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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 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 _________________________________
LOUISIANA UNWIRED, LLC.
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(Exact name of registrant as specified in its charter)
Louisiana 72-1407430
- ----------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
One Lakeshore Drive Suite 1900
Lake Charles, LA 70629
- ------------------------------------------ ------------------------------
(Address of principal executive offices) (Zip code)
(337) 436-9000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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 ____ No X
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<TABLE>
<CAPTION>
Part I - Financial Information
Page
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Item 1. - Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets ............................... 3
Condensed Consolidated Statement of Operations ...................... 4
Condensed Consolidated Statement of Cash Flows ...................... 5
Notes to Financial Statements ....................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................... 9
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................. 13
SIGNATURES
.......................................................................................... 14
</TABLE>
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Part I Financial Information
Item 1 Financial Statements
LOUISIANA UNWIRED, LLC AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------
2000 1999
---- ----
(Unaudited) (Note 1)
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 3,042 $ 1,844
Subscriber receivables, net 1,821 1,256
Other receivables 1,180 810
Inventory 2,544 2,189
Prepaid expenses 2,723 854
Receivables from related parties 940 ---
Due from affiliates --- 788
-------- --------
Total current assets 12,250 7,741
Marketable securities 75,232 114,854
Property and equipment, net 115,735 85,305
Licenses, net 10,559 10,462
Other assets 10,511 46
-------- --------
Total assets $224,287 $218,408
======== ========
Liabilities and members' equity
-------------------------------
Current liabilities:
Accounts payable $ 10,798 $ 9,012
Accrued expenses 3,115 1,568
Payables to related parties 1,276 123
Current maturities of long term obligations 512 140
-------- --------
Total current liabilities 15,701 10,843
Long Term obligations, net of current maturities 9,069 1,369
Minor interest 927 ---
Member's equity
Members capital 253,752 251,561
Accumulated other comprehensive income 508 709
Accumulated deficit (55,670) (46,074)
-------- --------
Total members' equity 198,590 206,196
-------- --------
Total liabilities and members' equity $224,287 $218,408
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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LOUISIANA UNWIRED, LLC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the three
Months ended
-------------------------
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Revenues:
Subscriber $ 7,522 $ 1,546
Roaming 2,350 265
Merchandise sales 2,759 863
Other revenue 94 ---
-------- -------
Total revenue 12,725 2,674
Expense:
Cost of service 5,268 1,356
Merchandise cost of sales 5,252 1,915
Selling, general and administrative 7,414 1,758
Depreciation and amortization 5,910 2,353
-------- -------
Total operating expense 23,844 7,382
-------- -------
Operating loss (11,119) (4,708)
Other income (expense):
Interest income (expense), net 1,316 (606)
-------- -------
Loss before extraordinary item and minority interest (9,803) (5,314)
Minority interest 445 ---
Extraordinary item-early extinguishment of debt (238) ---
-------- -------
Net loss $ (9,596) $(5,314)
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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LOUISIANA UNWIRED, LLC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the three
months ended
-----------------------------
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
------------------------------------
Net cash used in operating activities $ (9,628) $ (10,714)
Cash flows from investing activities
------------------------------------
Sale of marketable securities 41,000 ---
Purchase of marketable securities (1,579) ---
Payments for the purchase of equipment (14,805) (586)
Payments for microwave relocation costs (250) ---
--------- ---------
Net cash provided by (used in) investing activities 24,366 (586)
Cash flows from financing activities
------------------------------------
Capital contributions from members 4,029
Debt issuance costs --- (300)
Proceeds from long-term debt 260 6,771
Principal payments of long-term debt (13,800) ---
--------- ---------
Net cash provided by (used in) financing activities (13,540) 10,500
--------- ---------
Net increase (decrease) in cash and cash equivalents 1,198 (800)
Cash and cash equivalents at beginning of period 1,844 1,350
--------- ---------
Cash and cash equivalents at end of period $ 3,042 $ 550
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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LOUISIANA UNWIRED, LLC
NOTES TO CONSDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. Operating results for
the three month period ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000.
The balance sheet at December 31, 1999 was derived from audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The consolidated financial statements contained
herein should be read in conjunction with the financial statements and
notes included in the prospectus that is part of Amendment No. 2 to the US
Unwired Inc. registration statement on Form S-1, Registration No. 333-
33964, filed on May 11, 2000 with the Securities and Exchange Commission.
2. Description of Organization
Louisiana Unwired, LLC ("the Company") was formed in 1998 and is
principally engaged in providing access to and usage of its personal
communications service ("PCS") networks. PCS is a new generation of
wireless communications, offering customers advanced, secure two-way
digital wireless service and applications. As of March 31, 2000, the
Company has been primarily engaged in building out its PCS network and in
providing PCS service in parts of Louisiana, Texas and Alabama. The Company
is a majority owned subsidiary, 93.42% at March 31, 2000, of US Unwired
Inc. ("US Unwired").
In April 1998, the Company's members contributed PCS licenses in four
Louisiana Basic Trading Areas ("BTAs" or "markets") to the Company from an
affiliated company with common ownership. Additionally, certain related
assets and liabilities, including debt used to finance the purchase of
these four licenses, were also contributed. These contributed assets and
liabilities were recorded at their historical cost. The Company commenced
operations in one of these markets in April 1998 and in the remaining three
markets in September 1998. An additional 18 licenses were contributed to
the Company by Command Connect, LLC in December 1999.
Additionally during 1998, the Company entered into an agreement with Sprint
PCS and became a Sprint PCS network partner. The agreement grants the
Company exclusive right to provide PCS service under the Sprinta and Sprint
PCSa brand names in markets comprising 9.7 million residents. Under the
agreement, the Company has agreed to construct and manage Sprint PCS's
network in markets for which the Company does not have a license. In
consideration for these services, Sprint PCS pays 92% of collected
revenues, as defined in the agreement, to the Company. The agreement
requires the Company to build out the PCS network in accordance with FCC
requirements and deadlines. The Company and Sprint PCS will share equally
the costs for any necessary future relocation of microwave sources that
interfere with Sprint PCS's spectrum.
Effective January 1, 2000, US Unwired entered into an agreement with
Meretel Communications Limited Partnership ("Meretel") to receive an 80%
ownership interest in each of the Beaumont-Port Arthur and Lufkin-
Nacogdoches BTAs in exchange for a reduction in US Unwired's ownership
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interest in Meretel from 24.33% to 13.28%. US Unwired contributed these net
assets to a new partnership, Texas Unwired, a Louisiana general partnership
("Texas Unwired"), of which the Company is the managing partner. The
contributed net assets were recorded at fair value. On January 1, 2000, US
Unwired contributed its 80% ownership interest in Texas Unwired to the
Company. The Company's financial statements for the three months ended
March 31, 2000 include the financial position and results of operations of
Texas Unwired on a consolidated basis.
3. Marketable Securities
The following is a summary of the Company's available-for-sale marketable
securities as of March 31, 2000:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated Fair
Cost Gains Losses Value
-----------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Commercial paper $64,068 $508 --- $64,576
Fixed income mutual funds 10,656 --- --- 10,656
------- ---- ----------- -------
$74,724 $508 --- $75,232
======= ==== =========== =======
</TABLE>
4. Property and Equipment
Major categories of property and equipment were:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
(In thousands)
<S> <C> <C>
Facilities and equipment $110,719 $ 86,438
Furniture and fixtures 2,520 1,645
Vehicles 289 140
Leasehold improvements 612 350
Construction in progress 22,475 12,537
-------- --------
136,615 101,110
Less: accumulated depreciation and amortization 20,880 15,805
-------- --------
$115,735 $ 85,305
======== ========
</TABLE>
5. Long-term Obligations
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
(In thousands)
<S> <C> <C>
FCC debt $ 1,475 $ 1,509
Capital leases 8,106 ---
-------- --------
Total long-term obligations 9,581 1,509
Less current maturities 512 140
-------- --------
Long-term obligations, excluding current maturities $ 9,069 $ 1,369
======== ========
</TABLE>
7
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During the three months ended March 31, 2000, the Company extinguished
$13.9 million of debt related to Texas Unwired. As a result, the
unamortized debt issuance costs related to this debt, totaling $238,000,
were written off as an extraordinary item.
In 1999, Meretel entered into lease agreements to lease cell sites for a
15-year period. As part of the agreement discussed in Note 2 above, Texas
Unwired assumed Meretel's obligations under 31 leases in the Beaumont-Port
Arthur and Lufkin-Nacogdoches markets. During the three months ended March
31, 2000, the Company executed one additional capital lease, bringing the
total capitalized leases to 32.
Future minimum annual lease payments due under these capital leases
consisted of the following at March 31, 2000 (in thousands):
2001 $ 768
2002 768
2003 768
2004 768
2005 768
Thereafter 7,307
-------
11,147
Amounts representing interest (3,041)
-------
Present value of minimum lease payments (including
current portion of $376) $ 8,106
=======
7. Commitments and Contingencies
The Company's PCS licenses are subject to a requirement that the Company
construct network facilities that offer coverage to 25% of the population
or have substantial service in each of its BTAs within five years from the
grant of the licenses. Should the Company fail to meet these coverage
requirements, it may be subject to forfeiture of its licenses or imposition
of fines by the FCC. The PCS build out in each BTA is subject to the
successful completion of the network design, site and facility
acquisitions, the purchase and installation of the network equipment,
network testing, and the satisfactory accommodation of microwave users
currently using the spectrum. All FCC requirements have been met where
operations have commenced.
On October 29, 1999, US Unwired issued $400 million in aggregate principal
amount of its 13 3/8% Senior Subordinated Discount Notes due November 1,
2009 (the "Notes"). The Company fully and unconditionally guarantees the
Notes. The Notes are secured by a pledge of the Company's 80% interest in
Texas Unwired and any notes payable by Texas Unwired to the Company. The
Company's guarantee of the Notes ranks equally in right of payment with its
future senior subordinated indebtedness and is subordinated in right of
payment to all existing and future senior debt of the Company.
Effective October 1, 1999 US Unwired entered into a $130 million senior
credit facility. At March 31, 2000, no amounts under this facility were
outstanding. This facility is secured by, among other things, a first
priority security interest in all tangible and intangible assets of the
Company, including its PCS licenses to the extent legally permitted; a
pledge by the Company of its ownership interest in Texas Unwired; and an
assignment by the Company of its Sprint PCS agreements and any network
contract, including software rights.
8. Other Comprehensive Income
Other comprehensive income includes net loss and unrealized gains from
marketable equity securities that are classified as "available-for-sale."
The following summarizes the Company's other comprehensive income for the
three months ended March 31, 2000 (in thousands):
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Accumulated other comprehensive income
Balance, beginning of period $709
Other comprehensive income
Unrealized gains on securities 508
Deduct:
Realized gain on sale of securities 709
----
Balance, end of period $508
====
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
The following discussion is intended to facilitate an understanding and
assessment of significant accounting changes and trends related to the financial
condition and results of operations of Louisiana Unwired, LLC ("the Company" or
"we" or "us"). This discussion should be read in conjunction with our financial
statements included in this report.
The discussion contains statements that may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward looking statements are statements about our current and future
business strategy, operations, capabilities and construction plans and schedule,
as well as financial projections, plans and objectives of management, expected
actions of third parties, and other matters. They often include the words
"believes," "belief," "expects," "plans," "anticipates," "intends," "projects"
or similar words. Forward-looking statements speak only as of the date made and
are not guarantees of future performance and may involve risks and
uncertainties. Forward-looking statements involve known and unknown risks and
other factors that could cause actual results to be materially different from
our historical results or from any future results expressed or implied by any
forward-looking statements. Some of the factors that could cause the difference
are:
. the availability at acceptable terms of sufficient funds to pay
for our business plan
. competition
. changes in labor, equipment and capital costs
. any inability to obtain required regulatory approvals
. changes in technology
. any inability to comply with our guarantee of US Unwired Inc.'s
senior subordinated discount notes or with our obligations under
US Unwired Inc.'s credit agreement
. changes in management
. any ability to attract and retain qualified employees
. future acquisitions
. general economic and business conditions
Actual results may differ from those in the forward-looking statements as a
result of these factors, many of which are outside the control of the Company.
You should not rely too heavily on any forward-looking statement. We cannot
assure you that our forward-looking statements will prove to be correct.
Overview
9
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The Company was formed in January 1998. In February 1998, the Company became a
Sprint PCS network partner, which gives the Company the exclusive right to
provide digital PCS services under the sprint(R) and Sprint PCS(R) brand names
in a service area comprising approximately 9.7 million residents in the Gulf
States region.
Our Sprint PCS service area covers 41 Basic Trading Areas ("BTAs" or "markets")
in eastern Texas, southern Oklahoma, southern Arkansas, significant portions of
Louisiana, Alabama and Mississippi, the Florida panhandle and southern
Tennessee. Our service area is contiguous with Sprint PCS's launched markets of
Houston, Dallas, Little Rock, New Orleans, Birmingham, Tallahassee and Memphis.
We are constructing a 100% digital, 100% wireless PCS network that we expect to
complete by March 2001.
We currently offer PCS service in eleven markets: Beaumont-Port Arthur,
Longview-Marshall, Lufkin-Nacogdoches, Texarkansas and Tyler, Texas; Alexandria,
Houma-Thibodeaux, Lake Charles, Monroe and Shreveport, Louisiana; and
Montgomery, Alabama. Our network currently covers approximately 2.4 million
residents out of approximately 3.6 million total residents in those markets. We
expect to cover a total of approximately 6.1 million residents by December 2000
and 6.4 million residents by March 2001, at which point we expect to have
covered approximately 66% of the resident population in our service area. The
number of people in our service area does not represent the number of Sprint PCS
subscribers that we expect to have in our service area. At March 31, 2000, we
had approximately 66,000 subscribers within those eleven markets and we had
initiated the build out of eleven additional markets in the Florida panhandle,
Mississippi and Alabama. This phase of our build out represents 330 owned and
co-located towers. We have begun radio frequency design, network design and cell
site engineering in the remaining markets to be built out.
Effective January 1, 2000, US Unwired Inc. ("US Unwired") received an 80%
ownership interest in each of the Beaumont-Port Arthur and Lufkin-Nacogdoches
markets in exchange for a reduction in its ownership interest in the Meretel
Communications Limited Partnership ("Meretel") from 24.33% to 13.28%. US Unwired
contributed the net assets of those markets to Texas Unwired, a Louisiana
general partnership ("Texas Unwired") of which the Company is the managing
partner. US Unwired then contributed its 80% ownership interest in Texas Unwired
to the Company.
As of March 31, 3000, the Company was owned 93.42% by US Unwired, 6.06% by
Cameron Communications Corporation and 0.52% by Command Connect, LLC. As of
March 31, 2000, the Company owned 80% of Texas Unwired.
Results of Operations
You should keep in mind that our operating results for three months ended March
31, 2000 include the consolidation of Texas Unwired but our operating results
for the three months ended March 31, 1999 include the Texas Unwired assets as a
part of Meretel and are presented on an equity basis.
Revenues
Three months ended March 31,
----------------------------
2000 1999
---- ----
(In thousands)
Subscriber revenues $ 7,522 $ 1,545
Roaming revenues 2,350 265
Merchandise sales 2,759 863
Other revenue 94 ---
------- -------
Total revenues $12,725 $ 2,673
======= =======
Subscriber revenues were $7.5 million for the three months ended March 31, 2000
compared to $1.5 million for the three months ended March 31, 1999, representing
an increase of $6.0 million. LA Unwired's subscriber revenues increased to $5.7
million at March 31, 2000 from $1.5 million at March 31,
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1999, representing a $4.2 million increase due to increase in subscribers to
approximately 50,000 at March 31, 2000 from approximately 13,000 at March 31,
1999. Texas Unwired accounted for $1.8 million in revenues and had approximately
16,000 at March 31, 2000.
Roaming revenues were $2.3 million for the three months ended March 31, 2000 as
compared to $265,000 for the three months ended March 31, 1999, representing an
increase of $2.0 million. LA Unwired's roaming revenues increased to $1.8
million at March 31, 2000 from $265,000 at March 31, 1999, representing a $1.5
million increase due to an expansion in coverage to nine markets at March 31,
2000 from four markets at March 31, 1999. Texas Unwired added $496,000 in
roaming revenues with coverage in two markets.
Merchandise sales were $2.8 million for the three months ended March 31,2000 as
compared to $863,000 for the three months ended March 31, 1999, representing an
increase of $1.9 million. LA Unwired's merchandise sales increased to $2.2
million from $863,000 at March 31, 1999, representing an increase of $1.3
million. This was due primarily to an increase in initial sales to 19,000 new
subscribers during the three months ended March 31, 2000 compared to 7,600 new
subscribers added during the three months ended March 31, 1999. Texas Unwired
had $547,000 in merchandise sales for the three months ended March 31, 2000 and
added approximately 4,000 new subscribers.
Operating Expenses
Cost of service was $5.3 million for the three months ended March 31, 2000 as
compared to $1.4 million for the three months ended March 31, 1999, representing
an increase of $3.9 million. LA Unwired's cost of service increased to $4.3
million for the three months ended March 31, 2000 from $1.4 million for the
three months ended March 31,1999, representing an increase of $2.9 million. This
increase primarily resulted from the increased number of new subscribers,
coverage area and additional lease costs incurred in eleven yet to be opened
markets in Florida, Alabama and Mississippi. Texas Unwired's cost of sales added
$1.0 million with coverage for its two markets.
Merchandise cost of sales was $5.3 million for the three months ended March 31,
2000 as compared to $1.9 million for the three months ended March 31, 1999,
representing an increase of $3.4 million. LA Unwired's merchandise cost of sales
increased to $4.3 million for the three months ended March 31, 2000 from $1.9
million at March 31, 1999, representing an increase of $2.4 million. This was
primarily due to the number of new subscribers added. Texas Unwired added $1.0
million in merchandise cost of sales that was also related to new subscriber
additions.
Selling, general and administrative expenses were $7.4 million for the three
months ended March 31, 2000 as compared to $1.8 million for the three months
ended March 31, 1999, representing an increase of $5.6 million. LA Unwired's
selling, general and administrative expenses increased to $6.1 million for the
three months ended March 31, 2000 from $1.8 million at March 31, 1999,
representing an increase of $4.3 million. This was primarily due to the costs
associated with expanding our market coverage and included an additional $1.6
million in management fees from US Unwired for the three months ended March 31,
2000. Texas Unwired incurred $1.3 million in selling, general and administrative
expenses for the three months ended March 31, 2000.
Depreciation and amortization expense was $5.9 million for the three months
ended March 31, 2000 as compared to $2.4 million for the three months ended
March 31, 1999, an increase of $3.5 million. LA Unwired increased to $4.7
million for the three months ended March 31, 2000 from $2.4 million at March 31,
1999, representing an increase of $2.3 million. This was primarily due to the
increase in capital costs associated with expanding our market coverage. Texas
Unwired incurred $1.2 million in depreciation costs or the three months ended
March 31, 2000 that was also associated with market expansion.
Operating Loss
The total operating loss was $11.1 million for the three months ended March 31,
2000 as compared to $4.7 million for the three months ended March 31, 1999, an
increase of $6.4 million. LA Unwired had an
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operating loss of $9.5 million for the three months ended March 31, 2000 as
compared to an operating loss of $4.7 million for the three months ended March
31, 1999, representing an increase of $4.8 million. This is primarily
attributable to increased operational costs associated with building out our
markets. Texas Unwired recorded an operating loss of $1.6 million for the three
months ended March 31, 2000 and this is also attributable to costs associated
with building out our markets.
Other Income/(Expense)
Three months ended March 31,
----------------------------
(In thousands)
2000 1999
------ -----
Interest expense $ (280) $(626)
Interest income 1,596 20
------ -----
Total other income/(expense) $1,316 $(606)
====== =====
Interest expense was $280,000 for the three months ended March 31, 2000 as
compared to $626,000 for the three months ended March 31, 1999, representing a
decrease of $346,000. This decrease was the result of the early extinguishment
of long-term debt in the fourth quarter of 1999. Texas Unwired incurred $247,000
in interest expense for the three months ended March 31, 2000 that was
attributable to interest expense on cell site capital leases.
Interest income was $1.6 million for the three months ended March 31, 2000 as
compared to $0 for the three months ended March 31, 1999. The increase is the
result of investing available funds in marketable securities until the funds are
required to fund our market build out.
Minority Interest in Subsidiary
Minority interest in losses of affiliate was $445,000 for the three months ended
March 31,2000 and $0 for the three months ended March 31, 1999. This is
attributable to the consolidation of Texas Unwired and represents the portion of
losses from Texas Unwired allocable to the minority partners.
Liquidity and Capital Resources
We need approximately $303.8 million to build out our PCS network and to market
and distribute our products and services from January 2000 through December
2001. We believe that the proceeds from our financings and internally generated
cash will be enough to build out our network as planned, cover anticipated
operating losses and meet our debt service requirements through December 2001.
We expect to cover approximately 66% of the population in a majority of markets
in our service area by March 2001. We plan to use this $303.8 million for
capital requirements, including capital expenditures, working capital, debt
service requirements and anticipated operating losses for the period from
January 2000 through December 2001. We will use this capital also for switches,
base stations, towers and antennae, radio frequency engineering, cell site
acquisition and construction and microwave relocation. The actual amounts
required building out our PCS network may vary materially from these estimates.
We may need more capital if we have unforeseen delays, cost overruns,
unanticipated expenses, regulatory expenses, engineering design changes and
other technological risks.
On October 1, 1999, US Unwired entered into a credit facility with Co Bank, ACB,
The Bank of New York, BNY Capital Markets, Inc., First Union Securities, Inc.,
First Union National Bank and other lenders for $130 million. At March 31, 2000,
US Unwired had full availability of $130 million under this new credit facility
for the build out of our PCS network and anticipated operating losses. This
facility is secured by, among other things, a first priority security interest
in all tangible and intangible assets of the Company, including its PCS licenses
to the extent legally permitted; a pledge by the Company of its ownership
interest in Texas Unwired; and an assignment by the Company of its Sprint PCS
agreements and any network contract, including software rights.
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On October 29, 1999, US Unwired issued approximately $400 million in aggregate
principal amount of 13 3/8% senior subordinated discount notes and received
gross proceeds of approximately $209 million. These notes are unsecured
obligations of US Unwired. They bear interest at a rate of 13 3/8% per year,
payable twice per year on May 1 and November 1, beginning May 1, 2005. LA
Unwired fully and unconditionally and jointly and severally guarantees US
Unwired's obligations under these notes.
Cash used in operating activities was $9.6 million for the three months ended
March 31, 2000. Cash provided by investing activities was $24.4 million for the
three months ended March 31, 2000 and includes $39.4 million provided by the
purchase and sale of marketable securities offset by $14.8 million used to
purchase equipment. Cash used in financing activities was $13.5 million for the
three months ended March 31, 2000 and consists primarily of $13.8 million used
in the payment of long-term debt.
In the past, we have paid our working capital requirements, acquisitions,
capital expenditures and debt service through bank financing and retained
earnings from operations.
Seasonality
Like the wireless communications industry in general, our subscribers increase
in the fourth quarter due to the holiday season. A greater number of phones sold
at holiday promotional prices causes our losses on merchandise sales to
increase. Our sales and marketing expenses increase also with holiday
promotional activities. We generally have the most use and revenue per
subscriber in the summer because of an increase in revenues from fees charged to
non-US Unwired, non-Sprint PCS customers who use our network while traveling in
our service area. We believe that the increased traffic in our service area
comes from people traveling during summer vacation. We expect these trends to
continue based on historical operating results.
Impact of Year 2000 Issue on Our Operations and Financial Conditions
We use a significant number of computer systems and software programs in our
operations, including in support of our PCS network equipment and for various
administrative functions. Before the Year 2000, we discussed the nature and
progress of our plans to prepare for that year. In late 1999, we finished
testing and preparing our systems for the Year 2000 date change. As of the date
of this report, we had experienced no significant disruptions in our critical
information technology systems and non-information technology systems that
resulted from the Year 2000 date change. We believe that our systems
successfully responded to the Year 2000 date change. We are not aware of any
material problems that resulted from the Year 2000 date change with our
products, our internal systems or the products and services of third parties. We
will continue to monitor our critical computer applications and those of our
suppliers and vendors throughout 2000 so we can promptly address any Year 2000
matters that may arise.
Quantitative and Qualitative Disclosure about Market Risk
We are not exposed to fluctuations in currency exchange rates, as all our
services are invoiced in U.S. dollars. We are exposed to the impact of interest
rate changes on our short-term cash investments, consisting of U.S. Treasury
obligations and other investments in respect of institutions with the highest
credit ratings, all of which investments mature on or before July 13, 2000.
These short-term investments carry a degree of interest rate risk. We believe
that the impact of a 1% increase or decline in current average investment rates
would not have a material impact on our investment income.
PART II
Item 6. Exhibits and Reports on Form 8-K
13
<PAGE>
a. Exhibits
Financial Data Schedule
b. Reports on Form 8-K during the quarter ended March 31, 2000
No reports on Form 8-K were filed during the quarter ended March 31,
2000.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the undersigned
thereunto duly authorized.
May 18, 2000 LOUISIANA UNWIRED, LLC
By:/s/ Thomas G. Henning
______________________________
Thomas G. Henning
Duly Authorized Officer
By:/s/ Jerry E. Vaughn
______________________________
Jerry E. Vaughn
Principal Financial Officer
14
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<SECURITIES> 75,232
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0
0
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