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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 2000
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-23694
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Nucentrix Broadband Networks, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 73-1435149
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
200 Chisholm Place, Suite 200, Plano, Texas 75075
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (972) 423-9494
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N/A
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Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check X 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:
Shares Outstanding
Class as of July 31, 2000
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Common Stock, $.001 par value 10,160,683
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NUCENTRIX BROADBAND NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
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Current assets: (UNAUDITED)
<S> <C> <C>
Cash and cash equivalents ..................................... $ 28,940 $ 28,932
Restricted assets - investment in debt securities ............. 251 251
Subscriber receivables, net of allowance for
doubtful accounts of $344 and $407, respectively ............ 1,017 1,342
Other receivables ............................................. 583 934
Prepaid expenses and other .................................... 1,240 1,228
------------- -------------
Total current assets ............................... 32,031 32,687
Systems and equipment, net ............................................ 48,608 55,993
License and leased license investment, net ............................ 70,930 73,310
Note and lease receivables ............................................ 2,937 3,212
Other assets, net ..................................................... 3,763 3,609
------------- -------------
Total assets....................................... $ 158,269 $ 168,811
============= =============
Current liabilities:
Accounts payable and accrued expenses ......................... $ 17,261 $ 18,579
Current portion of long-term debt ............................. 1,928 1,845
------------- -------------
Total current liabilities .......................... 19,189 20,424
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Long-term debt, less current portion .................................. 13,869 14,671
Other long-term liabilities ........................................... 3,620 3,671
Commitments and contingencies (note 7)
Stockholders' equity:
Preferred stock, $.01 par value; 15,000,000 shares
authorized; none issued.................................. -- --
Common stock, $.001 par value; 30,000,000 shares
authorized, 10,157,983 and 10,099,717 shares
outstanding at June 30, 2000, and December 31, 1999,
respectively.............................................. 10 10
Additional paid-in capital .................................... 147,998 147,279
Accumulated deficit ........................................... (26,417) (17,244)
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Total stockholders' equity ......................... 121,591 130,045
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Total liabilities and stockholders' equity ......... $ 158,269 $ 168,811
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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NUCENTRIX BROADBAND NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
(NOTE 2) (NOTE 2)
-------------------------------------- -------------
THREE PERIOD FROM
MONTHS ENDED EFFECTIVE DATE TO EFFECTIVE
JUNE 30, 2000 JUNE 30, 1999 DATE
-------------- -------------- -------------
<S> <C> <C> <C>
Revenues ............................... $ 15,818 $ 17,273 --
Operating expenses:
System operations ................. 7,364 8,187 --
Selling, general and administrative 8,498 8,852 --
Depreciation and amortization ..... 7,346 5,782 --
-------------- -------------- ------------
Total operating expenses ....... 23,208 22,821 --
Operating loss ................. (7,390) (5,548) --
Other income (expense):
Interest income ................... 498 368 --
Interest expense .................. (346) (309) --
Other income (expense), net ....... 89 700 --
-------------- ------------- ------------
Total other income (expense) ... 241 759 --
-------------- ------------- ------------
Loss before reorganization costs
and extraordinary item ......... (7,149) (4,789) --
Reorganization costs .............. -- (143) --
--------------- ------------ ------------
Loss before extraordinary item.. (7,149) (4,932) --
Extraordinary item:
Gain on debt forgiveness ....... -- -- 173,783
-------------- -------------- ------------
Net income (loss) ...................... $ (7,149) $ (4,932) 173,783
============== ============== ============
Net loss per common share -
basic and diluted ................ $ (0.70) $ (0.49) N/A
============== ============== ============
Weighted average shares outstanding -
basic and diluted ...................... 10,153 10,009 N/A
============== ============== ============
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
(NOTE 2) (NOTE 2)
--------------------------------------- -----------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED EFFECTIVE DATE TO JANUARY 1, 1999,
JUNE 30, 2000 JUNE 30, 1999 TO EFFECTIVE DATE
---------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues ............................... $ 32,141 $ 17,273 $ 18,466
Operating expenses:
System operations ................. 14,661 8,187 8,599
Selling, general and administrative 16,542 8,852 9,156
Depreciation and amortization ..... 14,313 5,782 6,104
-------------- -------------- --------------
Total operating expenses ....... 45,516 22,821 23,859
Operating loss ................. (13,375) (5,548) (5,393)
Other income (expense):
Interest income ................... 993 368 423
Interest expense .................. (700) (309) (321)
Other income (expense), net ....... 3,909 700 2
-------------- -------------- --------------
Total other income (expense) ... 4,202 759 104
-------------- -------------- --------------
Loss before reorganization costs
and extraordinary item ......... (9,173) (4,789) (5,289)
Reorganization costs .............. -- (143) (2,311)
-------------- -------------- --------------
Loss before extraordinary item.. (9,173) (4,932) (7,600)
Extraordinary item:
Gain on debt forgiveness ....... -- -- 173,783
-------------- -------------- --------------
Net income (loss) ...................... $ (9,173) $ (4,932) $ 166,183
============== ============== ==============
Net loss per common share -
basic and diluted ................ $ (0.91) $ (0.49) N/A
============== ============== ==============
Weighted average shares outstanding -
basic and diluted ...................... 10,132 10,009 N/A
============== ============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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NUCENTRIX BROADBAND NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
(NOTE 2) (NOTE 2)
--------------------------------------- ----------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED EFFECTIVE DATE JANUARY 1, 1999,
JUNE 30, TO JUNE 30, TO EFFECTIVE
2000 1999 DATE
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ........................................ $ (9,173) $ (4,932) $ 166,183
Adjustments to reconcile net loss to net cash
provided by operating activities:
Gain on forgiveness of debt ................ -- -- (173,783)
Non-cash stock compensation ................ 56 -- --
Depreciation and amortization .............. 14,313 5,782 6,104
Gain on sale of assets ..................... (4,020) -- --
Changes in assets and liabilities:
Restricted cash ......................... -- 226 --
Subscriber and other receivables ........ 676 1,136 (954)
Prepaid expenses and other .............. 334 305 (158)
Accounts payable, accrued expenses and
other liabilities ....................... (1,441) 682 5,057
-------------- -------------- --------------
Net cash provided by operating
activities ........................... 745 3,199 2,449
-------------- -------------- --------------
Cash flows from investing activities:
Proceeds from sale of assets .................... 4,400 -- --
Purchases of systems and equipment .............. (4,117) (4,072) (5,081)
Expenditures for licenses and leased licenses.... (1,043) -- (16)
Proceeds from note receivable ................... 275 78 138
-------------- -------------- --------------
Net cash used in investing
activities ......................... (485) (3,994) (4,959)
-------------- -------------- --------------
Cash flows from financing activities:
Payments on short-term borrowings and notes
payable .................................... (145) (157) (241)
Payments on long-term debt ................... (725) (343) (335)
Proceeds from exercise of stock options ...... 618 525 --
-------------- -------------- --------------
Net cash provided by (used in)
financing activities ............... (252) 25 (576)
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents.. 8 (770) (3,086)
Cash and cash equivalents at beginning of period ..... 28,932 27,590 30,676
-------------- -------------- --------------
Cash and cash equivalents at end of period ........... $ 28,940 $ 26,820 $ 27,590
============== ============== ==============
Cash paid for interest ............................... $ 687 $ 220 $ 391
============== ============== ==============
Cash paid for reorganization costs ................... $ 525 $ 143 $ 2,311
============== ============== ==============
Non-cash activities:
Capital leases and other ........................ $ 211 -- --
=============== =============== ===============
Common stock issued for channel license ......... $ 45 -- --
=============== ============== ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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NUCENTRIX BROADBAND NETWORKS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(1) Description of Business
Nucentrix Broadband Networks, Inc. (the "Company") provides broadband
wireless services in medium and small markets in the central United
States. The Company controls up to 196 megahertz ("MHz") of radio
spectrum in the 2.1 gigahertz ("GHz") and 2.5 - 2.7 GHz band licensed
by the Federal Communications Commission ("FCC") in 94 markets
(including four markets for which the Company has entered into a
definitive agreement or letter of intent to acquire). This spectrum
commonly is referred to together as "Multichannel Multipoint
Distribution Service," or "MMDS," and is referred to together as "MMDS"
in this report. The Company currently provides high-speed wireless
Internet access service under temporary developmental FCC licenses in
two markets, primarily to medium-sized and small businesses, small
offices/home offices and telecommuters.
At July 31, 2000, the Company provided wireless subscription television
service in 58 markets, including an offering of up to 185 digital
channels from DIRECTV, Inc. and its distributors in over 50 markets.
(2) Financial Restructuring
On December 4, 1998, the Company filed a voluntary, pre-negotiated Plan
of Reorganization (the "Plan") under Chapter 11 of the U.S. Bankruptcy
Code ("Bankruptcy Code"). On March 15, 1999, the U.S. Bankruptcy Court
for the District of Delaware confirmed the Plan, and the Company
consummated the Plan on April 1, 1999 (the "Effective Date").
The Company adopted Fresh Start Reporting as of the Effective Date, in
accordance with American Institute of Certified Public Accountants
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7"). Fresh Start
Reporting resulted in a new reporting entity with assets and
liabilities adjusted to estimated fair value and beginning retained
earnings set to zero. Liabilities subject to compromise were adjusted
to zero in connection with their cancellation under the Plan. In
connection with the debt discharge, the Company recorded an
extraordinary gain of approximately $174.0 million on the Effective
Date.
As a result of the application of Fresh Start Reporting and the
reorganization of the Company on the Effective Date, financial
information in the accompanying condensed consolidated financial
statements for the three and six months ended June 30, 2000, and for
the period from the Effective Date to June 30, 1999 (collectively, the
"Successor Period") is presented on a different basis than the
financial information for the period from January 1, 1999, to the
Effective Date (the "Predecessor Period"). Accordingly, such
information is not comparable.
Federal tax law requires that the amount of income from discharge of
indebtedness that occurs in connection with a Chapter 11 bankruptcy be
used to permanently reduce federal tax attributes. These reductions may
be applied to one or more tax items, including but not limited to
pre-bankruptcy net operating loss carryforwards, the tax basis of
certain assets and the tax basis of subsidiary stock ("Tax Attribute
Reduction"). Management currently is considering the impact of
alternatives available to the Company in performing this Tax Attribute
Reduction, but has not yet concluded which alternative it will select.
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(3) Liquidity and Capital Resources
The Company's condensed consolidated financial statements have been
presented on a going concern basis which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of
business.
Although the Company does not expect to generate sufficient cash flow
to fully implement its long-term business strategy without additional
capital or financing, it currently expects that cash on hand and cash
generated from operations and equipment financing from Cisco Systems,
Inc. ("Cisco"), will be sufficient to fund operations and capital
requirements at least through the second quarter of 2001. The Company
may seek additional debt or equity financing in 2000 or the first
quarter of 2001 if it accelerates its business strategy or Internet
build-out schedule, consummates any significant acquisitions or
alliances, determines that market conditions are appropriate for such
financing or determines that its current operating assumptions are
inaccurate.
In any event, the Company likely will seek additional capital or
financing before the end of 2001 to enable it to fully implement its
long-term business strategy. Options include the sale of debt or equity
securities, borrowings under secured or unsecured loan arrangements,
including vendor equipment financing, and sales of assets. The Company
can provide no assurance that such financing will be available in a
timely manner or on satisfactory terms.
(4) Principles of Consolidation
The condensed consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries. Significant
intercompany balances and transactions between the entities have been
eliminated in consolidation.
(5) Interim Financial Information
In the opinion of management, the accompanying unaudited condensed
consolidated financial information of the Company contains all
adjustments, consisting only of those of a normal recurring nature,
necessary to present fairly the Company's financial position as of June
30, 2000, and the results of operations and cash flows for the three
and six months ended June 30, 2000, and the period from January 1,
1999, to the Effective Date and from the Effective Date to June 30,
1999. These results are not necessarily indicative of the results to be
expected for the full fiscal year. The accompanying financial
statements are for interim periods and should be read in conjunction
with the 1999 audited consolidated financial statements of the Company
included in the Company's 1999 Form 10-K (as amended by Form 10-K/A).
(6) Net Loss Per Common Share - Basic and Diluted
The Company has presented (1) basic loss per share, computed on the
basis of the weighted average number of common shares outstanding
during the period, and (2) diluted loss per share, computed on the
basis of the weighted average number of common shares and all dilutive
potential common shares outstanding during the period. Options to
purchase 767,100 shares and warrants to purchase 825,000 shares of the
Company's common stock issued and outstanding at June 30, 2000, have
not been included in the calculation of diluted loss per share because
their effects are antidilutive. Earnings per share information has not
been presented for the Predecessor Period as the Company was
reorganized on the Effective Date in connection with the Plan and,
accordingly, per share amounts are not comparable between the
Predecessor Period and the Successor Period.
(7) Commitments and Contingencies
Certain former directors and officers of the Company, to whom the
Company may have indemnity obligations, are defendants in one purported
class action securities lawsuit, styled Thompson, et al. v. David E.
Webb, et al., (98-371-D), in State District Court in Kleburg County,
Texas. This action alleges, among other things, various violations of
state securities laws. In June 2000, the plaintiffs' counsel in this
matter notified counsel for
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defendants that the maximum amount of damages sought by the plaintiffs
in this matter was $700 million. The plaintiffs previously had
indicated in a statement of the case that their purported class damage
models indicated total damages of $70.5 million.
Certain former officers and directors of the Company, to whom the
Company also may have indemnity obligations, were defendants in a
federal securities action styled Coates, et al. v. Heartland Wireless
Communications, Inc., et al., (3-98-CV-0452-D), in U.S. District Court
for the Northern District of Texas. In June 2000, the court dismissed
the plaintiffs' claims in this matter, with prejudice. In July 2000,
the Company received notice that the plaintiffs intended to appeal the
District Court's decision to the U.S. Circuit Court of Appeals for the
Fifth Circuit.
The Company also is a party to three purported class action lawsuits
alleging that the Company overcharged its customers for administrative
late fees. The most recent lawsuit, filed against the Company in State
District Court in Duval County, Texas in May 2000, is styled John
Nolen, Jr., et al. v. Nucentrix Broadband Networks, Inc. (DC-00-155).
The plaintiff in the Nolen action is represented by the same counsel
who has filed similar lawsuits against the Company in Brooks and Nueces
Counties, Texas. The Nolen action alleges that the Company's
administrative late fees are unenforceable and usurious. The plaintiff
seeks to represent a class consisting of all persons who have entered
into a contract to receive subscription television services from the
Company and paid the Company an administrative late fee since December
4, 1998. The plaintiff in Nolen seeks (1) a declaration that the
administrative late fees charged by the Company are usurious and
unenforceable and that these late fees should be returned to the
purported class, (2) an injunction prohibiting the Company from
charging more than the maximum legal interest rate, and (3) recovery of
statutory penalties and interest, attorneys' fees, prejudgment and
post-judgment interest and costs.
The Company intends to vigorously defend all of the matters discussed
above. While it is not feasible to predict or determine the final
outcome of these proceedings or to estimate the amounts or potential
range of loss with respect to these matters, and while management does
not expect such an adverse outcome, management believes that an adverse
outcome in one or more of these proceedings that exceeds or otherwise
is excluded from applicable insurance coverage could have a material
adverse effect on the consolidated financial condition, results of
operations and/or cash flows of the Company.
In September 1999, two former stockholders of Heartland Wireless
Communications, Inc. filed a motion in U.S. Bankruptcy Court to revoke
the order confirming the Plan. The Company intends to vigorously oppose
the motion, and it is not possible at this time to predict the effect
of any action by the Bankruptcy Court to revoke the Plan.
The Company also is a party to other legal proceedings, a majority of
which are incidental to its business. In the opinion of management, and
after consideration for amounts recorded in the accompanying condensed
consolidated financial statements, the ultimate effects of such other
matters are not expected to have a material adverse effect on the
consolidated financial condition, results of operations or cash flows
of the Company.
The Company has entered into a Memorandum of Agreement with Cisco.
Under the agreement with Cisco, the Company is obligated to purchase at
least $13.0 million in base station and customer premises equipment
from Cisco through the end of 2001, subject to Cisco meeting certain
equipment test trial and other conditions. As part of its strategic
alliance with the Company, Cisco has offered a financing facility of up
to $16.25 million for the purchase of such equipment.
(8) Segment Reporting
Historically the Company has been considered to have a single
reportable segment: the distribution of subscription television
services. However, based on the Company's current business strategy to
become a leading provider of broadband wireless services in its
markets, and its plans to provide broadband wireless Internet access in
approximately 20 of its markets by the end of 2001, the Company expects
to be comprised of two reportable segments by the end of 2000: (i)
distribution of subscription television services and (ii)
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delivery of broadband wireless Internet access. In anticipation of
launching broadband wireless Internet access and other Internet
protocol-based services, the Company incurred expenses totaling $1.0
million and $1.8 million for the quarter and six months ended June 30,
2000, including costs related to its two operating Internet markets in
Austin and Sherman-Denison, Texas and allocable corporate costs. As of
and for the quarter and six months ended June 30, 2000, revenues and
segment assets related to the delivery of broadband wireless Internet
access were immaterial.
(9) Acquisitions
In June 2000, the Company entered into a letter of intent to acquire
substantially all of the MMDS broadband wireless assets in the greater
Lexington, Kentucky area for $5.4 million in common stock, assumption
of debt to the FCC and cash. The transaction is subject to customary
closing conditions, including completion of due diligence and
definitive agreements, and receipt of all required regulatory
approvals.
In May 2000, the Company executed a definitive agreement to acquire all
of the MMDS broadband wireless assets in the greater Rockford, Illinois
area for $6.0 million in common stock and the assumption of debt to the
FCC. The transaction is subject to customary closing conditions,
including completion of due diligence and receipt of all required
regulatory approvals.
(10) Subsequent Events
In July 2000, the Company exchanged 547,783 shares of common stock in
Wireless One, Inc. ("Wireless One") for approximately $700,000,
pursuant to Wireless One's plan of reorganization under Chapter 11 of
the Bankruptcy Code. After this exchange, the Company retained no
equity interest in Wireless One. Losses recorded in prior years for
Wireless One reduced the Company's investment to zero. Accordingly, the
proceeds will be classified as a gain on sale of assets and included in
other income in the condensed consolidated statement of operations for
the three months ended September 30, 2000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In this Quarterly Report on Form 10-Q, we will refer to Nucentrix Broadband
Networks, Inc., a Delaware corporation, as "the Company," "we," "us" and "our."
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with respect
to our financial condition, results of operations, business strategy and
financial needs. The words "may," "will," "expect," "believe," "plan," "intend,"
"anticipate," "estimate," "continue" and similar expressions, as they relate to
us, as well as discussions of our strategy and pending transactions, are
intended to identify forward-looking statements. Such statements reflect our
current view of future events and are based on our assessment of, and are
subject to, a variety of factors, contingencies, risks, assumptions and
uncertainties deemed relevant by management, including:
o business and economic conditions in our existing markets,
o competitive technologies, products and services,
o regulatory and interference issues, including grant of two-way
transmission authorizations,
o the capabilities of the Vector Orthogonal Frequency Division
Multiplexing ("VOFDM") technology platform we intend to use for
broadband wireless services,
o with respect to pending transactions, completing definitive
documents, satisfying our due diligence efforts and obtaining
required third party consents, including consent of the Federal
Communications Commission ("FCC"),
o those matters discussed under "Risk Factors" in Part I of our
Annual Report on Form 10-K for 1999 (as amended by Form 10-K/A),
and
o those matters discussed elsewhere in this document.
We cannot assure you that any of our expectations will be realized, and
actual results and occurrences may differ materially from our expectations as
stated in this document. We undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
OVERVIEW
We provide broadband wireless Internet and wireless subscription
television services using up to 196 megahertz ("MHz") of radio spectrum licensed
by the FCC in the 2.1 gigahertz ("GHz") and 2.5 - 2.7 GHz range, primarily in
medium and small markets in the central United States. This spectrum commonly is
referred to together as "Multichannel Multipoint Distribution Service," or
"MMDS," and is referred to together as "MMDS" in this report. We own the basic
trading area ("BTA") authorization, or otherwise license or lease MMDS spectrum,
in 94 markets covering an estimated 9.4 million total households, including four
markets covering an estimated 708,000 total households for which we have entered
into a definitive agreement or letter of intent to acquire.
Our business strategy is to become a leading provider of broadband
wireless services using our high-capacity radio spectrum in our markets. We
currently provide always-on, high-speed wireless Internet access service under
temporary developmental FCC licenses to over 235 accounts serving an estimated
1,850 end users in Austin and Sherman-Denison, Texas, primarily to medium-sized
and small businesses, small offices/home offices and telecommuters. Our service
offerings include Internet access from 256 Kbps to 1.54 Mbps, or up to 50 times
faster than service provided over standard telephone lines. Through a national
independent contractor, we also provide value-added services such as technical
support, e-mail, Web hosting and design, domain name registration and domain
name and maintenance changes.
In February 2000, we announced a strategic alliance and agreement with
Cisco Systems, Inc. ("Cisco"), to pursue testing and deployment of broadband
wireless services using VOFDM technology on a Cisco Powered Network(R). The
agreement includes two field trials to be completed in Austin and Amarillo,
Texas between September 2000 and
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the end of 2000. We plan to receive initial results from the Austin field trial
by the end of August 2000. We expect to launch at least 20 total markets by the
end of 2001.
Historically, we have used our spectrum to provide wireless
subscription television services. We presently have wireless subscription
television transmission facilities constructed and operating in 58 markets in
nine states. At July 31, 2000, we had approximately 117,000 wireless
subscription television customers, including approximately 109,000 customers who
subscribed only to programming service provided over our MMDS spectrum, and
8,000 "combo" subscribers who subscribed to both our MMDS programming service
and to DIRECTV programming service sold by us. In addition, at July 31, 2000,
there were approximately 17,000 customers who received only DIRECTV programming
sold by us.
Our business strategy contemplates a decline in revenues, wireless
subscription television subscribers and earnings before interest, taxes,
depreciation and amortization and non-recurring items ("EBITDA") in 2000 and
beyond, as we allocate more of our spectrum and other resources to develop and
expand our broadband wireless Internet access and other broadband wireless
Internet protocol ("IP")-based businesses.
In connection with the FCC's rules on MMDS two-way communications
services, the FCC has announced a one-week "filing window" for applications for
two-way authorizations from August 14, 2000, to August 18, 2000. We intend to
file two-way applications for a number of our markets in this filing window,
including Austin and Sherman-Denison. All such applications must meet FCC
interference protection rules or contain the consent of co-channel and adjacent
channel licensees in our markets and neighboring markets. All complete
applications that have not been opposed within 120 days after the close of the
filing window will be granted. Although we believe we will be able to file for
and receive two-way authorizations to replace our developmental authorizations
in Austin and Sherman-Denison, there can be no assurance that we will receive
such authorizations in these or other markets.
Cisco Systems and Cisco Powered Network are trademarks of Cisco
Systems, Inc. DIRECTV is a registered trademark of DIRECTV, Inc., a subsidiary
of the Hughes Electronics unit of General Motors Corporation.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000, COMPARED
TO THE THREE AND SIX MONTHS ENDED JUNE 30, 1999
As a result of the application of Fresh Start Reporting, in connection
with our Plan of Reorganization (the "Plan") that became effective April 1, 1999
(the "Effective Date"), financial information in the accompanying unaudited
condensed consolidated financial statements for the period from the Effective
Date to June 30, 1999, and the three and six months ended June 30, 2000
(collectively, the "Successor Period"), is presented on a different basis than
the financial information for the period from January 1, 1999, to the Effective
Date (the "Predecessor Period"). Accordingly, such information is not
comparable. However, for purposes of comparison discussions in this report,
references to the three months ended June 30, 1999, represent the period from
the Effective Date through June 30, 1999, and references to the six months ended
June 30, 1999, represent the combined amounts for the period of January 1, 1999,
through the Effective Date and the period from the Effective Date through June
30, 1999.
Revenues; Subscribers. Our revenues consist primarily of monthly fees
paid by wireless subscription television subscribers for basic programming,
premium programming, equipment rental and other miscellaneous fees, revenue from
our agency relationships with DIRECTV and its distributors, as well as fees
generated from start-up Internet operations in Austin and Sherman-Denison,
Texas. Our revenues for the second quarter of 2000 were $15.8 million, compared
to $17.3 million for the second quarter of 1999. Revenues for the six months
ended June 30, 2000, were $32.1 million, compared to $35.7 million for the same
period last year. The average number of wireless subscription television
subscribers for the three months ended June 30, 2000, was 123,983 compared to
149,264 for the same period of 1999. For the six months ended June 30, 2000, the
average number of subscribers was 127,190 compared to 152,415 for the six months
ended June 30, 1999. In addition, during the three and six months ended June 30,
2000, we had 16,531 and 15,299 average subscribers, respectively, who received
only DIRECTV programming sold by us. As of January 1, 2000, we do not include
these customers in our reported wireless subscription television subscriber base
but we do receive certain agency revenue from DIRECTV related to these accounts,
as well as equipment lease payments from a portion of these customers. We also
do not include these customers or their related revenues in our calculation of
recurring average revenue per subscriber. Prior year calculations have been
revised to conform with this presentation.
10
<PAGE> 11
The decline in revenues over the periods presented resulted primarily
from fewer total wireless subscription television subscribers as we continued to
shift our principal focus from providing wireless subscription television
services to developing and expanding our broadband wireless IP-based services.
Other factors contributing to a loss in subscribers over the periods presented
were decreased marketing of MMDS subscription television services, overall
increased competition for cable television services, and a loss of subscribers
in Austin in the second quarter of 1999, which resulted from a technology
conversion that caused some existing subscribers to fall outside of the coverage
range of the new technology. We no longer offer programming provided solely over
MMDS frequencies in seven of our markets as we prepare to reallocate the use of
spectrum in these markets for two-way broadband wireless services, although we
continue to offer MMDS and DIRECTV programming in combination with one another
in these markets.
Recurring average revenue per subscriber was $35.63 and $35.48 for the
three and six months ended June 30, 2000, respectively, compared to $35.10 and
$35.14 for the same periods last year. Internet service revenues for the three
and six months ended June 30, 2000, were not material.
System Operations Expense. Systems operations expense includes
programming costs, channel lease payments, labor and overhead relating to
service calls and churn, transmitter site and tower rentals, certain repairs and
maintenance expenditures and Internet service costs. Programming costs (with the
exception of minimum payments) and channel lease payments (with the exception of
certain fixed payments) are variable expenses based on the number of
subscribers. Systems operations expense was $7.4 million, or 46.6% of revenues,
for the second quarter of 2000, compared to $8.2 million, or 47.4% of revenues,
for the same period in 1999. For the six months ended June 30, 2000, systems
operations expense was $14.7 million, or 45.6% of revenues, compared to $16.8
million, or 47% of revenues, for the comparable prior year period. System
operations expense decreased over both periods primarily due to lower
programming expense as a result of lower subscriber count and a larger
proportion of DIRECTV subscribers, which have lower programming costs. Average
monthly churn was 3.1% and 2.9% for the quarter and six months ended June 30,
2000, respectively, compared to 2.9% and 2.8% for the same periods last year.
Selling, General and Administrative (SG&A) Expense. SG&A expense for
the second quarter of 2000 was $8.5 million, or 53.7% of revenues, compared to
$8.9 million, or 51.2% of revenues, for the same period last year. For the six
months ended June 30, 2000, SG&A expense was $16.5 million, or 51.5% of
revenues, compared to $18.0 million, or 50.4% of revenues, for the same period
last year. The decrease in SG&A expense over the periods presented was primarily
due to savings from consolidation of certain offices and management in our video
markets, and lower bad debt expense due to improved collections. This decrease
was partially offset by increased costs to improve service at our customer care
center and increased expenditures related to the testing and deployment of
broadband wireless services using Cisco technology. SG&A costs related to the
anticipated launch of broadband wireless Internet access and other IP-based
services, including costs related to our two operating Internet markets in
Austin and Sherman-Denison, Texas, and allocable corporate overhead, were
$874,000 and $1.6 million for the quarter and six months ended June 30, 2000,
compared to $700,000 and $870,000 for the same prior year periods.
Depreciation and Amortization. Depreciation and amortization expense
includes depreciation of systems and equipment and amortization of license and
leased license investment and other intangibles. Our policy is to capitalize the
excess of direct costs of subscriber installations over installation fees in our
subscription television business. These direct costs include reception materials
and equipment on subscriber premises and installation labor and overhead. These
direct costs are capitalized as systems and equipment in the accompanying
condensed consolidated balance sheets. Depreciation and amortization expense was
$7.3 million and $14.3 million for the three and six months ended June 30, 2000,
respectively, compared to $5.8 million and $11.9 million for the same periods
last year. The increase in expense over the periods presented is primarily due
to increased depreciation on DIRECTV subscriber equipment resulting from more
DIRECTV subscribers, and increased depreciation on the excess of direct
subscriber installation costs over installation fees. Prior year depreciation on
these assets had decreased due to a write-down in September 1998 of certain
long-lived assets, in accordance with Statement of Financial Accounting
Standards ("FAS") No. 121.
Operating Loss. We generated operating losses of $7.4 million and $13.4
million for the three and six months
11
<PAGE> 12
ended June 30, 2000, respectively, compared to $5.5 million and $10.9 million
for the three and six months ended June 30, 1999, respectively. The increased
losses during the periods presented were primarily due to lower wireless
subscription television revenues, increased costs to improve service at our
customer care center, additional expenditures related to testing and deployment
of fixed wireless broadband services, and increased depreciation on DIRECTV
subscriber equipment and subscriber installation costs. These cost increases
were partially offset by lower programming expense, savings from consolidation
of certain offices and management in our video markets, and lower bad debt
expense.
EBITDA. "EBITDA," or earnings before interest, taxes, depreciation and
amortization and non-recurring items, is widely used by analysts, investors and
other interested parties in the Internet, cable television and
telecommunications industries. EBITDA is also a widely accepted financial
indicator of a company's ability to incur and service indebtedness. EBITDA is
not a financial measure determined by generally accepted accounting principles
and should not be considered as an alternative to net income as a measure of
operating results or to cash flows as a measure of funds available for
discretionary or other liquidity purposes. EBITDA may not be comparably
calculated from one company to another. EBITDA was a negative $44,000 and a
positive $938,000 for the three and six months ended June 30, 2000, compared to
a positive $234,000 and $945,000 for the same periods in 1999. The decrease in
EBITDA during the current quarter is primarily due to decreased subscription
television revenues resulting from fewer subscribers as we continue to shift our
principal focus to developing and expanding our wireless broadband IP-based
services, and from start-up costs related to our planned deployment of wireless
broadband Internet operations.
Interest Income. Interest income was $498,000 and $993,000 for the
three and six months ended June 30, 2000, respectively, compared to $368,000 and
$791,000 for the same periods last year. The increase in interest income for the
periods presented was due to higher earnings during the current year on larger
unrestricted cash balances.
Interest Expense. We incurred interest expense of $346,000 and $700,000
for the three and six months ended June 30, 2000, respectively, compared to
$309,000 and $630,000 for the three and six months ended June 30, 1999,
respectively. Interest expense increased slightly in 2000 because of higher debt
balances related to capital lease obligations incurred in connection with the
leaseback of 33 tower sites that were sold during the fourth quarter of 1999 and
the first six months of 2000.
Other Income/Expense. During the first quarter of 2000, we received
$3.8 million in exchange for our equity interest in Wireless One, Inc.
("Wireless One"), which announced confirmation of its plan of reorganization in
November 1999. The entire amount received was recognized as other income, as our
investment balance had been reduced to zero during 1997 as a result of Wireless
One losses. Other income during the prior year includes cash settlements from
certain litigation matters.
Reorganization Costs. During the six months ended June 30, 1999, we
incurred $2.5 million in expenses related to our reorganization under Chapter
11. These costs were for financial and legal advisors, accountants and
administrative costs. There were no reorganization costs in the current year.
Net Loss. We have recorded net losses since our inception. Net loss for
the quarter and six months ended June 30, 2000, was $7.1 million ($0.70 per
share) and $9.2 million ($0.91 per share), respectively, compared to $4.9
million ($0.49 per share) and $12.5 million for the quarter and six months ended
June 30, 1999 (excluding an extraordinary gain on debt forgiveness of $174.0
million on the Effective Date, relating to the reorganization of the Company).
The increase in net loss in the second quarter of 2000 compared to the
same period in 1999 was primarily due to a decrease in revenues from our
subscription television business discussed above. The improvement in
year-to-date net loss resulted primarily from a nonrecurring gain of $3.8
million in the first quarter of 2000 on the exchange of our equity interest in
Wireless One, Inc., and from no reorganization costs in the first six months of
2000 compared to $2.5 million in such costs for the same period last year,
offset by decreased revenues from our subscription television business. Earnings
per share information has not been presented for the Predecessor Period as the
Company was reorganized on the Effective Date in connection with our Plan and,
accordingly, per share amounts are not comparable between the Predecessor Period
and Successor Period.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The approval by the FCC of the use of MMDS spectrum for digital two-way
communications services will allow us to use our spectrum to provide broadband
wireless services such as high-speed Internet access, voice over IP ("VoIP")
and/or fixed-wireless telecommunications services. The growth of our business by
using our spectrum to provide two-way communications services will require
substantial investment in capital expenditures for the development and launch of
broadband wireless services.
Cash provided by operations was $745,000 during the six months ended
June 30, 2000, compared to $5.6 million for the same period of 1999. The
decrease in cash provided by operations resulted primarily from lower wireless
subscription television revenues due to fewer subscribers, partially offset by
lower programming costs.
Cash used in investing activities was $485,000 during the six months
ended June 30, 2000, compared to $9.0 million for the six months ended June 30,
1999. Cash used in investing activities decreased in the first six months of
2000 compared to the prior year primarily due to $3.8 million received in the
first quarter of 2000 from the exchange of our equity interest in Wireless One.
In addition, we had lower expenditures for systems and equipment related to our
subscription television business, somewhat offset by higher expenditures for
engineering, legal, site acquisition and other costs related to the preparation
of FCC applications necessary to expand our broadband wireless operations to
two-way communications services.
Cash used in financing activities was $252,000 during the six months
ended June 30, 2000, compared to $551,000 during the comparable period in 1999.
Cash used in financing activities in the current year included principal
payments on our BTA debt and capital leases related to the sale and leaseback of
33 of our towers. This was partially offset by $618,000 in cash proceeds
received from the exercise of employee stock options. Cash used in the first six
months of 1999 was for principal payments on our BTA debt, capital lease
obligations and other notes payable, several of which have been fully repaid,
offset by proceeds from stock option exercises.
At July 31, 2000, we had approximately $28.1 million of unrestricted
cash and cash equivalents and $650,000 in restricted cash representing
collateral securing various outstanding letters of credit to certain of our
vendors. The $399,000 of restricted cash represents bank certificates of deposit
pledged as collateral for long-term operating leases and are, therefore,
considered non-current and included in other assets on the accompanying
condensed consolidated balance sheets.
FUTURE CASH REQUIREMENTS
Our goal is to become a leading provider of broadband wireless services
in our markets. To implement this strategy, we plan to (1) offer high-speed
Internet access service to medium-sized and small businesses in at least 20
markets by the end of 2001, (2) increase our geographic scope for broadband
wireless services by acquisitions or business combinations and (3) offer
telephony services, including VoIP and/or fixed-wireless telecommunications
services.
We estimate that a launch of a new broadband wireless network system
providing high-speed Internet access in a typical market will involve an initial
expenditure of approximately $500,000 to $900,000 for network equipment,
depending upon the system design and type and sophistication of the equipment.
In addition, we estimate that the acquisition and installation of each new
Internet subscriber will cost between $1,500 and $1,800 depending upon the type
of customer. This includes charges for equipment, labor, overhead and direct
commissions. This may be offset partially by installation and other up-front
fees. Other launch costs include the cost of securing adequate space for
marketing facilities in markets not previously operating a wireless subscription
television business, as well as costs related to employees. As a result of these
costs, operating losses are likely to be incurred by a system during the
start-up period.
Although we do not expect to generate sufficient cash flow to fully
implement our long-term business strategy without additional capital or
financing, we currently expect that cash on hand and cash generated from
operations, plus
13
<PAGE> 14
equipment financing under our strategic alliance with Cisco, will be sufficient
to fund operations and capital requirements through at least the second quarter
of 2001.
We may seek additional capital or financing in 2000 if we accelerate
our business strategy and/or Internet market build-out schedule, consummate any
significant acquisitions or alliances, determine that market conditions are
appropriate for such financing, or our current operating assumptions prove to be
inaccurate. In any event, we likely will seek additional capital or financing
before the end of 2001 to implement our long-term business strategy. Options
include the sale of debt or equity securities, borrowings under secured or
unsecured loan arrangements, including vendor equipment financing and sales of
assets. We cannot provide assurance that such financing will be available in a
timely manner and on satisfactory terms.
COMMITMENTS AND CONTINGENCIES
Certain former directors and officers of the Company, to whom we may
have indemnity obligations, are defendants in one purported class action
securities lawsuit. This action alleges, among other things, various violations
of state securities laws. A second securities lawsuit against former directors
and officers of the Company was dismissed in June 2000 by the U.S. District
Court for the Northern District of Texas, although the Company has received
notice that the plaintiffs in this case intend to appeal the District Court's
decision. In addition, we are a party to three purported class action lawsuits
alleging that we overcharged our customers for administrative late fees. We
intend to vigorously defend the above matters. While it is not feasible to
predict or determine the final outcome of these proceedings or to estimate the
amounts or potential range of loss with respect to these matters, and while we
do not expect such an adverse outcome, we believe that an adverse outcome in one
or more of these proceedings that exceeds or otherwise is excluded from
applicable insurance coverage could have a material adverse effect on the
consolidated financial condition, results of operations and/or cash flows of the
Company. In September 1999, two former stockholders of Heartland Wireless
Communications, Inc. filed a motion in U.S. Bankruptcy Court to revoke the order
confirming our Plan which became effective in April 1999. We intend to
vigorously oppose the motion, and it is not possible at this time to predict the
effect of any action by the Bankruptcy Court to revoke the Plan.
Under our agreement with Cisco, we are obligated to purchase at least
$13.0 million in base station and customer premises equipment from Cisco through
the end of 2001, subject to Cisco meeting certain equipment test trial and other
conditions. As part of our strategic alliance, Cisco has offered a financing
facility of up to $16.25 million for the purchase of such equipment. In the
alternative, we may pursue other financing, or purchase such equipment with
available cash.
INFLATION
We do not believe that inflation has had or is likely to have any
significant impact on our operations. We believe that we will be able to
increase prices, if necessary, to keep pace with inflationary increases in
costs.
RECENTLY ISSUED ACCOUNTING PRINCIPLES
In June 1998 the Financial Accounting Standards Board ("FASB") issued
FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("FAS No. 133"), which was amended by FAS No. 137 issued in July 1999 and FAS
No. 138 issued in June 2000. FAS No. 137 delayed the effective date of FAS No.
133. FAS No. 133 is now effective for all interim and annual periods of the
Company commencing December 1, 2000. Given the Company's current and anticipated
derivative activities, management does not believe the adoption of FAS No. 133
should have a material effect on the Company's consolidated financial condition
or results of operations.
FASB issued Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation - an Interpretation of APB Opinion No. 25" ("FIN
44") in March 2000. Among other issues, this interpretation clarifies the
definition of an employee for purposes of applying APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), the criteria for
determining whether a plan qualifies as a non-compensatory plan, the accounting
consequence of various modifications to the terms of previously fixed stock
options or awards and the accounting for
14
<PAGE> 15
an exchange of stock compensation awards in a business combination. The
interpretation is effective July 1, 2000, but certain conclusions in the
interpretation cover specific events that occurred after either December 15,
1998, or January 12, 2000. Management believes that FIN 44 will not have a
material effect on the Company's consolidated financial condition or results of
operations upon adoption.
RECENT EVENTS
In June 2000, we entered into a letter of intent to acquire
substantially all of the MMDS broadband wireless assets in the greater
Lexington, Kentucky area for $5.4 million in common stock, assumption of BTA
debt and cash. This market covers over 245,000 estimated total households. The
transaction is subject to customary closing conditions, including completion of
due diligence and definitive agreements, and receipt of all required regulatory
approvals. We expect to close this transaction in the fourth quarter of 2000 or
first quarter of 2001.
In addition, in May 2000, we executed a definitive agreement in a
previously disclosed transaction to acquire all of the MMDS broadband wireless
assets in the greater Rockford, Illinois area for $6.0 million in common stock
and the assumption of BTA debt. This market is contiguous with our existing BTAs
in central Illinois, and covers over 250,000 estimated total households. The
transaction is subject to customary closing conditions, including completion of
due diligence and receipt of all required regulatory approvals. We expect to
close this transaction in the third quarter of 2000.
In the second quarter of 2000, we closed the sale of two tower sites to
SBA Towers, Inc. for approximately $400,000 in connection with a previously
disclosed sale and leaseback transaction. We have extended the deadline for
closing the one remaining tower site in this transaction to August 31, 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in marketable securities
(which consist of commercial paper). At June 30, 2000, our marketable securities
were recorded at a fair value of approximately $650,000, with an overall
weighted average return of approximately 6% and an overall weighted average life
of less than one year. The marketable securities held by us have exposure to
price risk, which is estimated as the potential loss in fair value due to a
hypothetical change of 50 basis points (8.3% of our overall average return on
marketable securities) in quoted market prices. This hypothetical change would
have an immaterial effect on the recorded value of the marketable securities.
We are not exposed to material future earnings or cash flow
fluctuations from changes in interest rates on long-term debt since 100% of our
long-term debt is at a fixed rate as of June 30, 2000. The fair value of our
long-term debt at June 30, 2000, is estimated to be $15.8 million based on the
overall rate of the long-term debt of 10% and an overall maturity of seven years
compared to terms and rates currently available in long-term financing markets.
To date we have not entered into any derivative financial instruments to manage
interest rate risk and currently are not evaluating the future use of any such
financial instruments.
We do not currently have any exposure to foreign currency transaction
gains or losses. All other business transactions are in U.S. dollars.
15
<PAGE> 16
'
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in certain legal proceedings as described in note 7 of
the notes to condensed consolidated financial statements included in Part I,
Item 1 of this report, which discussion is incorporated herein by reference. For
additional information regarding these proceedings, see "Item 3 - Legal
Proceedings" in our Annual Report on Form 10-K (as amended by Form 10-K/A) for
1999, and "Part II, Item 1 - Legal Proceedings" in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2000. We also are a party, from time to
time, to routine litigation incident to our business. We do not believe that any
other pending litigation matter will have a material adverse effect on the
Company's consolidated financial condition, results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 30, 2000, we issued to Kevin Ketelson, as the owner of a
Multipoint Distribution Service license in Des Moines, Iowa, 2,000 shares of our
common stock in partial consideration for the purchase of this license. These
shares were issued pursuant to Regulation D of the Securities Act of 1933.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on May 9,
2000, for the purpose of electing a board of directors, ratifying the
appointment of independent auditors and transacting other business as outlined
below. Proxies for the meeting were solicited under Regulation 14A of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
the board of directors' solicitations.
All of the nominees for directors as listed in the Proxy Statement
dated April 11, 2000, were elected with the following vote:
<TABLE>
<CAPTION>
Shares Voted "For" Shares "Withheld" Broker Non-Votes
------------------ ---------------- ----------------
<S> <C> <C> <C>
Carroll D. McHenry 9,934,002 44,181 -0-
Richard B. Gold 9,935,183 43,000 -0-
Terry S. Parker 9,935,183 43,000 -0-
Neil S. Subin 9,935,183 43,000 -0-
R. Ted Weschler 9,935,183 43,000 -0-
</TABLE>
The appointment of KPMG LLP as independent auditors was ratified by the
following vote:
<TABLE>
<CAPTION>
Shares Voted "For" Shares Voted "Against" Shares Abstaining Broker Non-Votes
---------------------- ----------------------- ------------------- ------------------
<S> <C> <C> <C>
9,974,203 630 3,350 -0-
</TABLE>
The proposal to amend the Company's First Amended and Restated 1999
Share Incentive Plan to (i) increase the maximum number of shares of common
stock that may be issued under the plan from 900,000 to 1,300,000 and (ii)
permit the grant of nonqualified stock options with an exercise price less than
100% of the fair market value of a share of common stock on the date of grant,
was approved by the following vote:
<TABLE>
<CAPTION>
Shares Voted "For" Shares Voted "Against" Shares Abstaining Broker Non-Votes
---------------------- ----------------------- ------------------- ------------------
<S> <C> <C> <C>
9,757,768 217,265 3,150 -0-
</TABLE>
16
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
2.1 Plan of Reorganization under Chapter 11 of the U. S.
Bankruptcy Code (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K dated January
19, 1999).
2.2 Order Confirming the Plan of Reorganization Under Chapter
11 of the U.S. Bankruptcy Code, dated as of March 15, 1999
(incorporated by reference to Exhibit 2.2 to the Company's
Registration Statement on Form S-1 filed with the SEC on
June 17, 1999, No. 333-80929).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 (the "March 1999 10-Q")).
3.2 Restated Bylaws of the Company (incorporated by reference
to Exhibit 3.2 to the March 1999 Form 10-Q).
*10.1 Nonqualified Stock Option Agreement between the Company and
Russell A. Wiseman dated as of April 3, 2000.
*10.2 First Amendment to the Nucentrix Broadband Networks, Inc.
First Amended and Restated 1999 Share Incentive Plan.
*27 Financial Data Schedule (EDGAR filing only).
----------
*Filed herewith.
(b) REPORTS ON FORM 8-K
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: August 10, 2000 NUCENTRIX BROADBAND NETWORKS, INC.
By: /s/ CARROLL D. MCHENRY
-------------------------------------------
Carroll D. McHenry
Chairman of the Board, President, Chief
Executive Officer and
Acting Chief Financial Officer
(Principal Executive Officer and
Principal Financial Officer)
17
<PAGE> 18
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<S> <C>
2.1 Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy
Code (incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K dated January 19, 1999).
2.2 Order Confirming the Plan of Reorganization Under Chapter 11
of the U.S. Bankruptcy Code, dated as of March 15, 1999
(incorporated by reference to Exhibit 2.2 to the Company's
Registration Statement on Form S-1 filed with the SEC on June
17, 1999, No. 333-80929).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999 (the "March 1999 10-Q")).
3.2 Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the March 1999 Form 10-Q).
*10.1 Nonqualified Stock Option Agreement between the Company and
Russell A. Wiseman dated as of April 3, 2000.
*10.2 First Amendment to the Nucentrix Broadband Networks, Inc.
First Amended and Restated 1999 Share Incentive Plan.
*27 Financial Data Schedule (EDGAR filing only).
</TABLE>
----------
*Filed herewith
18
