<PAGE>
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 EVENT REPORTED): March 4, 1998
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ADVANCED RADIO TELECOM CORP.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 000-21091 52-1869023
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
500 108th Avenue, NE, Suite 2600, Bellevue, Washington 98004
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (425) 688-8700
---------------------------------------------
N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
1
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ITEM 5. OTHER EVENTS
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On March 4, 1998 Advanced Radio Telecom Corp. issued a press release
announcing its new strategy. The information contained in the press release,
which is attached as the exhibit hereto, is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(C) EXHIBITS:
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Exhibit 99. Press Release of Advanced Radio Telecom Corp. dated March 4,
1998.
2
<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 hereunto duly authorized.
ADVANCED RADIO TELECOM CORP.
Date: March 4, 1998 By: /s/ Thomas M. Walker
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Thomas M. Walker
Vice President and Secretary
<PAGE>
EXHIBIT IN
The following designated exhibits are filed herewith:
Exhibit Page Number
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99. Press Release of Advanced Radio Telecom Corp.
dated March 4, 1998.
4
<PAGE>
FINAL--3/4/98
CONTACT: CONTACT:
MARY MOORE BAILEY LORI LAWRENSON
Manager, Public Relations Manager, Investor Relations
Advanced Radio Telecom Advanced Radio Telecom
(425) 990-1617 (425) 990-1620
ART ANNOUNCES BROADBAND DATA SERVICES STRATEGY
REPORTS 1997 RESULTS
BELLEVUE, WA., (MARCH 4, 1998) -- Advanced Radio Telecom Corp. (ART)
(NASDAQ:ARTT) today announced a new strategy to become the leading provider of
broadband data services to the vast number of businesses that are without fiber
connectivity. ART's broadband data services strategy is based on the critical
need of businesses for high-speed data connectivity -- affecting the largest
companies down to the smallest entrepreneurs. With its current nationwide
spectrum footprint covering 210 markets, its fixed wireless expertise and
planned data network, the Company will provide broadband access to the customer
premise, eliminating the bottleneck currently encountered by businesses who are
dependent upon the legacy telecommunications network.
"Our new strategy is the result of a four month in-depth assessment in which we
enlisted the assistance of primarily The Boston Consulting Group and also
Technology Solutions Company," said Henry C. Hirsch, president, chairman and
CEO of ART. "We focused on how we could leverage our strengths and ART's
existing asset base such that the company would be positioned to play a very
significant role in the future of communications on a global basis. Our new
strategy capitalizes upon our management expertise, our national spectrum
footprint and our leading knowledge and hands-on experience with fixed wireless
technology. One of the most attractive aspects of our strategy is that it is
totally scaleable in nature, which will allow us to better manage the capital
required as we roll out our national network. Given the direction of the market
and anticipated near term technological advancements, our goal is to utilize our
fixed wireless capability in conjunction with other technologies to deliver the
competitive and productivity benefits of broadband data communications to
mainstream business. This strategy is without doubt "right for
<PAGE>
the times" and an extremely exciting prospect for ART as a company."
The data services market is currently growing at a rate more than five times
that of voice telephony. Industry sources estimate that data traffic revenues
will increase by a 20% to 40% CAGR over the next five years, reaching some $40
billion by the year 2001.
Fiber-optics is the primary transmission medium for broadband connectivity. Of
the estimated 750,000 commercial buildings in the United States, 97% is not
served by fiber. Businesses are at a competitive disadvantage in today's
information-critical world and unable to realize the productivity gains
available unless they have access to broadband technology. These businesses,
including many data-intensive high technology companies, represent an
enormously under-served market.
Over the next five years, ART intends to employ its spectrum footprint in the
construction of broadband metropolitan area networks in the top 100 U.S.
markets. ART will initiate its network plan in Seattle and Washington, DC,
starting in the second quarter of 1998. As the broadband metropolitan area
networks are placed in service, the Company expects to interconnect them to form
a national network. This approach should work equally as well for ART's
international markets, where it currently has spectrum in the United Kingdom and
Scandinavia, covering over 77 million pops.
ART's broadband data networks will be unique in that they will be fully
packetized to the customer premise using the latest available technologies,
including Asynchronous Transfer Mode (ATM), Internet Protocol (IP), Ethernet and
Frame Relay. Using its fixed wireless networks, ART is able to reach customers
far more economically and much more quickly than the fiber alternative.
ART anticipates offering the following services to business customers over its
broadband data networks: Internet services, private and virtual private
networks, extranets, intranets, and ultimately, IP telephony and fax, video on
demand, service based video, video-conferencing, and other emerging high value-
added services. It is expected ART will reach its customers through a number of
sales
<PAGE>
channels, including strategic marketing relationships, reciprocal resale
agreements, and direct and indirect sales efforts.
To execute the new strategy, ART has assembled a management team with broad
communications expertise. Henry C. Hirsch, chairman, president and CEO, was
formerly CEO of Williams Communications Group and president of Williams
Telecommunication Systems (WilTel). William J. Maxwell, executive vice
president strategic planning, marketing and sales, previously served as
executive vice president of ICG Communications and president of ICG Telecom
Group.
George R. Olexa, senior vice president and CTO, was formerly executive vice
president of engineering, Dial Call Communications, Inc. and the architect of
the Air Touch cellular networks in major cities and Europe. They join founder
Vernon L. Fotheringham, vice chairman and Thomas A. Grina, executive vice
president and chief financial officer.
"Given the scope of this strategy and our intent to implement broadband
metropolitan networks, having a team that knows how to execute is the first
imperative. We've assembled a top-notch, experienced executive team at ART that
can do that and much more. We've all been involved in this process successfully
in past positions," said Hirsch.
1997 FINANCIAL RESULTS
Total revenues for the quarter ended December 31, 1997, were $230,360 compared
with $2.8 million for the same period last year which included $2.7 million of
non-recurring sales and construction revenue for radio links installed for
others. Total revenues for the twelve months ended December 31, 1997, were $1.1
million, compared to $2.9 million for last year.
The net loss for the quarter ended December 31, 1997, was $23.6 million, or
$1.12 per share, compared to $10.3 million, or $.92 per share, for the fourth
quarter 1996 and $13.0 million, or $.66 per share, for the third quarter of this
year. Included in the current period's net loss is a non-cash charge of
approximately $7.1 million for the portion of the radio equipment not
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expected to be part of the expanded broadband data network, and a non-recurring
charge of $1.4 million for executive compensation. The net loss for 1997 was
$61.7 million, or $3.23 per share compared to $30.7 million, or $3.97 per share
for 1996. The increase in the number of weighted average outstanding shares for
the periods reflects the company's acquisition of substantial spectrum in
February, 1997.
During the fourth quarter, the Company curtailed its market buildout and site
acquisition activity pending a comprehensive assessment of its business
strategy.
Financials and illustrations by FAX are attached.
Further information is available on ART's Website located at WWW.ARTELECOM.COM.
This news release contains forward looking statements. Forward looking
statements are not guarantees of future performance. Known and unknown risks,
uncertainties, and other factors including, without limitation, financial
resources and capital requirements, customer demand, technological risks,
management of growth, competition and government regulation may cause actual
results to differ materially from the future results implied or expressed in the
forward looking statements. Additional information about the most significant
of such factors is set forth in the Company's 1996 Annual Report on Form 10-K.
<PAGE>
Advanced Radio Telecom Corp.
Condensed Consolidated Balance Sheet
(unaudited)
As of December 31,
<TABLE>
<CAPTION>
1997 1996
---- ----
ASSETS
<S> <C> <C>
Current assets $ 45,207,489 $ 3,990,791
Property and equipment, net 25,294,946 19,303,849
FCC licenses, net 131,210,102 4,330,906
Other assets 30,847,212 9,023,155
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Total assets $ 232,559,749 $ 36,648,701
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 19,598,667 $ 13,614,696
Long term debt, net of current portion 106,823,103 3,084,085
Other liabilities 29,880,916
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Total liabilities 156,302,686 16,698,781
------------
Stockholders' equity 76,257,063 19,949,920
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Total liabilities and stockholders' equity $ 232,559,749 $ 36,648,701
</TABLE>
<PAGE>
Advanced Radio Telecom Corp.
Consolidated Statement of Operations
For the Year Ended December 31,
(unaudited)
<TABLE>
<CAPTION>
REVENUES: 1997 1996
------------- ----------------
<S> <C> <C>
Service revenue $ 708,883 $ 247,116
Equipment sales and construction revenue 396,970 2,660,811
-------------- ---------------
Total revenue 1,105,853 2,907,927
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COSTS and EXPENSES:
Technical and network operations 7,252,512 3,402,948
Cost of equipment sales and construction 254,444 1,590,779
Sales and marketing 13,469,898 5,548,584
General and administrative 12,789,866 12,896,134
Research and development 421,236 1,269,579
Equipment impairment 7,166,720
Depreciation and amortization 6,018,172 1,017,959
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Total operating costs and expenses 47,372,848 25,725,983
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Operating loss (46,266,995) (22,818,056)
Interest expense 18,931,303 1,695,489
Financing commitment expense 2,699,881 3,687,644
Other 1,248,000
Interest income (4,814,004) (118,882)
-------------- ---------------
Loss before income taxes and extraordinary item (63,084,175) (29,330,307)
Deferred income taxes 1,355,249
-------------- ---------------
Loss before extraordinary item (61,728,926) (29,330,307)
Extraordinary loss on early debt retirement - (1,339,996)
Net loss $ (61,728,926) $ (30,670,303)
============== ===============
Loss per common share before extraordinary item $ (3.23) $ (3.80)
Extraordinary loss per common share - (0.17)
-------------- ---------------
Net loss per common share $ (3.23) $ (3.97)
============== ===============
Weighted average common shares 19,083,304 7,717,755
============== ===============
</TABLE>
<PAGE>
Advanced Radio Telecom Corp.
Consolidated Statement of Operations
For the Three Months Ended December 31,
(unaudited)
<TABLE>
<CAPTION>
1997 1996
---- -----
REVENUES:
<S> <C> <C>
Service revenue $ 190,360 $ 122,103
Equipment sales and construction revenue 40,000 2,660,811
Total revenue 230,360 2,782,914
-------------- ---------------
COSTS and EXPENSES:
Technical and network operations 3,495,266 1,108,775
Cost of equipment sales and construction 40,045 1,590,779
Sales and marketing 3,136,152 1,656,103
General and administrative 4,009,403 2,335,736
Research and development 207,959 603,173
Equipment impairment 7,166,720
Depreciation and amortization 1,616,938 513,497
-------------- ---------------
Total operating costs and expenses 19,672,483 7,808,063
-------------- ---------------
Operating loss (19,442,123) (5,025,149)
Interest expense 4,995,800 298,546
Financing commitment expense 3,687,644
Interest income (967,822) (59,409)
-------------- ---------------
Loss before income taxes and extraordinary item (23,470,101) (8,951,930)
Deferred income taxes (104,774) -
-------------- ---------------
Loss before extraordinary item (23,574,875) (8,951,930)
Extraordinary loss on early debt retirement - (1,339,996)
Net loss $ (23,574,875) $ (10,291,926)
============== ===============
Loss per common share before extraordinary item $ (1.12) $ (0.80)
Extraordinary loss per common share - (0.12)
-------------- ---------------
Net loss per common share $ (1.12) $ (0.92)
Weighted average common shares 20,998,484 11,129,142
============== ===============
</TABLE>
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[GRAPHIC OMITTED]
ART NATIONAL BROADBAND DATA NETWORK EXAMPLE
[GRAPHIC OMITTED]
ART BROADBAND METROPOLITAN NETWORK EXAMPLE
ART METROPOLITAN SWITCHING CENTER EXAMPLE
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End of Advanced Radio Teleccom Release
