<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURI
TIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23694
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HEARTLAND WIRELESS COMMUNICATIONS, INC.
401(k) PLAN
HEARTLAND WIRELESS COMMUNICATIONS, INC.
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
<PAGE> 2
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Index to Financial Statements and Supplemental Schedules
Independent Auditors' Report
Statement of Net Assets Available for Benefits - December 31, 1996
Statement of Changes in Net Assets Available for Benefits - For the year
ended December 31, 1996
Notes to Financial Statements - December 31, 1996
<TABLE>
<CAPTION>
Supplemental Schedules: Schedules
---------
<S> <C>
Item 27a - Schedule of Assets Held for Investment Purposes at
December 31, 1996 1
Item 27d - Schedule of Reportable Transactions - For the year
ended December 31, 1996 2
Item 27f - Schedule of Non-exempt Transactions - For the year
ended December 31, 1996 3
</TABLE>
2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Plan Administrator
Heartland Wireless Communications, Inc. 401(k) Plan:
We have audited the accompanying financial statements of the Heartland Wireless
Communications, Inc. 401(k) Plan (the "Plan") as of December 31, 1996 and for
the year ended December 31, 1996 as listed in the accompanying index. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Heartland
Wireless Communications, Inc. 401(k) Plan as of December 31, 1996, and the
changes in net assets available for benefits for the year ended December 31,
1996 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes, reportable transactions and non-exempt transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The Fund Information
in the statement of net assets available for benefits and the statement of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for
benefits and changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
July 8, 1997
3
<PAGE> 4
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits
December 31, 1996
<TABLE>
<CAPTION>
Goldman Heartland
Washington The The Sachs Wireless
Mutual Growth Investment The Bond Money Communications,
Investors Fund of Company of Fund of Market Inc. Common
Total Fund America America Fund America Fund Stock
----- ---- ------- ------------ ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investment, at fair value (note 4):
Goldman Sachs Money Market
Fund $ 41,615 11,758 5,054 3,016 792 3,182 17,813
Mutual funds 54,469 18,399 18,994 17,076 -- -- --
Bond fund 1,276 -- -- -- 1,276 -- --
Heartland Wireless Communications,
Inc. common stock 110,800 -- -- -- -- -- 110,800
--------- ------- ------- ------- ------ -------- --------
166,545 18,399 18,994 17,076 1,276 -- 110,800
--------- ------- ------- ------- ------ -------- --------
Total investments 208,160 30,157 24,048 20,092 2,068 3,182 128,613
--------- ------- ------- ------- ------ -------- --------
Receivables:
Employer contributions receivable 9,533 -- -- -- -- -- 9,533
Employee contributions receivable 14,548 2,222 1,888 1,527 154 253 8,504
Investment income receivable 424 34 97 217 2 12 62
--------- ------- ------- ------- ------ -------- --------
Total receivables 24,505 2,256 1,985 1,744 156 265 18,099
--------- ------- ------- ------- ------ -------- --------
Total assets 232,665 32,413 26,033 21,836 2,224 3,447 146,712
--------- ------- ------- ------- ------ -------- --------
Payables - refunds payable (15,923) (1,130) (15) (1,644) (15) (29) (13,090)
--------- ------- ------- ------- ------ -------- --------
Net assets available for benefits $ 216,742 31,283 26,018 20,192 2,209 3,418 133,622
========= ======= ======= ======= ====== ======== ========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE> 5
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Goldman Heartland
Washington The The Sachs Wireless
Mutual Growth Investment The Bond Money Communications,
Investors Fund of Company of Fund of Market Inc. Common Disbursement
Total Fund America America Fund America Fund Stock Account
----- ---- ------- ------------ ------- ---- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employer's contributions $ 63,621 -- -- -- -- -- 63,611 10
Employee's contributions 185,541 26,672 22,017 16,422 2,009 3,148 100,485 14,788
--------- ------ ------ ------ ----- ------- -------- -------
249,162 26,672 22,017 16,422 2,009 3,148 164,096 14,798
Employee rollovers from other plans 28,646 1,008 1,633 1,485 -- -- 24,520 --
Investment income:
Dividend and interest income 1,029 221 209 346 29 63 161 --
Net appreciation (depreciation)
in fair value of investments (60,574) 1,212 1,065 781 12 -- (63,644) --
--------- ------ ------ ------ ----- ------- -------- -------
Net investment income (59,545) 1,433 1,274 1,127 41 63 (63,483) --
--------- ------ ------ ------ ----- ------- -------- -------
Total additions 218,263 29,113 24,924 19,034 2,050 3,211 125,133 14,798
Deductions from net assets attributed to:
Withdrawals 1,189 -- -- -- -- -- -- 1,189
Other 332 -- -- -- -- -- 70 262
--------- ------ ------ ------ ----- ------- -------- -------
Total deductions 1,521 -- -- -- -- -- 70 1,451
--------- ------ ------ ------ ----- ------- -------- -------
Net increase prior to
interfund transfers 216,742 29,113 24,924 19,034 2,050 3,211 125,063 13,347
Interfund transfers, net -- 2,170 1,094 1,158 159 207 8,559 (13,347)
--------- ------ ------ ------ ----- ------- -------- -------
Net increase 216,742 31,283 26,018 20,192 2,209 3,418 133,622 --
Net assets available for benefits:
Beginning of year -- -- -- -- -- -- -- --
--------- ------ ------ ------ ----- ------- -------- -------
End of year $ 216,742 31,283 26,018 20,192 2,209 3,418 133,622 --
========= ====== ====== ====== ===== ======= ======== =======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Notes To Financial Statements
(1) Description of Plan
The following description of the Heartland Wireless Communications,
Inc. 401(k) Plan (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
(a) General
The Plan was established for the benefit of the employees of
Heartland Wireless Communications, Inc. ("the Employer" or the
"Company") effective January 1, 1996. Participant contributions
began the pay period ended June 15, 1996.
The Plan is a defined contribution plan sponsored by the
Company. Employees are eligible to participate in the Plan upon
the completion of six months of service during which time they
have been credited with 1,000 hours of service and have attained
the age of twenty-one. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
(b) Contributions
Each participant may make voluntary contributions while a
participant in the Plan. Participant contributions are limited
from two to ten percent of the participant's compensation. The
maximum participant deferral amount for 1996 is $9,500.
The Company also makes discretionary matching contributions to
the Plan equal to $.50 for each $1 contributed, up to a maximum
amount of 2% of a participant's compensation. The aggregate
(determined on an annual basis) of participant contributions to
the Plan and other Company retirement plans and Company
contributions to the Plan and other Company retirement plans on
behalf of the participant are limited to the lesser of $30,000
or 25% of the participant's annual compensation.
(c) Participant Accounts
Each participant's account is credited with the participant's
voluntary contributions and an allocation of the Company's
contribution and Plan earnings (losses). Allocations are based
on participant contributions, as defined. Company contributions
forfeited by terminated employees are used to reduce any
matching contributions of the Company.
(d) Investment Program and Vesting
The Plan allows participants to direct the investments of their
contributions into six investment options.
6
<PAGE> 7
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Notes To Financial Statements
The investment programs of the Plan are as follows:
o Washington Mutual Investors Fund - invests in high quality common
stocks and securities convertible into such common stock. The stated
investment objective of the fund is to produce income and to provide
an opportunity for growth of principal consistent with sound common
stock investing.
o The Growth Fund of America - invests in a diversified portfolio
consisting primarily of common stocks, with some assets also held in
securities convertible into common stocks, cash and cash equivalents,
debt securities, or nonconvertible preferred stocks. The fund's
investment objective is growth of capital.
o The Investment Company of America Fund - invests primarily in common
stocks; however, assets are also held in securities convertible into
common stocks, debt securities, cash and cash equivalents, U.S.
Government securities, private placement securities or nonconvertible
preferred stock. The fund attempts to achieve its investment
objective of long-term growth of capital and income by giving more
weight to the possibilities of appreciation and potential dividends
than current yield.
o The Bond Fund of America - invests substantially all of its assets in
marketable corporate debt securities, U.S. Government securities,
mortgage-related securities, other asset-backed securities and cash
or money market instruments, with at least approximately two-thirds
of the fund's total assets usually invested in bonds. The fund's
objective is to provide as high a level of current income as is
consistent with the preservation of capital.
o Goldman Sachs Money Market Fund - invests in cash and cash
equivalents such as commercial paper, commercial bank obligations,
and securities of the U.S. Government, its agencies and
instrumentalities. The objective of this fund is to provide as high a
level of current income as is consistent with the preservation of
capital.
o Heartland Wireless Communications, Inc. Common Stock - invests solely
and exclusively in Heartland Wireless Communications, Inc. common
stock.
Voluntary contributions by the participant are immediately fully
vested and nonforfeitable. A participant's share of Employer
contributions vests 20 percent after each year of service, with the
participant being fully vested after completing five years of
service.
(e) Payment of Benefits
Upon death, disability or termination of service, a participant or
designated beneficiary receives a lump sum payment or installments of
cash and/or stock at the discretion of the Plan Administrator.
Benefits are recorded when paid.
7
<PAGE> 8
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Notes To Financial Statements
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements have been prepared on the
accrual method of accounting.
(b) Investments
All investments are stated at fair value based on quoted market
prices. Purchases and sales of securities are recorded on a
trade date basis. Interest and dividends are recorded on an
accrual basis. Expenses relating to the purchase or sale of
investment securities are added to the cost or deducted from the
proceeds, respectively.
(c) Use of Management Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of additions and deductions during the
reporting period. Actual results could differ from those
estimates.
(d) Related Party Transactions
The transactions between the Company and the Plan participants
are considered party-in-interest transactions and are summarized
at Schedule 3.
(e) Refunds Payable
At December 31, 1996, the Plan has recorded refunds payable of
$15,923. The refunds relate to amounts due to certain employees
of the Company based upon nondiscrimination tests, fee deferrals
and employee after-tax contributions to the Plan.
(f) Expenses of the Plan
The expenses of administration of the Plan, including the
expenses of the administration and the fees of the trustee, are
paid by the Company. The Company paid $15,905 in fees relating
to the Plan in 1996.
(3) Plan Termination
Although it has not expressed an intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan. Upon termination, participants will become
fully vested in their accounts.
8
<PAGE> 9
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Notes To Financial Statements
(4) Investments
The following table presents the fair value of investments
representing 5% or more of the Plan's net assets at December 31,
1996:
<TABLE>
<CAPTION>
Number of Fair
shares/units value
------------ -----
<S> <C> <C>
Washington Mutual Investors Fund 750 $18,399
The Growth Fund of America 1,146 18,994
The Investment Company of America
Fund 705 17,076
Goldman Sachs Money Market Fund 41,615 41,615
Heartland Wireless Communications,
Inc. Common Stock 8,442 110,800
</TABLE>
For the year ended December 31, 1996, the Plan's investments
(including investments bought, sold and held during the year)
appreciated (depreciated) as follows:
<TABLE>
<S> <C>
Washington Mutual Investors Fund $ 1,212
The Growth Fund of America 1,065
The Investment Company of America Fund 781
The Bond Fund of America 12
Heartland Wireless Communications, Inc. Common Stock (63,644)
---------
Net depreciation in fair value $ (60,574)
=========
</TABLE>
(5) Tax Status
The Plan has not yet obtained its determination letter regarding its
compliance with the applicable requirements of the Internal Revenue
Code. The Plan administrator and Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with
the applicable requirements of the Code. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
The United States federal income tax status of the participants with
respect to their contributions to the Plan is described in
information submitted to the participants and, subject to certain
limitations, such contributions are tax deferred.
9
<PAGE> 10
Schedule 1
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Item 27a - Schedule of Assets Held for Investment
December 31, 1996
<TABLE>
<CAPTION>
Number
Identity of Issue, Borrower, Lessor of Current
or Similar Party shares/units Cost value
- ---------------- ------------ ---- ------
<S> <C> <C> <C>
Washington Mutual Investors Fund 750 $ 18,039 18,399
The Growth Fund of America 1,146 18,640 18,994
The Investment Company of America Fund 705 16,988 17,076
The Bond Fund of America 93 1,264 1,276
Goldman Sachs Money Market Fund 41,615 41,615 41,615
Heartland Wireless Communications, Inc.
Common Stock* 8,442 174,503 110,800
-------- -------
Total assets held for investment $271,049 208,160
======== =======
</TABLE>
*Party-in-interest
See accompanying independent auditors' report.
10
<PAGE> 11
Schedule 2
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Expense Current Net
Aggregate incurred value at gain
number of Purchase Selling Lease with Cost of transaction or
Description transactions price price rental transaction assets date (loss)
----------- ------------ ----- ----- ------ ---------- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases:
- ----------
The Bond Fund of America 10 $ 1,264 - - - $ 1,264 $ 1,264 -
The Growth Fund of America 12 18,640 - - - 18,640 18,640 -
Heartland Wireless
Communications, Inc.
Common Stock 9 174,503 - - - 174,503 174,503 -
The Investment Company of
America Fund 11 16,988 - - - 16,988 16,988 -
Washington Mutual Investors
Fund 9 18,039 - - - 18,039 18,039 -
Goldman Sachs Money Market
Fund 133 331,100 - - - 331,100 331,100 -
Sales:
- ------
Goldman Sachs Money Market
Fund 59 - $274,718 - - 274,718 274,718 -
</TABLE>
See accompanying independent auditors' report.
11
<PAGE> 12
Schedule 3
HEARTLAND WIRELESS COMMUNICATIONS, INC. 401(k) PLAN
Item 27f - Schedule of Non-exempt Transactions
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Expense Current Net
incurred Cost value at gain
Identity of Relationship Purchase Selling Lease with of transaction or
Party Involved To Plan Description price price rental transaction assets date (loss)
- -------------- ------- ----------- ----- ----- ------ ---------- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Employer Employee Amount withheld, $ 2,554 - - - - - -
not invested
in Plan
</TABLE>
See accompanying independent auditors' report.
12
<PAGE> 13
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: July 14, 1997 HEARTLAND WIRELESS COMMUNICATIONS,INC.
401(k)PLAN
By: Heartland Wireless Communications, Inc.,
Plan Administrator
By: /s/ David D. Hagey
-------------------
David D. Hagey
Vice President, Controller
and Assistant Secretary
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
*23 Consent of KPMG Peat Marwick LLP
</TABLE>
- --------------------
*Filed herewith
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Plan Administrator
Heartland Wireless Communications, Inc.
401(k) Plan:
We consent to incorporation by reference in the Registration Statement
(No. 333-05943) on Form S-8 of our report dated July 8, 1997, relating
to the statement of net assets available for benefits of the Heartland
Wireless Communications, Inc. 401(k) Plan as of December 31, 1996, and
the related statement of changes in net assets available for benefits
for the year ended December 31, 1996, which report appears in the
December 31, 1996 annual report on Form 11-K of the Heartland Wireless
Communications, Inc. 401(k) Plan filed by Heartland Wireless
Communications, Inc.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
July 14, 1997