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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2000
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Aerial Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-28262 39-1706857
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8410 West Bryn Mawr, Suite 1100, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (773) 399-4200
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On January 27, 2000, Aerial Communications, Inc. ("Aerial") announced its
fourth quarter 1999 and full year 1999 financial results.
This Current Report on Form 8-K is being filed for the purpose of
filing the news release issued by Aerial relating to such announcement as an
exhibit.
Item 7. Financial Statements and Exhibits
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( c) Exhibits
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The exhibits accompanying this report are listed in the accompanying
Exhibit Index.
2
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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, thereto duly authorized.
Date: January 28, 2000 AERIAL COMMUNICATIONS, INC.
(Registrant)
By: /s/ J. Clarke Smith
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J. Clarke Smith
Vice President - Finance and Administration,
Chief Financial Officer and Treasurer
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
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99.1 Aerial news release dated January 27, 2000.
4
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EXHIBIT 99.1
Contacts: J. Clarke Smith Donald A. Johnson
Vice President - Finance and Administration Assistant Treasurer
(773) 399-4367 (773) 399-7970
FOR RELEASE: IMMEDIATE
Aerial Communications reports solid fourth quarter, year-end results
Adds 60,000 customers; churn continues to decline
January 27, 2000 - Chicago, Illinois - Aerial Communications [NASDAQ:AERL] today
reported it had strong fourth quarter operating results, citing solid holiday
sales coupled with continuing reduction in churn.
Aerial ended 1999 with 423,000 customers, adding nearly 60,000 customers during
the fourth quarter. Post-pay customers increased by nearly 65,000 during the
final three months of 1999, matching post-pay numbers for the same quarter a
year ago. For the year, Aerial added nearly 111,000 customers, increasing its
customer base by 36%.
The Company's customer base is 87% post-pay, advancing another 3 percentage
points from third quarter levels. For the year, the percent of customers using
Aerial post-pay plans advanced by 9%. Aerial also continued to see improvement
in post-pay churn ending the fourth quarter at 2.86%.
Total revenue for the quarter was $63.4 million, an increase of 29% from the
fourth quarter of a year ago. For the year, total operating revenue was $226
million, up 45% from 1998.
The Company's average revenue per unit (ARPU) for post-pay customers was $47.64,
down slightly from the third quarter, reflecting the increased competition and
the dynamics of the holiday season.
"Once again, we enjoyed a solid holiday season, benefiting from our expanded
distribution and compelling sales proposition," said Don Warkentin, President
and Chief Executive Officer of Aerial. "During 1999, we also focused on
fundamental operating improvements throughout the year to create a successful
business. We ended the year having substantially improved the organization, the
quality of the customer base, and the reliability of day-to-day operations. This
will provide a significant benefit as Aerial operations are combined with those
of VoiceStream after the close of the planned merger."
Operating statistics
Among post-pay customers, churn was 2.86%, improving significantly from 3.35% in
the previous quarter. ARPU for post-pay customers was $47.64, down slightly from
the previous quarter. Full year EBITDA, including $11 million of systems Y2K
costs, was ($118.0) million, a 40% improvement over 1998 results. Aerial's loss
before income taxes on a per share basis for 1999 was ($3.73) versus a loss of
($4.68) for 1998, a 20% improvement.
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1
Roaming targets achieved
During the quarter, Aerial met its target of having at least 75 international
GSM roaming partners operational by the end of the year. Aerial now offers
international roaming in more than 40 countries. Seventy of these international
roaming partners were added in the last six months of 1999.
Merger update
Significant progress has been made toward completing the anticipated
Aerial/VoiceStream merger. The management teams of both companies are working
together to effect a smooth integration of the companies once the merger is
completed.
Definitive joint proxy materials by Aerial, VoiceStream and Omnipoint were filed
with the Securities and Exchange Commission on January 25, 2000, with an Aerial
shareholder vote scheduled for February 24 for holders of record as of January
17. The application to the Federal Communications Commission became public
January 7.
The Aerial/VoiceStream/Omnipoint combination will have more than 200 million
licensed POPs, ranking it first among GSM companies in the world. The combined
company will be one of the largest wireless providers in the U.S. With a network
that virtually spans the country, three out of every four Americans will live in
the combined company's license areas.
About Aerial
Aerial Communications, headquartered in Chicago, holds licenses to provide fully
digital PCS service in areas covering 27.5 million of the U.S. population.
Aerial's markets include Columbus, Ohio; Houston, Minneapolis, Kansas City,
Pittsburgh and Tampa/Orlando/St. Petersburg. Aerial offers coverage
coast-to-coast throughout the U.S. as well as international roaming with more
than 75 wireless partners. Aerial's web site is www.aerial.com.
Aerial also is a member of the North American GSM Alliance LLC. The GSM Alliance
is a group of U.S. and Canadian digital wireless PCS carriers, helping to
provide seamless GSM wireless communications for GSM customers in more than
4,000 U.S. and Canadian cities and towns as well as international service.
Except for the historical and factual information presented, other information
set forth in this news release represents forward-looking statements, including
all statements about the Company's plans, beliefs, estimates and expectations.
These statements are based on current estimates and projections, which involve
certain risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Important factors that
may affect these forward-looking statements include, but are not limited to:
changes in technology that might effect the Company's services; potential
litigation; and changes in market conditions; and the ability to close, as
contemplated, the Aerial/VoiceStream Wireless merger. Investors are encouraged
to consider these and other risks and uncertainties which are discussed in
documents filed with the Securities and Exchange Commission.
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AERIAL COMMUNICATIONS, INC.
Three Months Ended December 31, 1999
(Unaudited, dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Increase
1999 1998 (Decrease)
------------ ------------ ------------
OPERATING REVENUES
<S> <C> <C> <C>
Service $ 54,171 $ 38,105 $ 16,066
Equipment sales 9,227 11,177 (1,950)
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Total Operating Revenues 63,398 49,282 14,116
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OPERATING EXPENSES
System operations 19,388 18,223 1,165
Marketing and selling 29,390 27,695 1,695
Customer service 10,407 15,354* (4,947)
Cost of equipment sold 21,627 28,099 (6,472)
General and administrative 21,453 20,195* 1,258
Depreciation 23,332 20,430 2,902
Amortization of intangibles 1,994 1,889 105
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Total Operating Expenses 127,591 131,885 (4,294)
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OPERATING (LOSS) (64,193) (82,603) 18,410
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INVESTMENT AND OTHER INCOME (EXPENSE)
Minority share of loss 10,401 19,854 (9,453)
Investment (losses) (214) --- (214)
Interest income 143 104 39
Other income (expense) (2,409) 298 (2,707)
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Total Investment and Other Income (Expense) 7,921 20,256 (12,335)
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(LOSS) BEFORE INTEREST AND INCOME TAXES (56,272) (62,347) 6,075
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INTEREST EXPENSE
Interest expense-affiliate 8,936 15,180 (6,244)
Interest expense-other 6,078 4,824 1,254
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Total Interest Expense 15,014 20,004 (4,990)
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(LOSS) BEFORE INCOME TAXES (71,286) (82,351) 11,065
Income tax expense (benefit) (746) 12 (758)
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NET (LOSS) $ (70,540) $ (82,363) $ 11,823
============ ============ ============
WEIGHTED AVERAGE COMMON AND
SERIES A COMMON SHARES (000s) 87,161 71,789 15,372
(LOSS) PER COMMON AND
SERIES A COMMON SHARE $ (0.81) $ (1.15) $ 0.34
============ ============ ============
</TABLE>
* Amounts reclassified for change in current period presentation
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AERIAL COMMUNICATIONS, INC.
Three Months Ended December 31, 1999
(Unaudited, dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Increase
1999 1998 (Decrease)
------------ ------------ ------------
OPERATING REVENUES
<S> <C> <C> <C>
Service $ 195,140 $ 123,640 $ 71,500
Equipment sales 30,361 31,514 (1,153)
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Total Operating Revenues 225,501 155,154 70,347
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OPERATING EXPENSES
System operations 78,303 69,066 9,237
Marketing and selling 89,755 79,704 10,051
Customer service 39,934 54,112* (14,178)
Cost of equipment sold 61,298 87,715 (26,417)
General and administrative 74,212 61,141* 13,071
Depreciation 84,347 75,846 8,501
Amortization of intangibles 7,660 7,555 105
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Total Operating Expenses 435,509 435,139 370
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OPERATING (LOSS) (210,008) (279,985) 69,977
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INVESTMENT AND OTHER INCOME (EXPENSE)
Minority share of loss 15,782 23,620 (7,838)
Investment (losses) (314) (128) (186)
Interest income 516 882 (366)
Other income (expense) (5,407) 442 (5,849)
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Total Investment and Other Income (Expense) 10,577 24,816 (14,239)
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(LOSS) BEFORE INTEREST AND INCOME TAXES (199,431) (255,169) 55,738
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INTEREST EXPENSE
Interest expense-affiliate 61,197 62,137 (940)
Interest expense-other 22,118 18,010 4,108
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Total Interest Expense 83,315 80,147 3,168
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(LOSS) BEFORE INCOME TAXES (282,746) (335,316) 52,570
Income tax expense (benefit) (113,400) 2,579 (115,979)
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NET (LOSS) $ (169,346) $ (337,895) $ 168,549
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WEIGHTED AVERAGE COMMON AND
SERIES A COMMON SHARES (000s) 75,734 71,723 4,011
(LOSS) PER COMMON AND
SERIES A COMMON SHARE $ (2.24) $ (4.71) $ 2.47
============ ============ ============
</TABLE>
* Amounts reclassified for change in current period presentation
