C> <C>
Six Months Ended
June 30,
---------------------------------
1996 1995
--------------- ---------------
Cash flows used in operating activities:
Net loss $ (37,413) $ (31,154)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation 6,595 5,381
Compensation expense from stock grants 114 42
Increase in employee notes receivable and related accrued interest (42) (11)
Payment in kind interest on financing agreement 1,009 -
Accrued interest (262) -
Interest expense associated with warrants - 300
Interest expense associated with amortization of discount and -
issuance cost 1,147
Delivery of pilot system equipment funded by financing agreement 1,321 -
Changes in assets and liabilities:
(Increase) decrease in operating assets:
Prepaid expenses and other assets (320) 92
Inventory (437) 13
Other Assets 879 -
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (426) (49)
Accrued interest on New York MTA License obligation, reversed in December 1995 - 15,713
--------------- ---------------
Net cash used in operating activities (27,835) (9,673)
--------------- ---------------
Cash flows used in investing activities:
Purchase of equipment (10,508) (620)
Refund of FCC deposit 40,000 -
Payment for Unissued license (25,457) -
--------------- ---------------
Net cash used in investing activities 4,035 (620)
--------------- ---------------
Cash flows from financing activities:
Proceeds from line of credit loan agreement - 10,000
Proceeds from issuance of preferred stock, net of issuance costs - 16,030
Proceeds from issuance of common stock 586 93
Payments of obligations under capital leases (119) (157)
Payments on credit agreement (36,500) -
Proceeds from financing agreement 13,300 -
Costs associated with secondary public offering (665) -
Proceeds from initial public offering, net of expenses 118,437 -
Dividends accrued and paid (1,536) -
--------------- ---------------
Net cash provided by financing activities 93,503 25,966
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 69,703 15,673
Cash and cash equivalents at beginning of period 57,784 5,543
--------------- ---------------
Cash and cash equivalents at end of period $ 127,487 $ 21,216
=============== ===============
Supplemental cash flow information (Note 10)
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
OMNIPOINT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)
For The Six Months Ended June 30, 1996
<S> <C> <C> <C> <C> <C> <C>
Total
Additional Stockholders'
Common Stock Paid-in Accumulated Unearned Notes Equity
Shares Amount Capital Deficit Compensation Receivable (Deficit)
----------- ------- ---------- ------------ ------------ ---------- ------------
Balance, December 31, 1995 24,658,618 $ 247 $ 29,860 $ (59,498) $ (23) $ (1,134) $ (30,548)
Dividends accrued on
Series B and Series C
Preferred Stock - - (273) - - - (273)
Shares issued at initial
public offering,
net of expenses 8,050,000 80 118,357 - - - 118,437
Conversion of
subordinated debt 1,562,500 16 16,234 - - - 16,250
Conversion of
preferred stock 10,605,591 106 44,597 - - - 44,703
Exercise of stock options 609,919 6 579 - - - 585
Exercise of stock Warrants 312,500 3 (2) - - - 1
Options issued in form of
advanced compensation - - 982 - (982) - -
Amortization of
unearned compensation - - - - 114 - 114
Interest on employee
notes receivable - - - - - (58) (58)
Forgiveness of employee
notes receivable - - - - - 16 16
Costs associated with
secondary offering - - (665) - - - (665)
Net loss - - - (37,413) - - (37,413)
---------- -------- ---------- ----------- ------------ ---------- ------------
Balance, June 30, 1996 45,799,128 $ 458 $ 209,669 $ (96,911) $ (891) $ (1,176) $ 111,149
========== ======== ========== =========== ============ ========== ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
1. GENERAL:
The consolidated financial statements have been prepared by Omnipoint
Corporation ("Omnipoint" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in
the opinion of management, include all adjustments necessary for a fair
presentation of the financial information for each period shown. Certain
information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such SEC
rules and regulations. Management believes that the disclosures made are
adequate to make the information presented not misleading. The results for
interim periods are not necessarily indicative of the results for the full
year. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto included
in the Company's 1995 Annual Report on Form 10-K.
On January 31, 1996, the Company completed an initial public offering in
which 8,050,000 shares of common stock were issued which provided the
Company with proceeds of approximately $118,437,000, net of expenses.
Certain prior year amounts have been reclassified to conform with the six
month presentation.
2. INVENTORY:
Inventory consists of raw materials and other items used in development of
the Company's technology.
3. PREPAID EXPENSES AND OTHER ASSETS:
<TABLE>
<CAPTION>
Prepaid expenses and other assets consist of the following at June 30, 1996
(unaudited) and December 31, 1995:
<S> <C> <C>
June 30, December 31,
1996 1995
------------------ -----------------
(In thousands)
Advance payment for pilot system equipment
financed through financing agreement $ 1,100 $ 4,840
Insurance 204 -
Deposits 220 83
Other 89 117
------------------ -----------------
$ 1,613 $ 5,040
================== =================
</TABLE>
<TABLE>
<CAPTION>
4. FIXED ASSETS:
Fixed assets including equipment under capital leases consist of the
following at June 30, 1996 (unaudited) and December 31, 1995:
<S> <C> <C>
June 30, December 31,
1996 1995
------------------ -----------------
(In thousands)
Building $ 1,768 $ 1,190
Office equipment 1,104 649
Lab equipment 7,429 3,693
Network infrastructure equipment 48,543 12,634
Cell sites 3,344 -
Furniture and fixtures 310 265
Purchased software 2,637 1,453
Building and leasehold improvements 4,001 1,325
Vehicles 431 214
------------------ -----------------
69,567 21,423
Less: accumulated depreciation (4,241) (2,466)
------------------ -----------------
$ 65,326 $ 18,957
================== =================
</TABLE>
Network infrastructure equipment includes approximately $543,000 of capitalized
interest at June 30, 1996.
<PAGE>
5. ACCRUED EXPENSES:
<TABLE>
<CAPTION>
Accrued expenses consist of the following at June 30, 1996 (unaudited)
and December 31, 1995:
<S> <C> <C>
June 30, December 31,
1996 1995
------------------ -----------------
(In thousands)
Salaries and benefits $ 1,139 $ 724
Bonuses 130 350
Relocation 579 539
Professional fees 447 464
Dividends - 1,839
Initial public offering/secondary offering costs 292 593
Other 168 84
------------------ -----------------
$ 2,755 $ 4,593
================== =================
</TABLE>
6. NEW YORK MTA LICENSE OBLIGATION:
Prior to December 31, 1995, the FCC had not implemented the exact terms for
principal and interest payments on the New York MTA License. The initial
terms generally allowed for installment payments over the first five years
of the License with interest-only for at least the first two years. Since
payments did not begin until after the New York MTA License and Pioneer's
Preference orders were no longer subject to judicial review, the FCC had
not yet determined the interest rate to be charged, the timing and nature
of the installment payments and related issues. Therefore, the Company
estimated and accrued interest at the prime rate (8.5% at June 30, 1995)
from the date of the New York MTA License obligation was awarded, and had
recorded accrued interest as of June 30, 1995 of $17,170,208.
On March 8, 1996, the FCC adopted an Order which specifies the license
payment terms, such as the interest rate and timetable for payment of the
principal obligations for recipients of the Pioneer's Preference license.
The FCC adopted an interest rate of 7.75%. Payments commenced 30 days from
the Order date or April 8, 1996, and thereafter are due on April 30, July
31, October 31 and January 31 over the next five years. The five year
payment period runs and interest accrues from the adoption date of March 8,
1996.
Based on the Order, the Company revised its estimate and accrual of
interest. Pursuant to Accounting Principles Board Opinion No. 20
"Accounting Changes," this change in accounting estimate was recorded in
the Company's financial statements during December 1995, resulting in a
decrease in 1995 interest expense of $33,547,639. Had this adjustment been
retroactively recorded in the six months ended June 30, 1995, the net loss
and loss per common share would have been $(15,440,480) and $(0.49),
respectively.
7. ERICSSON AGREEMENTS:
On April 16, 1996, Ericsson, Inc. ("Ericsson") and the Company entered into
definitive agreements governing (i) the licensing and supply arrangement
related to the Omnipoint System, (ii) the purchase by OCI or other
Omnipoint affiliates of PCS 1900 handsets, (iii) the sale by Ericsson of
IS-661 and GSM infrastructure equipment, and (iv) cooperation of marketing
standards and technical activities. Under the terms of the licensing and
supply agreement, Ericsson will pay license fees and royalties, including
an initial $4.5 million license fee. In addition, under the agreement for
the sale of Ericsson infrastructure equipment, the Company and its
affiliates will purchase $250.0 million of a mix of IS-661 and PCS 1900
infrastructure equipment. Under the handset agreement, the Company will
purchase GSM handsets. These commitments are to be fulfilled within five
years of the date upon which the definitive agreement was executed.
In April 1996, the Company entered into a non-binding memorandum of
understanding with Orbitel Mobile Communications Ltd. ("Orbitel"), a
wholly-owned subsidiary of Ericsson, which contemplates agreements pursuant
to which Orbitel will develop, manufacture and supply to the Company IS-661
and dual mode IS-661/PCS 1900 handsets in a mutually agreeable timetable
upon OCI agreeing to a minimum purchase commitment to be determined when
the parties have ascertained the resources necessary for the development
and manufacture of such handsets.
<PAGE>
8. ENTREPRENEURS' BAND AUCTION:
The Company successfully bid for 18 Entrepreneurs' Band BTA licenses for an
aggregate price of $509.1 million. The Company made its first payment of
5%, or $25.5 million on May 14, 1996 utilizing the $40 million deposit with
the FCC; the remaining $14.5 million of the FCC deposit was refunded to the
Company. At the time the licenses are awarded, the Company will pay an
additional 5%, or $25.5 million. The remaining 90%, or $458.1 million, will
be due in quarterly installments beginning in the year 2003 and continuing
until 2006 and will bear interest until paid at the 10-year Treasury Bill
rate on the date the licenses are awarded. The Company anticipates that
these licenses will be issued by the end of August 1996, unless delayed by
FCC proceedings or litigation. The Entrepreneurs' Band BTA licenses and any
other licenses purchased by the Company in the future will be accounted for
in accordance with the recently agreed upon industry practices.
Accordingly, interest incurred for such licenses will be capitalized during
the buildout phase and amortization of such license costs will begin with
the commencement of service to customers.
9. COMMITMENTS AND CONTINGENCIES:
During 1994, the Company entered into an agreement to purchase $100 million
of equipment and services over the next five years with Northern Telecom.
Under the terms of the Supply Agreement, if the conditions of the purchase
obligation of Omnipoint Communications Inc., a subsidiary of the Company
("OCI"), are satisfied and OCI fails to purchase $100 million of equipment
and services, it may have to pay a penalty of 10% of the satisfied portion
of the $100 million which may be waived under certain conditions. On July
21, 1995, the Company entered into an amendment to this supply agreement to
increase the purchase commitment from $100 million to $250 million. The
Company has purchased approximately $57.3 million under this purchase
commitment as of June 30, 1996.
On December 12, 1995, the Company and Hansol Paper Co., Ltd. ("Hansol") and
its Telecom affiliates entered into a strategic alliance for the promotion
of the Omnipoint System in the Republic of Korea and other parts of Asia,
and the grant of a license to Hansol to manufacture Omnipoint System
handsets. The agreement provides that Omnipoint will enter into a purchase
order, subject to certain preconditions, including competitive pricing, to
acquire from Hansol handsets for sale to subscribers in areas covered by
licenses, if any, purchased by the Company in the Entrepreneurs' Band
auction.
The NT Credit Facility is secured by a pledge of all capital stock of OCI
owned by a wholly-owned subsidiary of the Company (which constitutes a
95.58% ownership interest) and substantially all of OCI's assets.
<TABLE>
<CAPTION>
10. SUPPLEMENTAL CASH FLOW INFORMATION (UNAUDITED):
<S> <C> <C>
Six Months Ended June 30,
1996 1995
------------------ -----------------
(In thousands)
Cash paid for interest 7,612 322
Cash paid for taxes 83 23
Noncash investing and financing activities:
Common stock issued upon conversion of subordinated notes 16,250 -
Issuance of options as a form of advanced compensation 982 -
Common stock issued in exchange for employee notes receivable - 75
Conversion of preferred stock in connection with the offering 44,703 -
Issuance of Series B preferred stock in payment of Series B
dividend 576 1,517
Fixed asset and capitalized interest funded by the financing
agreement 37,636 -
Pilot system equipment funded by financing agreement 1,321 -
Issuance of Series C preferred stock in exchange for amounts
due under the line of credit - 10,000
Dividends accrued on Series B preferred stock - 231
</TABLE>
<PAGE>
11. SUBSEQUENT EVENTS (UNAUDITED):
SECONDARY EQUITY OFFERING
On July 3, 1996, the Company completed a secondary equity offering of
4,500,000 shares of common stock. Net proceeds to the Company totaled
$110.8 million after underwriters' commissions and associated offering
costs. The net proceeds are expected to be used principally for the second
required principal payment and subsequent interest payments for the
Entrepreneurs' Band licenses, for working capital and capital expenditures
related to the Entrepreneurs' Band networks and for the New York MTA
operations.
ERICSSON CREDIT AGREEMENT
In August 1996, the Company signed a credit agreement with Ericsson to
provide financing to the Company for up to $132.0 million for the purposes
of financing the purchase of equipment and services from Ericsson for the
New York MTA market. A portion of the Ericsson Credit Facility, which may
be used for interest payments accruing under such facility and for the
purposes of financing the purchase of handsets manufactured and supplied by
Ericsson or Orbitel, matures on June 30, 1998. The principal amount on
other portions of the facility are payable in installments beginning in
2000, with the final payment due on December 31, 2004. Amounts borrowed and
repaid are not available for re-borrowing. Interest on the Ericsson Credit
Facility is payable quarterly.
Under the terms of the Ericsson Credit Facility, OCI is subject to certain
financial and operational covenants including restrictions on OCI's ability
to pay dividends, restrictions on indebtedness and certain financial
maintenance requirements. Additionally, the Ericsson Credit Facility
provides that, among other events, the failure of OCI to pay when due
amounts owing the FCC shall constitute an event of default.
The Ericsson Credit Facility is secured by substantially all of the assets
of OCI, including a pledge of all capital stock of OCI owned by a
wholly-owned subsidiary of the Company (which constitutes a 95.58%
ownership interest). All collateral is held by a collateral agent and is
shared on a pari passu basis with Northern Telecom.
LINE OF CREDIT
In August 1996, the Company, through its subsidiary, Omnipoint PCS
Entrepreneurs Two, Inc. ("OPCSE Two"), entered into a credit facility with
a bank. The agreement provides for up to $100 million in revolving credit
for general working capital purposes with a draw down termination date and
final repayment date of May 8, 1997. The initial funding took place on
August 12, 1996, at which time the Company drew down $60 million (which
amount was repaid on August 13, 1996). Subsequent to the initial drawing,
the committed amount of the credit facility may not exceed the initial
drawing and is subject to mandatory reduction under the terms of the credit
agreement. Under the terms of the agreement, the Company paid a portion of
the upfront fee and will pay additional fees based in part on amounts
outstanding from time to time. Interest periods range from one to fourteen
days, with interest rates set by the bank based on wholesale money market
rates available to the bank. The facility is secured by all assets of OPCSE
Two and a pledge of all capital stock of OPCSE Two owned by a wholly-owned
subsidiary of the Company. The Company has also guaranteed the payment and
performance of OPCSE Two's obligations. <PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in forward-looking statements. Factors that might cause such a
difference include, but are not limited to, the "Risk Factors" set forth in the
Company's Registration Statement on Form S-1 (File No. 333-03739).
OVERVIEW
Omnipoint reported a second quarter 1996 loss of $21.5 million or $0.47 per
share, an increase of 31.1%, or approximately $5.1 million, compared to the same
quarter in 1995. For the six months ended June 30, 1996, the Company reported a
loss of $37.4 million, or $0.87 per share, an increase of 19.9%, or
approximately $6.2 million, compared to the same period in 1995. The 1995 second
quarter loss was $16.4 million, or $0.52 per share, and a six month 1995 loss of
$31.2 million, or $0.99 per share. On March 8, 1996, the FCC adopted an order
setting the interest rate for the New York MTA License at 7.75% per annum
accruing from March 8, 1996. As a result, the Company reversed accrued interest
of $33.5 million related to the License in December 1995. Had this adjustment
been retroactively recorded in the six months ended June 30, 1995, the net loss
and loss per share would have been $15.4 million and $0.49, respectively. For
the three month period ending June 30, 1995, the second quarter loss would have
been $8.4 million, or $0.27 per share.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30,
1995
Research and development expenses increased by 193.1%, or approximately
$5.6 million, to $8.5 million for the three months ended June 30, 1996 compared
to $2.9 million for the three months ended June 30, 1995. The increase was
primarily due to an increase of $1.0 million for project management costs
associated with the buildout of the IS-661 pilot system and New York MTA PCS
1900 infrastructure, an increase of $1.1 million for equipment leases and
rentals, an increase of $1.3 million for the development and delivery of a pilot
IS-661 mobility system, and an increase of $1.8 million in payroll and related
taxes, employee benefits and employee recruiting costs, associated with the
Company's continued growth and its development of the IS-661 technology. The
Company expects that research and development expenses will continue to increase
significantly during the remainder of 1996 as compared to 1995.
Sales, general and administrative expenses increased by 92.3%, or
approximately $2.4 million, to $5.0 million for the three months ended June 30,
1996 compared to $2.6 million for the three months ended June 30, 1995. Of this
increase, $1.2 million was due to payroll and payroll related expenses
associated with increases in headcount, resulting from the expansion of the
Company's operations. The remaining increase consists primarily of increases of
$164,000 in consulting service fees, $103,000 in rent and utility expenses,
$378,000 in equipment rentals and leases. The Company expects that such expenses
will continue to increase significantly during 1996, as the Company continues to
expand its operations.
Depreciation and amortization increased by 15.0%, or approximately
$400,000, to $3.1 million for the three months ended June 30, 1996 compared to
$2.7 million for the three months ended June 30, 1995. The increase in the 1996
period was due to a general increase in depreciation related to the Company's
research and development equipment.
Interest income increased approximately $1.2 million, to $1.3 million for
the three months ended June 30, 1996 compared to $102,000 for the three months
ended June 30, 1995. The increase was due to the increase in interest earned on
interest bearing cash and cash equivalents. The increase in cash and cash
equivalents resulted from the issuance of $25.0 million in senior notes in
November 1995 and $25.0 million in convertible notes in November and December
1995 and the proceeds of $119.8 million received from the Company's initial
public offering.
Interest expense decreased by 26.2%, or approximately $2.2 million, to $6.2
million for the three months ended June 30, 1996 compared to $8.4 million of the
three months ended June 30,1995. The interest expense for the three months ended
June 30, 1995 included $8.1 million of accrued interest expense related to the
New York MTA License. On March 8, 1996, the FCC adopted an order setting the
interest rate for the License at 7.75% per annum accruing from March 8, 1996. As
a result, the Company reversed $33.5 million of accrued interest related to the
New York MTA License during December 1995. Had this adjustment been
retroactively recorded in the three months ended June 30,
<PAGE>
1995, the net loss and loss per share would have been $8.4 million and $0.27,
respectively.
Net loss increased by 31.1%, or approximately $5.1 million to $21.5 million
for the three months ended June 30, 1996 compared to $16.4 million for the three
months ended June 30, 1995. This increase was primarily due to a general
increase in operating expenses, partially offset by a decrease of $3.4 million
in net interest expense.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Research and development expenses increased by 157.7%, or approximately
$8.2 million, to $13.4 million for the six months ended June 30, 1996 compared
to $5.2 million for the six months ended June 30, 1995. The increase was
primarily due to an increase of $1.1 million in the purchase of research and
development components and non-recurring engineering, an increase of $1.3
million for the development and delivery of a pilot IS-661 mobility system, an
increase of $1.1 million for project management costs associated with the
buildout of the IS-661 pilot system and New York MTA PCS 1900 infrastructure, an
increase of $1.1 million for equipment leases and rentals and an increase of
$3.0 million in payroll and related taxes, employee benefits and employee
recruiting costs associated with the Company's continued growth and its
development of the IS-661 technology. The Company expects that research and
development expenses will continue to increase significantly during the
remainder of 1996 as compared to 1995.
Sales, general and administrative expenses increased by 127.3%, or
approximately $5.6 million, to $10.0 million for the six months ended June 30,
1996 compared to $4.4 million for the six months ended June 30, 1995. Of this
increase, $2.1 million was due to payroll related expenses associated with
increases in headcount resulting from the expansion of the Company's operations.
The remaining increase consists primarily of increases of $914,000 in consulting
service fees, $386,000 in rent and utilities, $201,000 in legal fees, $521,000
in equipment rentals and leases and $105,000 in insurance expense. The Company
expects that such expenses will continue to increase significantly during 1996,
as the Company continues to expand its operations.
Depreciation and amortization increased by 22.2%, or approximately $1.2
million, to $6.6 million for the six months ended June 30, 1996 compared to $5.4
million for the six months ended June 30, 1995. The increase in the 1996 period
was due to a general increase in depreciation related to the Company's research
and development equipment.
Interest income increased approximately $2.5 million, to $2.7 million for
the six months ended June 30, 1996 compared to $153,000 for the six months ended
June 30, 1995. The increase was due to the increase in interest earned on
interest bearing cash and cash equivalents. The increase in cash and cash
equivalents resulted from the issuance of $25.0 million in senior notes in
November 1995 and $25.0 million in convertible notes in November and December
1995 and the proceeds of $119.8 million received from the Company's initial
public offering.
Interest expense decreased by 38.0%, or approximately $6.2 million, to
$10.1 million for the six months ended June 30, 1996 compared to $16.3 million
of the six months ended June 30, 1995.
The interest expense for the six months ended June 30, 1995 included $15.7
million of accrued estimated interest expense related to the New York MTA
License. On March 8, 1996, the FCC adopted an order setting the interest rate
for the License at 7.75% per annum accruing from March 8, 1996. As a result, the
Company reversed $33.5 million of accrued interest related to the New York MTA
License during December 1995. Had this adjustment been retroactively recorded in
the six months ended June 30, 1995, the net loss and loss per share would have
been $15.4 million and $0.53, respectively.
Net loss increased approximately $6.2 million to $37.4 million for the six
months ended June 30, 1996 compared to $31.2 million for the six months ended
June 30, 1995. This increase was primarily due to a general increase in
operating expenses, partially offset by a decrease of $8.7 million in net
interest expense.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ending June 30, 1996, the Company has financed its
operations and met its capital requirements primarily through the IPO, vendor
financing. Theses financing activities provided net cash of $93.5 million for
the six months ended June 30, 1996. Operating activities used net cash of $27.8
million for the six months ended June 30, 1996 compared to $9.7 million for the
six months ended June 30, 1995. The increase resulted from the Company's
additional activity relating to supporting product development and commencement
of the New York MTA network buildout. Investing activities provided net cash of
$4.0 million for the six months ended June 30, 1996 compared to a use of
$620,000 for the
<PAGE>
six months ended June 30, 1995. The increase consists of $10.5 million for
purchases of New York MTA infrastructure related items and lab equipment used in
engineering and manufacturing, and $25.5 million for the down payment on the
Entrepreneur's Band FCC licenses which are offset by the return of the $40
million deposit from the FCC's Entrepreneurs' Band auction.
As of June 30, 1996, the Company had working capital of approximately
$110.8 million. In January 1996, working capital increased by $135.4 million,
from a deficit of $13.7 million at December 31, 1995, to $121.7 million upon
receiving $118.4 million of proceeds, net of expenses, from the issuance of
8,050,000 shares of Common Stock in the Company's initial public offering and
the reduction of current liabilities of $36.5 million and $16.3 million related
to the repayment of debt outstanding pursuant to a certain credit agreement, and
the conversion of $25.0 million of convertible subordinated notes upon the
initial public offering, respectively. The increase in working capital was
partially offset by the cash used to repay a short-term credit agreement debt.
In July 1996, the Company received approximately $110.8 million of proceeds, net
of expenses, from the issuance of 4,500,000 shares of Common Stock.
Regarding the New York MTA License, on March 8, 1996 the FCC adopted an
order, the terms and conditions of which are as follows: (i) a five-year payment
period with interest accruing at 7.75% from the adoption date of the order with
the first payment due on the 30th day following such date and subsequent
payments due quarterly on April 30, July 31, October 31 and January 31, (ii)
interest only payments for the first two years and (iii) principal and interest
payments for the remaining three years. The Company made the first interest
payment of $2.2 million on April 5, 1996. The Company made a second payment of
$4.5 million, representing interest from April 8 through June 30, 1996, on April
30, 1996.
The Company has an agreement to purchase $250.0 million of equipment and
services over the next five years from Northern Telecom. The Company has
purchased approximately $57.3 million of equipment and services under such
agreement. The Company has a $382.5 million credit facility with Northern
Telecom, the "NT Credit Facility," to finance future purchases and installations
of telecommunications equipment, engineering services, certain related
construction costs, third-party equipment and other expenses. The Company also
has an OEM agreement to sell certain equipment, hardware and software to
Northern Telecom at its normal selling prices, which will result in licensing
fees and revenues.
The NT Credit Facility is secured by a pledge of all capital stock of OCI
owned by a wholly-owned subsidiary of the Company (which constitutes a 95.58%
ownership interest) and substantially all of OCI's assets. Under the terms of
the NT Credit Facility, OCI is subject to certain financial and operational
covenants including restrictions on OCI's ability to pay dividends, restrictions
on indebtedness and certain financial maintenance requirements. Additionally,
the NT Credit Facility provides that, among other events, the failure of OCI to
pay when due amounts owing the FCC shall constitute an event of default.
Interest on the NT Credit Facility is payable quarterly.
A portion of the NT Credit Facility, which may be used for working capital
purposes including interest payments on the principal of such facility, matures
on June 30, 1997. Borrowings for working capital purposes which are repaid may
be subsequently borrowed for the other purposes allowed under the NT Credit
Facility. As of June 30, 1996, the Company owed $13.1 million on the portion of
the NT Credit Facility which matures on June 30, 1996.
The principal amount of the non-working capital portions of the NT Credit
Facility is payable in installments beginning in 2000, with the final payment
due on December 31, 2004. As of June 30, 1996, OCI had a balance (principal and
accrued interest) of approximately $71.4 million outstanding under the
non-working capital portions of the facility.
Subsequent to June 30, 1996, the Company initiated an additional drawing on
the NT Credit Facility of $8.1 million to fund the purchase of construction and
consulting services related to the buildout of the New York MTA network.
On November 29, 1995, the Company sold convertible notes in the aggregate
amount of $15.0 million, together with warrants to purchase 375,000 shares of
Common Stock at an exercise price of $.004 per share. On December 18, 1995, the
Company sold convertible notes in the aggregate amount of $10.0 million together
with warrants to purchase 250,000 shares of Common Stock at an exercise price of
$.004 per share. The convertible notes were converted upon the closing of the
Company's initial public offering on January 31, 1996, into 1,562,500 shares of
Common Stock.
On January 31, 1996, the Company completed an initial public offering of
8,050,000 shares of Common Stock resulting in proceeds, net of related expenses
of approximately $118.4 million. In connection with the offering, the Preferred
<PAGE>
Stock were converted into 10,605,591 shares of Common Stock. The Company used a
portion of the proceeds to pay down the outstanding balance of the credit
agreement of $36.5 million in connection with its participation in the
Entrepreneurs' Band auction.
On July 3, 1996, the Company completed a secondary equity offering of
4,500,00 shares of common stock. Net proceeds to the Company totaled
$110,800,000 after underwriters' commissions and associated offering costs. The
net proceeds are expected to be used principally for the second required
principal payment and subsequent interest payments for the Entrepreneurs' Band
licenses, for working capital and capital expenditures related to the
Entrepreneurs' Band networks and for the New York MTA operations
In August 1996, the Company, through its subsidiary, Omnipoint PCS
Entrepreneurs Two, Inc. ("OPCSE Two"), entered into a credit facility with a
bank. The agreement provides for up to $100 million in revolving credit for
general working capital purposes with a draw down termination date and final
repayment date of May 8, 1997. The initial funding took place on August 12,
1996, at which time the Company drew down $60 million (which amount was repaid
on August 13, 1996). Subsequent to the initial drawing, the committed amount of
the credit facility may not exceed the initial drawing and is subject to
mandatory reduction under the terms of the credit agreement. Under the terms of
the agreement, the Company paid a portion of the upfront fee and wil pay
additional fees based in part on amounts outstanding from time to time. Interest
periods range from one to fourteen days, with interest rates set by the bank
based on wholesale money market rates available to the bank. The facility is
secured by all assets of OPCSE Two and a pledge of all capital stock of OPCSE
Two owned by a wholly-owned subsidiary of the Company. The Company has also
guaranteed the payment and performance of OPCSE Two's obligations.
As of August 7, 1996, the Company entered into a credit facility with
Ericsson to provide financing to the Company for up to $132.0 million for the
purposes of financing the purchase of equipment and services from Ericsson for
the New York MTA market. A portion of the Ericsson Credit Facility, which may be
used for interest payments accruing under such facility and for the purposes of
financing the purchase of handsets manufactured and supplied by Ericsson and
Orbitel, matures on June 30, 1998. The principal amount on other portions of the
facility is payable in installments beginning in 2000, with the final payment
due on December 31, 2004. Amounts borrowed and repaid are not available for
re-borrowing. Interest on the Ericsson Credit Facility is payable quarterly.
Under the terms of the Ericsson Credit Facility, OCI is subject to certain
financial and operational covenants including restrictions on OCI's ability to
pay dividends, restrictions on indebtedness and certain financial maintenance
requirements. Additionally, the Ericsson Credit Facility provides that, among
other events, the failure of OCI to pay when due amounts owing the FCC shall
constitute an event of default.
The Ericsson Credit Facility is secured by substantially all of the assets
of OCI, including a pledge of all capital stock of OCI owned by a wholly-owned
subsidiary of the Company (which constitutes a 95.58% ownership interest). All
collateral is held by a collateral agent and is shared on a pari passu basis
with Northern Telecom pursuant to an inter-creditor arrangement.
The Company bid successfully for Entrepreneurs' Band licenses with an
aggregate license fee of approximately of $509.1 million (net of the 25% small
business discount). The Company made its first payment of 5%, or approximately
$25.5 million utilizing the $40.0 million deposit with the FCC; the remaining
$14.5 million of the FCC deposit was refunded to the Company for general working
capital purposes. The Company submitted its long-form application for these
licenses. At the time the licenses are awarded, the Company will pay an
additional 5%, or approximately $25.5 million from its cash and cash equivalents
on hand. The Company will pay interest only until 2003 and will pay the balance
of $458.2 million and remaining interest until paid at the 10-year Treasury Note
rate set on the date the licenses are awarded. The Company anticipates that
these licenses will be issued by the end of August 1996, unless delayed by FCC
proceedings or litigation. The Entrepreneurs' Band BTA licenses and any other
licenses purchased by the Company in the future will be accounted for in
accordance with the recently agreed upon industry practices. Accordingly,
interest incurred for such licenses will be capitalized during the buildout
phase and amortization of such license costs will begin with the commencement of
service to customers.
The Company's future capital requirements will depend upon many factors,
including the successful development of new products, the extent and timing of
acceptance of the Company's equipment in the market, requirements to maintain or
arrange for manufacturing facilities, the progress of the Company's research and
development efforts, expansion of the Company's marketing and sales efforts, the
Company's results of operations and the status of competitive products. The
Company estimates that it will require between $100 million to $150 million to
build out its network at a sufficient level to meet the five year buildout
requirement imposed on the Company as a holder of the New York MTA license. The
Company believes that cash and cash equivalents on hand, anticipated revenues,
vendor financing and additional strategic partnerships will be adequate to fund
its operations for the next 12 months. There can be no assurance, however, that
the Company will not require additional financing prior to such date to fund its
operations. The Company
<PAGE>
believes that it will require substantial amounts of additional capital over the
next several years and anticipates that this capital will be derived from a mix
of public offerings and private placements of debt or equity securities or both.
<PAGE>
Part II -- Other Information
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1@ Amended and Restated Certificate of Incorporation of the
Registrant.
3.6* Amended and Restated Bylaws of the Registrant.
4.2 See Exhibit 3.1.
10.1* Registrant's Amended and Restated 1990 Stock Option Plan.
10.2* Form of Incentive Stock Option Agreement under Registrant's 1990
Stock Option Plan.
10.3* Form of Stock Option Agreement under Registrant's 1990 Stock Option
Plan for non-qualified options.
10.4* Form of Stock Option Agreement outside scope of Registrant's 1990
Stock Option Plan for non-qualified options.
10.5* Warrant Certificate, dated August 2, 1991, by and between the
Registrant and Allen & Company Incorporated.
10.6* Warrant Certificate, dated August 2, 1991, by and between the
Registrant and Allen & Company Incorporated.
10.7* Letter agreement, dated June 29, 1995, by and between the
Registrant and Allen & Company Incorporated (relating to Exhibit
10.6).
10.8* Common Stock Purchase Warrant issued March 10, 1995, granted to
Madison Dearborn Capital Partners, L.P.
10.9* Common Stock Purchase Warrant issued March 10, 1995, granted to
Madison Dearborn Capital Partners, L.P.
10.10* Proprietary Information, Development and Non-Compete Agreement,
dated December 6, 1990, by and between the Registrant and Douglas
G. Smith.
10.11* Employment Agreement, effective October 1, 1995, by and between the
Registrant, Omnipoint Communications Inc. and George F. Schmitt.
10.12* Promissory Note, dated October 1, 1995, by George F. Schmitt.
10.13* Stock Restriction Agreement, dated October 1, 1995, by and between
the Registrant and George F. Schmitt.
10.14* Employment Agreement, dated April 17, 1995, by and between the
Registrant and Bradley E. Sparks.
10.15* Promissory Note, dated April 17, 1995, by Bradley E. Sparks.
10.16* Stock Restriction Agreement, dated April 17, 1995, by and between
the Registrant and Bradley E. Sparks.
10.17* Employment Agreement, dated December 5, 1994, by and between the
Registrant and Randall Meals.
10.18* Promissory Note, dated December 5, 1994, by Randall Meals.
10.19* Promissory Note, dated September 19, 1995, by Randall Meals.
10.20* Stock Restriction Agreement, dated December 5, 1995, by and between
the Registrant and Randall Meals.
10.21* Employment Agreement, dated June 21, 1994, by and between Omnipoint
Communications Inc. and Harry Plonskier.
10.22* Stock Restriction Agreement, dated July 5, 1994, by and between the
Registrant and Harry Plonskier. 10.23* Employment Agreement, dated
June 16, 1991, by and between the Registrant and Evelyn Goldfine.
10.24* Employment Agreement, dated April 15, 1994, by and between
the Registrant and Robert Dixon.
10.25 [Intentionally left blank]
10.26* Form of Employment Agreement by and between the Registrant and its
employees.
10.27* Form of Non-Disclosure Agreement.
10.28* Form of Stock Restriction Agreement by and between the Registrant
and certain stockholders.
10.29* Series A Convertible Preferred Stock Purchase Agreement, dated
August 2, 1991, by and between the Registrant and Allen & Company
Incorporated.
10.30* Series B Convertible Preferred Stock Purchase Agreement, dated
August 9, 1993, by and among the Registrant and Madison Dearborn
Capital Partners, L.P.
10.31* Amendment No. 1 to Series B Convertible Preferred Stock Purchase
Agreement, dated June 29, 1995, by and between the Registrant and
Madison Dearborn Capital Partners, L.P.
<PAGE>
10.32* Series C Convertible Preferred Stock Purchase Agreement, dated June
29, 1995, by and among the Registrant and the other parties named
therein.
10.33* Stock Purchase Agreement, dated January 29, 1994, by and between
the Registrant and Ameritech Development Corporation.
10.34* Stock Purchase Agreement, dated June 29, 1994, by and between the
Registrant and Associated PCN Company.
10.35* Common Stock Purchase Agreement, dated June 1, 1994, by and between
the Registrant and the parties named therein.
10.36* Amended and Restated Registration Rights Agreement, dated June 29,
1995, by and among the Registrant and the parties named therein.
10.37* First Amended and Restated Voting Agreement, dated June 29, 1995,
by and among the Registrant and the other parties named therein.
10.38* OEM Supply Agreement for Omnipoint PCS (Personal Communication
Systems) Products, dated September 22, 1994, by and between the
Registrant and Northern Telecom Inc.
10.39* Letter agreement dated December 9, 1994, by and between the
Registrant and Northern Telecom Inc. (relating to Exhibit 10.38).
10.40* Manufacturing License and Escrow Agreement for Personal
Communication Service Products, dated February 28, 1995, by and
between the Registrant and Northern Telecom Inc.
10.41* Collaborative Development Agreement, dated March 1, 1995, by and
between the Registrant and Northern Telecom Inc.
10.42* Reciprocal OEM Agreement Memorandum of Understanding, dated March
30, 1995, by and between the Registrant and Northern Telecom Inc.
10.43* Supply Agreement, dated September 22, 1994, by and between
Omnipoint Communications Inc. and Northern Telecom Inc.
10.44* Amendment No. 1 to Supply Agreement, dated July 21, 1995, by and
between Omnipoint Communications Inc. and Northern Telecom Inc.
10.45* Loan Agreement, dated as of July 21, 1995, by and between Omnipoint
Communications Inc. and Northern Telecom Inc.
10.46 [Intentionally left blank]
10.46.1*Letter Agreement, dated November 14, 1995, by and among the
Registrant, Omnipoint Communications Inc. and JRC International
Inc. (relating to Exhibit 10.46).
10.46.2*Letter Agreement, dated December 21, 1995, by and among the
Registrant, Omnipoint Communications Inc. and JRC International
Inc. (relating to Exhibit 10.46).
10.47* Engineering Services Agreement, dated as of August 31, 1995, by and
between the Registrant and JRC International Inc.
10.48* Memorandum of Understanding, dated April 21, 1995, by and between
the Registrant and Pacific Bell Mobile Services.
10.49* Office Sublease Agreement by and between the Registrant and United
Technologies Microelectronics Center, Inc., commencing August 1,
1994 or upon earlier occupation by the Registrant.
10.50* Amendment to Office Sublease Agreement, signed August 17, 1994, by
and between the Registrant and United Technologies Microelectronics
Center, Inc.
10.51* Office Building Lease for Courthouse Plaza Office Building, dated
January 18, 1994, by and between the Registrant and Eastrich No.
130 Corporation.
10.52* First Lease Amendment, dated January 20, 1995, by and between the
Registrant and Eastrich No. 130 Corporation.
10.53* Pioneer's Preference License granted by the FCC to Omnipoint
Communications Inc. on December 14, 1994.
10.54* Note and Warrant Purchase Agreement dated November 22, 1995,
between the Registrant and the purchasers named therein.
10.55* Senior Note Due 2000 issued by the Registrant on November 22, 1995
to the holder identified therein. 10.56* Senior Note Due 2000
issued by the Registrant on November 22, 1995 to the holder
identified therein. 10.57* Common Stock Warrant issued by the
Registrant on November 22, 1995 to the holder identified therein.
10.58* Common Stock Warrant issued by the Registrant on November
22, 1995 to the holder identified therein. 10.59* Credit Agreement,
dated as of November 21, 1995, by and among OPCS Corp., Omnipoint
PCS Entrepreneurs, Inc. and Bank of America National Trust and
Savings Association.
10.60* Memorandum of Understanding, dated November 22, 1995, by and
between the Registrant and Ericsson Inc. 10.60.1* Letter Agreement,
dated January 24, 1996, by and between the Registrant and between
Ericsson Inc. 10.61* Convertible Subordinated Note and Warrant
Purchase Agreement, dated December 12, 1995, by and between the
Registrant and Hansol Paper Co., Ltd.
10.62* Convertible Subordinated Note and Warrant Purchase Agreement, dated
as of November 29, 1995, by and among the Registrant and the
entities identified therein.
10.63* Letter of Intent, dated October 26, 1995, by and between the
Registrant and BellSouth Personal Communications, Inc.
10.64* Waiver of Registration Rights and Confirmation of 180-Day Lockup,
dated as of October 31, 1995, by and between the Registrant and
Ameritech Development Corporation.
10.65* Registration Rights Agreement dated as of April 26, 1994, by and
among the Registrant and the parties thereto.
10.66* Contract for Sale of Real Estate, dated August 30, 1995, by and
between F&R Bari Realty, Ltd., Inc. and Omnipoint Communications
Inc.
10.67* Lease Agreement, dated October 15, 1995, by and between the
Registrant and Baetis Properties, Inc.
10.68+ Acquisition Agreement for Ericsson CMS 40 Personal Communications
Systems (PCS) Infrastructure Products, dated as of April 16, 1996,
by and between Ericsson Inc. and Omnipoint Communications Inc.
10.69+ Acquisition Supply and License Agreement for Omnipoint Personal
Communications Systems (PCS) Infrastructure Products, dated as of
April 16, 1996, by and between Ericsson Inc. and Omnipoint
Communications Inc.
10.70+ Agreement for Purchase and Sale of Ericsson Inc. Masko Terminal
Units, dated as of April 16, 1996, by and between Ericsson Inc. and
Omnipoint Communications Inc.
10.71+ Memorandum of Understanding, dated April 2, 1996, by and between
Orbitel Mobile Communications Inc. and the Registrant.
10.72++ Letter of Intent, dated November 20, 1995, by and between the
Registrant and Western Wireless Corporation.
10.73++ Letter of Intent, dated February 26, 1996, by and between Omnipoint
Communications Inc. and American Portable Telecom, Inc.
10.74** Letter on Intent, dated March 22, 1996, by and between Omnipoint
Communications, Inc. and American Personal Communications.
10.75** Letter of Intent, dated May 13, 1996, by and between the Registrant
and InterCel, Inc.
10.76** License Agreement, dated March 22, 1996, by and between the
Registant and Bender & Company, Inc.
10.77** Second License Agreement, dated April 17, 1996, by and between the
Registrant and Bender & Company, Inc.
10.78** Lease Agreement, dated March 1, 1996, by and between Omniset
Corporation and Roots Stone Limited Partnership.
11.1 Statement of computation of loss per share.
27 Financial Data Schedule
- ----------
@ Incorporated herein by reference to Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
* Incorporated herein by reference to the Company's Registration Statement on
Form S-1, No. 33-98360.
+ Incorporated by reference to the Company's Current Report on Form 8-K,
filed May 3, 1996.
** Incorporated herein by reference to the Company's Registration Statement on
Form S-1, No. 333-03739
- ----------
(b) Reports on Form 8-K
Report on Form 8-K filed May 3, 1996, Item 5, disclosing the consummation
of the Ericsson transactions.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
OMNIPOINT CORPORATION
Date: August 14, 1996 /S/ BRADLEY E. SPARKS
--------------- -------------------------
Bradley E. Sparks
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE>
<CAPTION>
EXHIBIT 11.1
OMNIPOINT CORPORATION
STATEMENT OF COMPUTATION OF LOSS PER SHARE
<S> <C> <C> <C> <C>
Three Months Ended June 30, Six Months Ended June 30,
(unaudited) (unaudited)
--------------------------------- ---------------------------------
1996 1995 1996 1995
---------------- --------------- --------------- ---------------
Calculation of primary loss per share:
Net loss $ (21,510) $ (16,430) $ (37,413) $ (31,154)
================ =============== =============== ===============
Common shares outstanding 45,620 24,499 43,045 24,487
Issuance of cheap stock (1) -- 6,870 -- 6,870
---------------- --------------- --------------- ---------------
Total shares - primary 45,620 31,369 43,045 31,357
================ =============== =============== ===============
Primary loss per share:
Net loss per share $ (0.47) $ (0.52) $ (0.87) $ (0.99)
================ =============== =============== ===============
</TABLE>
Note:The computation of fully diluted earnings per share is identical to that
of primary earnings per share for the periods presented above and therefore
is not included separately herein.
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common equivalent shares issued during the twelve month period
prior to the initial filing date of the Company's Initial Public Offering
Registration Statement at exercise prices below the initial public offering
price of $16.00 have been included in the calculation of cheap stock shares
using the treasury stock method, until the initial public offering became
effective on January 31, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF OMNIPOINT CORPORATION AS OF AND FOR THE SIX MONTHS
ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001002532
<NAME> Omnipoint Corporation
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 127487
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1613
<CURRENT-ASSETS> 130847
<PP&E> 69567
<DEPRECIATION> (4241)
<TOTAL-ASSETS> 567757
<CURRENT-LIABILITIES> 20069
<BONDS> 17552
0
0
<COMMON> 458
<OTHER-SE> 110691
<TOTAL-LIABILITY-AND-EQUITY> 111149
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10072
<INCOME-PRETAX> (37413)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37413)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37413)
<EPS-PRIMARY> (0.87)
<EPS-DILUTED> (0.87)
</TABLE>
