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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
October 27, 1998
WESTERN WIRELESS CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Washington
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(State or Other Jurisdiction of Incorporation)
000-28160 91-1638901
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(Commission File Number) (IRS Employer Identification No.)
3650 131st Avenue SE, Suite 400
Bellevue, WA 98006
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(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (425) 586-8700
2001 NW Sammamish Road
Issaquah, WA 98027
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On October 27, 1998, Western Wireless Corporation issued the following press
release:
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION CONTACT:
Investment Community: Media:
Ken Prussing John Snyder
Western Wireless Corporation The Snyder Buscher Group
(425) 586-8072 (206) 652-9704
[email protected] [email protected]
WESTERN WIRELESS REPORTS THIRD QUARTER 1998 RESULTS
- RECORD GROWTH IN SERVICE REVENUES WITH POSITIVE CONSOLIDATED EBITDA -
- RULING REQUEST FILED WITH INTERNAL REVENUE SERVICE -
BELLEVUE, Wash. (October 27, 1998) -- Western Wireless Corporation (NASDAQ:
WWCA), a leading provider of cellular and personal communications services
(PCS), announced today its financial and operating results for the third quarter
ended September 30, 1998.
"Western Wireless had an outstanding quarter for each of our businesses. We
added over 85,000 new wireless subscribers during the quarter while continuing
to show record growth in service revenues. For the third quarter in a row
Western Wireless had positive EBITDA (operating income before depreciation and
amortization) on a consolidated basis. The simultaneous growth and dramatically
improved financial results are a testament to our commitment to serving our
customers" said John Stanton, chairman and chief executive officer of Western
Wireless. "Our VoiceStream(R) wireless business reached the important milestone
of positive cash flow before marketing (EBITDA less sales and marketing,
including net phone loss). Our Cellular One(R) business continued to generate
free cash flow (EBITDA less capital expenditures) demonstrating, yet again, the
value of our rural cellular business."
CONSOLIDATED FINANCIAL RESULTS
For the third quarter ended September 30, 1998, Western Wireless had
885,100 total wireless subscribers, a 67.9 percent increase over the third
quarter of 1997. The company reported total revenues of $157.6 million for the
quarter, up 50.1 percent over the same quarter a year ago. Consolidated EBITDA
was $15.7 million for the third quarter of 1998. The company had a net loss of
$49.7 million, a basic loss of $0.65 per share for the quarter, down from a net
loss of $68.0 million, and a basic loss of $0.97 per share for the third quarter
of 1997.
The company reported total revenues of $413.0 million for the nine months
ended September 30, 1998, a 54.6 percent increase over the same period in 1997.
Consolidated EBITDA was $26.7 million for the nine months ended September 30,
1998. Net loss was $166.9 million, a basic loss of $2.20 per share, for the nine
months ended September 30, 1998, down from a loss of $193.2
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million, a basic loss of $2.76 per share, for the same period in 1997.
CELLULAR AND PCS SUMMARIES
For the quarter ended September 30, 1998, ending cellular subscribers were
620,300, a 45.5 percent increase over the same quarter in 1997. Cellular net
additions were 37,000 for the quarter, including 4,800 from an acquisition.
Cellular service revenues for the third quarter of 1998 increased 35.4 percent
from the same quarter a year ago to $107.2 million. Cellular EBITDA for the
quarter was $43.4 million, a 41.6 percent increase over the same quarter in
1997. Cellular free cash flow was $13.5 million for the third quarter, the
seventh consecutive quarter of positive free cash flow for the cellular
business.
For the nine months ended September 30, 1998, cellular net additions were
100,300, including subscribers obtained through acquisitions. Cellular service
revenues for the same period were $290.3 million, a 41.4 percent increase over
the nine months ended September 30, 1997. For the nine months ended September
30, 1998, cellular EBITDA was $112.9 million, a 54.0 percent increase over the
same period a year ago. Cellular free cash flow for the nine months ended
September 30, 1998, was $63.4 million, a 98.3 percent increase over the same
period in 1997.
At the end of the third quarter 1998, Western Wireless had 264,800
VoiceStream PCS subscribers, an increase of 162.2 percent over the same quarter
of 1997. VoiceStream PCS net additions were 52,200 for the quarter, a 96.2
percent increase over the third quarter of 1997. PCS service revenues were $34.4
million for the quarter compared to $16.2 million for the third quarter of 1997,
an increase of 111.8 percent. The negative EBITDA declined from $31.6 million in
the third quarter of 1997 to $27.8 million for the same quarter in 1998. Cash
flow before marketing was positive for the first time in the history of
VoiceStream. For the nine months ended September 30, 1998, the company added
136,200 VoiceStream PCS subscribers. VoiceStream PCS service revenues for the
same period were $84.7 million, a 135.0 percent increase over the nine months
ended September 30, 1997. The negative EBITDA declined from $97.3 million in the
nine months ended September 30, 1997, to $86.2 million for the same period in
1998.
WESTERN WIRELESS INTERNATIONAL
Western Wireless International (WWI) continues to make progress in
developing the countries where it has operations. During the quarter a WWI
partnership was awarded a license in Croatia. Total international subscribers
from systems operating in Latvia, Georgia, and Iceland were over 50,000 at
September 30, 1998.
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RULING REQUEST FILED WITH THE INTERNAL REVENUE SERVICE
Western Wireless is considering alternatives to its current capital
structure, one of which is a potential spin-off of its 80.1 percent ownership
interest in VoiceStream Wireless Corporation to its shareholders on a tax-free
basis. In connection with such consideration, Western Wireless has filed a
request for ruling with the Internal Revenue Service ("IRS") as to the tax-free
nature of such spin-off. Such a transaction would be subject to numerous
conditions including, among others, the receipt of a favorable IRS ruling, final
approval by the Board of Directors of the terms and conditions of any such
transaction, certain government and third party approvals and review by the
Securities and Exchange Commission ("SEC") of necessary SEC filings. There can
be no assurance that such potential tax-free spin-off will be consummated.
Based in Bellevue, Wash., Western Wireless Corp. is a leading provider of
wireless communications services in the western United States. It currently
offers cellular service marketed under the Cellular One name in 17 western
states. Marketed under the VoiceStream Wireless name, Western Wireless provides
PCS service using the globally dominant GSM technology in nine U.S. metropolitan
markets. In addition, Western Wireless owns PCS licenses for 104 markets. In
conjunction with joint ventures Western Wireless provides VoiceStream PCS
service in two additional markets, and owns licenses for another 21 markets. As
a result, Western Wireless' combined cellular and PCS licenses, along with its
joint ventures, cover 59 percent of the land in the continental United States.
###
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WESTERN WIRELESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber revenues $ 118,233 $ 81,829 $ 324,076 $ 209,517
Roamer revenues 22,082 12,243 47,115 27,810
Equipment sales and other revenues 17,235 10,922 41,784 29,869
------------ ------------ ------------ ------------
Total revenues 157,550 104,994 412,975 267,196
------------ ------------ ------------ ------------
Operating expenses:
Cost of service 26,705 24,040 75,026 66,563
Cost of equipment sales 30,597 21,989 77,107 57,496
General and administrative 40,238 28,660 120,546 78,849
Sales and marketing 44,347 31,233 113,643 88,254
Depreciation and amortization 40,282 37,305 115,483 96,927
------------ ------------ ------------ ------------
Total operating expenses 182,169 143,227 501,805 388,089
------------ ------------ ------------ ------------
Operating loss (24,619) (38,233) (88,830) (120,893)
------------ ------------ ------------ ------------
Other income (expense):
Interest and financing expense, net (31,699) (27,289) (93,498) (67,797)
Equity in net loss of unconsolidated affiliates (7,647) (3,799) (21,712) (7,107)
Other, net 2,061 1,278 7,892 2,556
------------ ------------ ------------ ------------
Total other income (expense) (37,285) (29,810) (107,318) (72,348)
------------ ------------ ------------ ------------
Minority interest in net loss of consolidated subsidiary 12,231 29,285
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Net loss $ (49,673) $ (68,043) $ (166,863) $ (193,241)
============ ============ ============ ============
Basic loss per common share $ (0.65) $ (0.97) $ (2.20) $ (2.76)
============ ============ ============ ============
Weighted average common shares used in computing
basic loss per common share 75,877,000 70,056,000 75,828,000 70,004,000
============ ============ ============ ============
</TABLE>
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WESTERN WIRELESS CORPORATION
SUPPLEMENTARY FINANCIAL AND OPERATIONAL DATA
(Dollars in thousands)
(Unaudited)
(Note: The following Table sets forth certain selected financial and operating
data of the company for the three and nine months ended September 30, 1998 and
1997)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
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1998 1997
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CELLULAR PCS CELLULAR PCS
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<S> <C> <C> <C> <C>
Revenues:
Subscriber revenues $ 84,942 $ 33,291 $ 65,588 $ 16,241
Roamer revenues 20,972 1,110 12,243
Equipment sales 4,133 11,785 2,488 7,051
Other revenues 1,317 1,383
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Total revenues 111,364 46,186 81,702 23,292
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Operating expenses:
Cost of service 14,415 12,290 12,105 11,935
Cost of equipment sales 9,247 21,350 7,092 14,897
General and administrative 22,313 17,925 15,873 12,787
Sales and marketing 21,964 22,383 15,963 15,270
Depreciation and amortization 19,199 21,083 16,730 20,575
-------------------------- --------------------------
Total operating expenses 87,138 95,031 67,763 75,464
-------------------------- --------------------------
Operating income (loss) $ 24,226 $ (48,845) $ 13,939 $ (52,172)
========================== ==========================
EBITDA $ 43,425 $ (27,762) $ 30,669 $ (31,597)
========================== ==========================
Ending subscribers 620,300 264,800 426,300 101,000
========================== ==========================
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
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1998 1997
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CELLULAR PCS CELLULAR PCS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Subscriber revenues $ 241,802 $ 82,274 $ 173,460 $ 36,057
Roamer revenues 44,669 2,446 27,810
Equipment sales 10,097 27,857 8,405 17,407
Other revenues 3,830 4,057
-------------------------- --------------------------
Total revenues 300,398 112,577 213,732 53,464
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Operating expenses:
Cost of service 40,013 35,013 34,577 31,986
Cost of equipment sales 24,224 52,883 20,044 37,452
General and administrative 64,361 56,185 42,449 36,400
Sales and marketing 58,899 54,744 43,360 44,894
Depreciation and amortization 54,241 61,242 49,328 47,599
-------------------------- --------------------------
Total operating expenses 241,738 260,067 189,758 198,331
-------------------------- --------------------------
Operating income (loss) $ 58,660 $(147,490) $ 23,974 $(144,867)
========================== ==========================
EBITDA $ 112,901 $ (86,248) $ 73,302 $ (97,268)
========================== ==========================
Ending subscribers 620,300 264,800 426,300 101,000
========================== ==========================
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WESTERN WIRELESS CORPORATION
Dated: October 27, 1998
By /s/ Alan R. Bender
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Alan R. Bender
Senior Vice President and
General Counsel
