<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
---------- ---------
COMMISSION FILE NUMBER 000-28160
WESTERN WIRELESS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1638901
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3650 131ST AVENUE S.E.,
BELLEVUE, WASHINGTON 98006
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(425) 586-8700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title Shares Outstanding as of July 31, 1999
---------------------------------- ---------------------------------------
Class A Common Stock, no par value 49,575,203
Class B Common Stock, no par value 27,196,123
<PAGE> 2
WESTERN WIRELESS CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
as of June 30, 1999, and December 31, 1998......................................3
Consolidated Statements of Operations and Comprehensive Losses
for the Six Months Ended June 30, 1999, and June 30, 1998.......................4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1999, and June 30, 1998.......................5
Notes to Consolidated Financial Statements......................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................................11
PART II - OTHER INFORMATION................................................................18
ITEM 1. LEGAL PROCEEDINGS.................................................................18
ITEM 2. CHANGES IN SECURITIES.............................................................18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES...................................................18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................18
ITEM 5. OTHER INFORMATION.................................................................18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................................19
</TABLE>
2
<PAGE> 3
WESTERN WIRELESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,340 $ 2,192
Accounts receivable, net of allowance for doubtful accounts of
$8,754 and $7,629, respectively 63,275 45,327
Inventory 8,282 8,794
Prepaid expenses and other current assets 11,072 8,544
----------- -----------
Total current assets 87,969 64,857
Property and equipment, net of accumulated depreciation
of $251,514 and $208,776, respectively 291,676 272,317
Licensing costs and other intangible assets, net of accumulated
amortization of $89,781 and $81,209, respectively 619,068 518,789
Investments in and advances to unconsolidated affiliates 49,563 37,663
Other assets 160 12,912
Net assets from discontinued operations 314,762
----------- -----------
$ 1,048,436 $ 1,221,300
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable $ 3,859 $ 5,101
Accrued liabilities 56,412 70,718
Construction accounts payable 9,136 6,582
Payable to VoiceStream Wireless 4,181
----------- -----------
Total current liabilities 73,588 82,401
----------- -----------
Long-term debt 1,180,000 1,045,000
----------- -----------
Minority interest in consolidated subsidiaries 1,570 639
Commitments (Note 8)
Shareholders' equity (net capital deficiency):
Preferred stock, no par value, 50,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value, 300,000,000 shares authorized;
Class A, 49,421,197 and 38,710,893 shares issued and outstanding,
respectively, and; Class B, 27,318,880 and 37,312,477 shares issued
and outstanding, respectively 682,902 800,631
Deferred compensation (21,751) (1,211)
Foreign currency translation (2,509) (2,328)
Deficit (865,364) (703,832)
----------- -----------
Total shareholders' equity (net capital deficiency) (206,722) 93,260
----------- -----------
$ 1,048,436 $ 1,221,300
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 4
WESTERN WIRELESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSES
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------------- ---------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber revenues $ 95,268 $ 80,757 $ 182,202 $ 156,860
Roamer revenues 34,431 13,210 57,681 23,697
Equipment sales and other revenues 6,852 4,437 12,531 8,477
------------ ------------ ------------ ------------
Total revenues 136,551 98,404 252,414 189,034
------------ ------------ ------------ ------------
Operating expenses:
Cost of service 15,448 13,711 30,952 25,598
Cost of equipment sales 8,061 7,525 15,824 14,977
General and administrative 28,848 21,786 55,552 42,048
Sales and marketing 22,446 19,444 43,906 36,935
Depreciation and amortization 26,604 17,492 49,045 35,042
Stock based compensation 66,496 66,496
------------ ------------ ------------ ------------
Total operating expenses 167,903 79,958 261,775 154,600
------------ ------------ ------------ ------------
Operating income (loss) from continuing operations (31,352) 18,446 (9,361) 34,434
------------ ------------ ------------ ------------
Other income (expense):
Interest and financing expense, net (23,504) (24,276) (46,800) (44,297)
Equity in net loss of unconsolidated
affiliates (2,924) (2,524) (7,685) (4,605)
Other, net 1,380 807 2,027 1,319
------------ ------------ ------------ ------------
Total other income (expense) (25,048) (25,993) (52,458) (47,583)
------------ ------------ ------------ ------------
Minority interest in consolidated subsidiaries 747 939
------------ ------------
Net loss from continuing operations (55,653) (7,547) (60,880) (13,149)
------------ ------------ ------------ ------------
Net (loss) from discontinued operations 7,709 (45,493) (82,152) (104,041)
Cost of discontinuance (18,500)
------------ ------------ ------------ ------------
Total discontinued operations 7,709 (45,493) (100,652) (104,041)
------------ ------------ ------------ ------------
Net loss $ (47,944) $ (53,040) $ (161,532) $ (117,190)
============ ============ ============ ============
Basic and diluted loss per common share:
Continuing operations $ (0.73) $ (0.10) $ (0.79) $ (0.17)
Total discontinued operations 0.10 (0.60) (1.31) (1.37)
------------ ------------ ------------ ------------
Basic and diluted loss per common share $ (0.63) $ (0.70) $ (2.10) $ (1.54)
============ ============ ============ ============
Weighted average common shares used in
computing basic and diluted loss
per common share 76,611,000 75,831,000 76,734,000 75,804,000
============ ============ ============ ============
Comprehensive loss:
Net loss $ (47,944) $ (161,532)
Other comprehensive income:
Foreign currency translation (333) (181)
------------ ------------
Total comprehensive loss $ (48,277) $ (161,713)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
WESTERN WIRELESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Operating activities:
Net loss $(161,532) $(117,190)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Net loss from discontinued operations 82,152 104,041
Depreciation and amortization 49,045 35,042
Employee equity compensation 66,496 1,353
Equity in net loss of unconsolidated affiliates 7,685 4,605
Minority interest in net loss of consolidated subsidiary 939
Other, net 1,731 1,792
Changes in operating assets and liabilities, net of effects
from consolidating acquired interests:
Accounts receivable, net (16,187) (653)
Inventory 549 3,784
Prepaid expenses and other current assets (2,528) (679)
Accounts payable (1,242) 1,220
Accrued liabilities (7,668) 3,304
--------- ---------
Net cash provided by operating activities 19,440 36,619
--------- ---------
Investing activities:
Purchase of property and equipment (59,670) (19,550)
Additions to licensing costs and other intangible assets (1,573) (8,396)
Acquisition of wireless properties, net of cash acquired (124,318) (16,796)
Investments in and advances to unconsolidated affiliates (10,408) (5,424)
Repayment of advances to VoiceStream Wireless 21,588 87,729
Return of investment from VoiceStream Wireless 20,000
Other (457)
--------- ---------
Net cash (used in) provided by investing activities (154,381) 37,106
--------- ---------
Financing activities:
Proceeds from issuance of common stock, net 3,089 572
Additions to long-term debt 135,000 30,000
Repayment of debt (110,000)
Proceeds from sale of minority interest in consolidated subsidiary, net (1,080)
--------- ---------
Net cash provided by (used in) financing activities 138,089 (80,508)
--------- ---------
Change in cash and cash equivalents 3,148 (6,783)
Cash and cash equivalents, beginning of period 2,192 15,122
--------- ---------
Cash and cash equivalents, end of period $ 5,340 $ 8,339
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
WESTERN WIRELESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION:
Western Wireless Corporation (the "Company") provides wireless
communications services in the western United States principally through the
ownership and operation of cellular systems in rural areas. As of June 30, 1999,
the Company provides cellular services in 94 markets.
The Company owns 96% of Western Wireless International Corporation
("WWI") which holds a 66.7% stake in Meteor Mobile Communications ("MMC"). MMC
is the preferred applicant in the competition to acquire wireless licenses in
Ireland and is currently incurring capital and pre-operating costs, the results
of which are included in the Company's consolidated financial statements. In
addition, WWI holds non-controlling interests in entities which own and operate
wireless licenses in certain foreign countries including Georgia, Ghana, Iceland
and Latvia. WWI also has interests in entities which have been awarded wireless
licenses in Croatia and Haiti. International entities which WWI has
non-controlling interests are accounted for using the equity method.
The Company had an 80.1% controlling interest in VoiceStream Wireless
Corporation ("VoiceStream"), an entity which provides wireless communication
services through the ownership and operation of personal communication services
("PCS"). On May 3, 1999, VoiceStream formally separated from Western Wireless'
other operations (the "Spin-off"). As of that date, Western Wireless distributed
all of its interest in VoiceStream to its shareholders. Although VoiceStream has
been operated separately from Western Wireless' other operations and has been a
separate legal entity since its inception, the Spin-off established VoiceStream
as a stand-alone entity with objectives separate from those of Western Wireless
(see note 3).
The accompanying interim consolidated financial statements and the
financial information included herein are unaudited, but reflect all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the financial position, results of operations and cash flows for the periods
presented. All such adjustments are of a normal, recurring nature. Results of
operations for interim periods presented herein are not necessarily indicative
of results of operations for the entire year. For further information, refer to
the Company's annual audited financial statements and footnotes thereto for the
year ended December 31, 1998, contained in the Company's Form 10-K dated March
31, 1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Loss per common share:
Loss per common share is calculated using the weighted average number of
shares of outstanding common stock during the period. The number of shares
outstanding has been calculated based on the requirements of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Due to the net
loss incurred during the periods presented, all options outstanding are
anti-dilutive, thus basic and diluted loss per share are equal.
Supplemental cash flow disclosures:
Cash paid for interest was $45.6 million and $51.3 million for the six
months ended June 30, 1999 and 1998, respectively. Significant non-cash
financing activities include net assets of discontinued operations charged to
Additional Paid-In Capital ("APIC") of $207.5 million and stock based
compensation charged to APIC and deferred compensation of $82.8 million.
Reclassifications:
Certain amounts in prior year's financial statements have been
reclassified to conform to the 1999 presentation.
Recently issued accounting standards:
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." It requires
the recognition of all derivatives as either assets or liabilities and the
measurement of those instruments at fair value. The required adoption period is
effective for the issuance of the Company's March 31, 2001, annual financial
statements. The implementation of SFAS No. 133 is not expected to have a
material impact on the Company's financial position or results of operations.
6
<PAGE> 7
WESTERN WIRELESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. BUSINESS DIVESTITURE:
On May 3, 1999, the Company completed a Spin-off to the Company's
shareholders of its 80.1% holdings of the outstanding shares of VoiceStream.
VoiceStream consists of the Company's former PCS operations. The Company's
shareholders received one share of VoiceStream common stock for each share of
the Company's common stock owned on April 30, 1999.
The accompanying consolidated financial statements have been restated to
report the discontinued operations of VoiceStream separately from the continuing
operations of the Company. The June 30, 1999 Consolidated Balance Sheet reflects
a non-cash reduction to APIC of $207.5 million to recognize the book value of
net assets distributed. In addition, the Company received $20 million in
consideration for Net Operating Losses incurred by VoiceStream prior to the
Spin-off. This amount was treated as a return of investment which increased APIC
by the same amount.
The June 30, 1999, Consolidated Statements of Operations and
Comprehensive Losses include the following operating results, representing only
the Company's portion, through May 3, 1999, for the discontinued operations
presented as a single classification (dollars in thousands):
<TABLE>
<S> <C>
Revenues .................................. $ 78,785
Operating expenses ........................ 138,840
---------
Operating loss ............................ (60,055)
Other income (expense) .................... (22,097)
---------
Net loss from discontinued operations ..... $ (82,152)
=========
</TABLE>
During the second quarter of 1999, the Company adjusted the estimated
loss of discontinued operations by $7.7 million to reflect the actual results of
the discontinued operations through May 3, 1999. The adjustment resulted in a
reduction to the previously reported discontinued loss of $89.9 million. The
amount presented above reflects this adjustment.
The following supplemental summarized balance sheet data represents the
accounts of VoiceStream as of May 3, 1999, and as reported, net, in the December
31, 1998, balance sheet (dollars in thousands):
<TABLE>
<CAPTION>
MAY 3, DECEMBER 31,
1999 1998
---------- ------------
<S> <C> <C>
Current assets:
Cash .................................................. $ 21,572 $ 8,057
Accounts receivable, net .............................. 36,600 24,766
Inventory ............................................. 19,418 20,182
Other ................................................. 12,612 6,393
---------- ----------
Total current assets ........................... 90,202 59,398
Property and equipment, net ................................ 657,232 619,280
Licensing costs and other intangible assets, net ........... 311,328 312,040
Other ...................................................... 102,144 60,938
---------- ----------
Total assets of discontinued operations .................... $1,160,906 $1,051,656
========== ==========
Current liabilities:
Accounts payable and accrued liabilities .............. $ 91,537 $ 61,738
Other ................................................. 14,646 58,217
Payable to Western Wireless ........................... 28,822
---------- ----------
Total current liabilities ...................... 135,005 119,955
Long-term debt ............................................. 740,000 540,000
Minority interest in net assets of VoiceStream Wireless .... 56,530 76,939
---------- ----------
Total liabilities of discontinued operations ............... $ 931,535 $ 736,894
========== ==========
</TABLE>
During the first quarter, the Company recognized $18.5 million for costs
of discontinuance. These costs included $16 million for acquiring the Company's
bondholders consent of the Spin-off. The remaining costs were an estimate for
other Spin-off related expenses, including, among other items, legal and
advisory fees, costs for data processing and printing costs.
7
<PAGE> 8
WESTERN WIRELESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
Property and equipment consists of:
(Dollars in thousands) JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Land, buildings, and improvements ..................... $ 9,651 $ 12,748
Wireless communications systems ....................... 399,653 373,971
Furniture and equipment ............................... 63,499 53,919
----------- -----------
472,803 440,638
Less accumulated depreciation ......................... (251,514) (208,776)
----------- -----------
221,289 231,862
Construction in progress .............................. 70,387 40,455
----------- -----------
$ 291,676 $ 272,317
=========== ===========
</TABLE>
Depreciation expense was $23.0 million and $14.3 million for the three
months ended June 30, 1999 and 1998, respectively, and $42.2 million and $28.8
million for the six months ended June 30, 1999 and 1998, respectively.
5. LICENSING COSTS AND OTHER INTANGIBLE ASSETS:
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
License costs ......................................... $ 672,726 $ 564,157
Other intangible assets ............................... 36,123 35,841
----------- -----------
708,849 599,998
Accumulated amortization .............................. (89,781) (81,209)
----------- -----------
$ 619,068 $ 518,789
=========== ===========
</TABLE>
Amortization expense was $3.6 million and $3.2 million for the three
months ended June 30, 1999 and 1998, respectively, and $6.9 million and $6.2
million for the six months ended June 30, 1999 and 1998, respectively.
6. LONG-TERM DEBT:
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Credit Facility:
Revolver ....................................... $ 580,000 $ 445,000
Term Loan ...................................... 200,000 200,000
10-1/2% Senior Subordinated Notes Due 2006 ........... 200,000 200,000
10-1/2% Senior Subordinated Notes Due 2007 ........... 200,000 200,000
----------- -----------
$ 1,180,000 $ 1,045,000
=========== ===========
</TABLE>
The Company has a $950 million credit facility with a consortium of
lenders (the "Credit Facility"), in the form of a $750 million revolving credit
loan (the "Revolver") and a $200 million term loan (the "Term Loan").
The aggregate amounts of principal maturities of the Company's debt are
as follows (dollars in thousands):
<TABLE>
<S> <C>
Six months ending December 31, 1999 ..... $ 0
Year ending December 31,
2000 .................................... 0
2001 .................................... 59,500
2002 .................................... 89,000
2003 .................................... 147,000
Thereafter .............................. 884,500
----------
$1,180,000
==========
</TABLE>
8
<PAGE> 9
WESTERN WIRELESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, DECEMBER 31,
1999 1998
------- ------------
<S> <C> <C>
Accrued payroll and benefits ....... $10,154 $14,667
Accrued interest expense ........... 12,138 13,091
Accrued property taxes ............. 5,856 4,951
Accrued taxes (other than income) .. 6,798 3,870
Accrued interconnect charges ....... 5,695 6,358
Other .............................. 15,771 27,781
------- -------
$56,412 $70,718
======= =======
</TABLE>
8. COMMITMENTS:
Future minimum payments required under operating leases and agreements
that have initial or remaining noncancellable terms in excess of one year as of
June 30, 1999, are summarized below (dollars in thousands):
<TABLE>
<S> <C>
Six months ending December 31, 1999 ..... $ 5,657
Year ending December 31,
2000 .................................... 10,156
2001 .................................... 8,775
2002 .................................... 7,407
2003 .................................... 4,860
Thereafter .............................. 5,651
-------
$42,506
=======
</TABLE>
Aggregate rental expense for all operating leases was approximately $3.5
million and $3.1 million for the three months ended June 30, 1999 and 1998,
respectively, and $6.8 million and $5.6 million for the six months ended June
30, 1999 and 1998, respectively.
In order to ensure adequate supply and availability of certain wireless
system equipment requirements and service needs, the Company has committed to
purchase from various suppliers, wireless communications equipment and services.
The aggregate amount of these commitments total approximately $100 million. The
purchase requirements of these agreements were fulfilled during the second
quarter of 1999.
The Company has various other purchase commitments for materials,
supplies and other items incidental to the ordinary course of business which are
neither significant individually nor in the aggregate. Such commitments are not
at prices in excess of current market value.
9. SHAREHOLDERS' EQUITY:
Stock issuances:
During the six months ended June 30, 1999, the Company issued 611,707
shares of its Class A Common Stock as a result of employee stock options
exercises.
In January 1999, the Company issued an additional 105,000 Class A Common
Stock shares to certain key executives pursuant to an Executive Restricted Stock
Plan.
Other transactions:
During the second quarter, as a result of the Spin-off, the Company
recognized compensation expense on all options outstanding as of May 3, 1999. On
the spin date, the Company cancelled and reissued all outstanding stock options.
All reissued stock options were granted in a manner that ensured employees of
both the Company and VoiceStream maintained the value of their options, subject
to normal fluctuations in the price of both companies stock, after the Spin-off.
9
<PAGE> 10
WESTERN WIRELESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. SHAREHOLDERS' EQUITY (CONTINUED):
This reissuance did not accelerate benefits to option holders. The
Company believes this allows employees to continue to better participate in the
success of the Company for which they work. As outlined in the provisions of
EITF 90-9 the company recorded deferred compensation of approximately $82.8
million and compensation expense for those options in which the service period
had passed of $63.4 million.
10. ACQUISITIONS:
In June 1999, the Company completed the purchase of the cellular
licenses and operations of the Brownsville, TX and McAllen, TX Metropolitan
Statistical Areas ("MSA") for an aggregate amount of approximately $96.0 million
in cash. This transaction was accounted for using the purchase method.
During February 1999, the Company completed the purchase of the cellular
license and operations of the Wyoming 4 and Oklahoma 1 Rural Service Areas
("RSA") for $19 million in cash. Prior to the purchase of the Wyoming 4 RSA, the
Company operated this market under an Interim Operating Authority ("IOA") from
the FCC. This transaction was accounted for using the purchase method.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
LITIGATION REFORM ACT OF 1995.
Statements contained or incorporated by reference herein that are not based on
historical fact, including without limitation statements containing the words
"believes," "may," "will," "estimate," "continue," "anticipates," "intends,"
"expects" and words of similar import, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, events or developments to be
materially different from any future results, events or developments expressed
or implied by such forward-looking statements. Such factors include, among
others, the following: general economic and business conditions, both nationally
and in the regions in which Western Wireless Corporation (the "Company")
operates; technology changes; competition; changes in business strategy or
development plans; the high leverage of the Company; the ability to attract and
retain qualified personnel; existing governmental regulations and changes in, or
the failure to comply with, governmental regulations; liability and other claims
asserted against the Company; the Company's and its third-party suppliers'
ability to take corrective action in a timely manner with respect to the year
2000 issue; and other factors referenced in the Company's filings with the
Securities and Exchange Commission. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future results, events or developments
The following is a discussion and analysis of the consolidated financial
condition and results of operations of the Company and should be read in
conjunction with the Company's consolidated financial statements and notes
thereto and other financial information included herein and in the Company's
annual report on Form 10-K for the year ended December 31, 1998.
OVERVIEW
Western Wireless provides cellular communications services through the
ownership and operation of cellular communications systems in 94 Rural Service
Areas and Metropolitan Statistical Areas in the United States.
The Company owns 96% of Western Wireless International Corporation
("WWI") which holds a 66.7% stake in Meteor Mobile Communications ("MMC"). MMC
is the preferred applicant in the competition to acquire wireless licenses in
Ireland and is currently incurring only capital and pre-operating costs, the
results of which are included in the Company's consolidated financial
statements. The Office of the Director of Telecommunications ("ODTR") has
announced its intention to award MMC the licenses, subject to the favorable
outcome of certain legal proceedings against the ODTR in the Irish High Court.
The impact of MMC on the results of operations, balance sheet and cash flows is
immaterial for the three and six months ended June 30, 1999. WWI also holds
non-controlling interests in entities which own and operate wireless licenses in
certain foreign countries including Georgia, Ghana, Iceland and Latvia. WWI also
has interests in entities which have been awarded wireless licenses in Croatia
and Haiti. International entities which WWI has non-controlling interests are
accounted for using the equity method.
The Company had an 80.1% controlling interest in VoiceStream Wireless
Corporation ("VoiceStream"), an entity which provides wireless communication
services through the ownership and operation of personal communication services
("PCS") licenses. On May 3, 1999, VoiceStream was formally separated from
Western Wireless (the "Spin-off"). As of that date, Western Wireless distributed
all of its interest in VoiceStream to its shareholders. Although VoiceStream has
been operated separately from Western Wireless' other operations and has been a
separate legal entity since its inception, the Spin-off established VoiceStream
as a stand-alone entity with objectives separate from those of Western Wireless.
For additional information regarding the Spin-off, see the Company's information
statement filed with the SEC on Form 14-C dated April 12, 1999.
During the second quarter, as a result of the Spin-off, the Company
recognized compensation expense on all options outstanding as of May 3, 1999. On
the spin date, the Company cancelled and reissued all outstanding options. All
reissued stock options were granted in a manner that ensured employees of both
the Company and VoiceStream maintained the value of their options, subject to
normal fluctuations in the price of both companies stock, after the Spin-off.
This reissuance did not accelerate any benefits to option holders. The Company
believed this allowed employees to continue to better participate in the success
of the Company for which they work. As outlined in the provisions of EITF 90-9
the company recorded deferred compensation of approximately $82.8 million and
compensation expense for those options in which the service period had passed of
$63.4 million.
11
<PAGE> 12
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
The Company had 737,600 subscribers at June 30, 1999, representing an
increase of 42,100 or 6.1% from March 31, 1999. The Company had 583,300
subscribers at June 30, 1998, representing an increase of 36,200 or 6.6% from
March 31, 1998.
The following table sets forth certain financial data as it relates to
the Company's operations:
<TABLE>
<CAPTION>
(Dollars in thousands) THREE MONTHS ENDED JUNE 30,
----------------------------------------------
1999 % CHANGE 1998
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Subscriber revenues $ 95,268 17.9% $ 80,757
Roamer revenues 34,431 160.6% 13,210
Equipment sales and other
revenues 6,852 54.4% 4,437
--------- ---------
Total revenues $ 136,551 $ 98,404
Operating expenses:
Cost of service $ 15,448 12.7% $ 13,711
Cost of equipment sales 8,061 7.1% 7,525
General and administrative 28,848 32.4% 21,786
Sales and marketing 22,446 15.4% 19,444
Depreciation and amortization 26,604 52.1% 17,492
Stock based compensation 66,496 N.M.
--------- ---------
Total operating expenses $ 167,903 $ 79,958
Other income (expense) $ (25,048) (3.6%) $ (25,993)
Net loss from continuing operations $ (55,653) (637.4%) $ (7,547)
EBITDA $ 61,748 71.8% $ 35,938
Cash flows provided by (used in):
Operating activities $ 6,676 (54.5%) $ 14,684
========= =========
Investing activities $(102,665) (441.0%) $ (18,978)
========= =========
Financing activities $ 85,604 N.M. $ 165
========= =========
</TABLE>
REVENUES
The increase in subscriber revenues is primarily due to the 26.5% growth
in the number of ending subscribers at June 30, 1999, compared to June 30, 1998,
offset by a decrease in the average monthly subscriber revenue per average
subscriber. Average monthly subscriber revenue per average subscriber was $44.32
for the three months ended June 30, 1999, a 7.0% decline from $47.63 for the
three months ended June 30, 1998, but up 3.3% from the first quarter. Over the
past few years the cellular industry as a whole has also shown a decline in the
average monthly cellular subscriber revenue per subscriber.
The increase in roamer revenues is attributed to an increase in roaming
traffic and partially offset by a decrease in the rates charged between
carriers. A significant portion of the increase is driven by the growth in
roamer minutes with digital carriers as a result of the Company's strategy,
implemented in 1998, to become the roaming partner of choice for other carriers.
While the Company expects total roamer minutes to continue increasing, the
decline in the rates charged between carriers may limit the growth of roamer
revenues.
Equipment sales for the three months ended June 30, 1999, which consists
primarily of handset sales, increased primarily due to the increase in the
number of handsets sold due to the growth in subscriber additions. In addition,
average phone and accessory revenue per item sold increased compared to the same
quarter one year ago.
12
<PAGE> 13
OPERATING EXPENSES
The increase in cost of service is primarily attributable to the
increased costs of maintaining the Company's expanding wireless network to
support the larger subscriber base. Cost of service as a percentage of service
revenues decreased to 12.0% for the three months ended June 30, 1999 from 14.4 %
for the three months ended June 30, 1998. The decrease as a percentage of
service revenues is due mainly to service revenues growing at a faster rate than
the fixed cost of service components.
Cost of equipment sales increased primarily due to the increase in
handsets sold, offset by a decrease in the average cost of handsets, for the
three months ended June 30, 1999 compared to the same period in 1998.
The Company's general and administrative costs are principally variable
costs, that is costs that will vary with the level of subscribers. The increase
in total dollars is primarily attributable to the increase in costs associated
with supporting a larger subscriber base. The general and administrative monthly
cost per average subscriber increased to $13.42 for the three months ended June
30, 1999, from $12.85 for the same period in 1998. The modest increase is due
partly to additional headquarter costs resulting from lost cost efficiencies as
a result of the Spin-off. In addition, the Company incurred pre-operating costs
related to Ireland with no corresponding additions in subscribers as the
Ireland market is not yet operational.
The increase in sales and marketing costs is primarily due to the
increase in subscribers added during the three months ended June 30, 1999,
compared to the same period in 1998. Sales and marketing cost per net subscriber
added, including the loss on equipment sales, remained relatively flat at $678
for the three months ended June 30, 1999, compared to $656 for the three months
ended June 30, 1998.
The increase in depreciation and amortization expenses is attributable
to the continued expansion of the Company's wireless systems.
The stock based compensation results mainly from the cancellation and
reissuance of employee stock options as a result of the Spin-off, as previously
discussed. The Company anticipates future expenses related to this transaction
to be approximately $20 million spread over the remainder of 1999, and continue
through the year 2001.
NET LOSS FROM CONTINUING OPERATIONS
The net operating loss from continuing operations of $31.4 million for
the three months ended June 30, 1999 is mainly attributable to the $66.5 million
in stock based compensation expense as a result of the Spin-off. This compares
to operating income from continued operations of $18.5 million for the same
period in the prior year. The Company anticipates operating income from
continued operations in future periods.
OTHER INCOME (EXPENSE)
Interest and financing expense decreased to $23.5 million for the three
months ended June 30, 1999, compared to $24.3 million for the same period in
1998, due to a modest increase in the average long-term debt balance offset by a
lower applicable borrowing rate for the current quarter compared to the
comparative quarter. The increase in long-term debt for the current quarter was
incurred primarily near the end of the second quarter of 1999 to fund the
Company's acquisition of wireless properties. The weighted average interest rate
was 8.35% for the three months ended June 30, 1999, as compared to 9.36% for the
same period in 1998.
EBITDA
EBITDA represents operating income (loss) before depreciation,
amortization and stock based compensation. Management believes EBITDA provides
meaningful additional information on the Company's operating results and on its
ability to service its long-term debt and other fixed obligations, and to fund
the Company's continued growth. EBITDA is considered by many financial analysts
to be a meaningful indicator of an entity's ability to meet its future financial
obligations, and growth in EBITDA is considered to be an indicator of future
profitability, especially in a capital-intensive industry such as wireless
telecommunications. EBITDA should not be construed as an alternative to
operating income (loss) as determined in accordance with United States GAAP, as
an alternate to cash flows from operating activities (as determined in
accordance with GAAP), or as a measure of liquidity. Because EBITDA is not
calculated in the same manner by all companies, the Company's presentation may
not be comparable to other similarly titled measures of other companies.
EBITDA for the Company increased to $61.7 million for the three months
ended June 30, 1999, from
13
<PAGE> 14
$35.9 million for the same period in 1998. The increase in EBITDA is primarily a
result of increased revenues due to the increased subscriber base and the
related cost efficiencies gained.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
The Company had 737,600 subscribers at June 30, 1999, representing an
increase of 77,200 or 11.7% from December 31, 1998. The Company had 583,300
subscribers at June 30, 1998, representing an increase of 63,300 or 12.2% from
December 31, 1997.
The following table sets forth certain financial data as it relates to
the Company's operations:
<TABLE>
<CAPTION>
(Dollars in thousands) SIX MONTHS ENDED JUNE 30,
-----------------------------------------------
1999 % CHANGE 1998
--------- ---------- ---------
<S> <C> <C> <C>
Revenues:
Subscriber revenues $ 182,202 16.2% $ 156,860
Roamer revenues 57,681 143.4% 23,697
Equipment sales and other
revenues 12,531 47.8% 8,477
--------- ---------
Total revenues $ 252,414 $ 189,034
Operating expenses:
Cost of service $ 30,952 20.9% $ 25,598
Cost of equipment sales 15,824 5.7% 14,977
General and administrative 55,552 32.1% 42,048
Sales and marketing 43,906 18.9% 36,935
Depreciation and amortization 49,045 39.9% 35,042
Stock based compensation 66,496 N.M.
--------- ---------
Total operating expenses $ 261,775 $ 154,600
Other income (expense) $ (52,458) (10.2%) $ (47,583)
Net loss from continuing operations $ (60,880) (363.0%) $ (13,149)
EBITDA $ 106,180 52.8% $ 69,476
Cash flows provided by (used in):
Operating activities $ 19,440 (46.9%) $ 36,619
========= =========
Investing activities $(154,381) N.M. $ 37,106
========= =========
Financing activities $ 138,089 N.M. $ (80,508)
========= =========
</TABLE>
REVENUES
The increase in subscriber revenues is primarily due to the 26.4% growth
in the number of ending subscribers at June 30, 1999, compared to June 30, 1998,
offset by a decrease in the average monthly subscriber revenue per average
subscriber. Average monthly subscriber revenue per average subscriber was $43.44
for the six months ended June 30, 1999, a 8.3% decline from $47.37 for the six
months ended June 30, 1998. Over the past few years the cellular industry as a
whole has also shown a decline in the average monthly cellular subscriber
revenue per subscriber.
The increase in roamer revenues is attributed to an increase in roaming
traffic and partially offset by a decrease in the rates charged between
carriers. A significant portion of the increase is driven by the growth in
roamer minutes as a result of the Company's strategy, implemented in 1998, to
become the roaming partner of choice for other carriers. While the Company
expects total roamer minutes to continue increasing, the decline in the rates
charged between carriers may limit the growth of roamer revenues.
Equipment sales for the six months ended June 30, 1999, which consists
primarily of handset sales, increased primarily due to the increase in the
number of handsets sold due to the growth in subscriber additions. In addition,
average phone and accessory revenue per item sold increased compared to the same
period one year ago.
14
<PAGE> 15
OPERATING EXPENSES
The increase in cost of service is primarily attributable to the
increased costs of maintaining the Company's expanding wireless network to
support the larger subscriber base. Cost of service as a percentage of service
revenues declined to 12.9% for the six months ended June 30, 1999 from 14.2% for
the six months ended June 30, 1998. The decrease as a percentage of service
revenues is due mainly to service revenues growing at a faster rate than the
fixed cost of service components.
Cost of equipment sales increased primarily due to the increase in
handsets sold, offset by a decrease in the average cost of handsets, for the six
months ended June 30, 1999 compared to the same period in 1998.
The Company's general and administrative costs are principally variable
costs, that is costs that will vary with the level of subscribers. The increase
in total dollars is primarily attributable to the increase in costs associated
with supporting a larger subscriber base. The general and administrative monthly
cost per average subscriber increased to $13.25 for the six months ended June
30, 1999, compared to $12.70 for the same period in 1998. The modest increase is
due partly to additional headquarter costs resulting from lost cost efficiencies
as a result of the Spin-off. In addition, the Company incurred pre-operating
costs related to Ireland with no corresponding additions in subscribers as the
Ireland market is not yet operational.
The increase in sales and marketing costs is primarily due to the
increase in subscribers added during the six months ended June 30, 1999,
compared to the same period in 1998. Sales and marketing cost per net subscriber
added, including the loss on equipment sales, decreased to $692 for the six
months ended June 30, 1999, from $729 for the six months ended June 30, 1998.
This decrease is attributable to the costs being spread over a larger number of
net subscriber additions, which increased 6.2% during the six months ended June
30, 1999 compared to the six months ended June 30, 1998.
The increase in depreciation and amortization expenses is attributable
to the continued expansion of the Company's wireless systems.
The stock based compensation results mainly from the cancellation and
reissuance of employee stock options as a result of the Spin-off, as previously
discussed. The Company anticipates future expenses related to this transaction
to be approximately $20 million spread over the remainder of 1999, and continue
through the year 2001.
NET LOSS FROM CONTINUING OPERATIONS
The net operating loss from continuing operations of $9.4 million for
the six months ended June 30, 1999 is mainly attributable to the $66.5 million
in stock based compensation expense as a result of the Spin-off. This compares
to operating income from continued operations of $34.4 million for the same
period in the prior year. In addition, the Company continues to see revenues
increase combined with overall cost efficiencies gained from the growing
subscriber base.
OTHER INCOME (EXPENSE)
Interest and financing expense, increased to $46.8 million for the six
months ended June 30, 1999, compared to $44.3 million for the same period in
1998, due to the increase in average long-term debt. Long-term debt was incurred
primarily to fund the Company's acquisition of wireless properties and capital
expenditures associated with the build out and enhancements of the cellular
systems. The weighted average interest rate, was 8.16% for the six months ended
June 30, 1999, as compared to 9.34% for the same period in 1998.
EBITDA
EBITDA represents operating income (loss) before depreciation,
amortization and stock based compensation. Management believes EBITDA provides
meaningful additional information on the Company's operating results and on its
ability to service its long-term debt and other fixed obligations, and to fund
the Company's continued growth. EBITDA is considered by many financial analysts
to be a meaningful indicator of an entity's ability to meet its future financial
obligations, and growth in EBITDA is considered to be an indicator of future
profitability, especially in a capital-intensive industry such as wireless
telecommunications. EBITDA should not be construed as an alternative to
operating income (loss) as determined in accordance with United States GAAP, as
an alternate to cash flows from operating activities (as determined in
accordance with GAAP), or as a measure of liquidity. Because EBITDA is not
calculated in the same manner by all companies, the Company's presentation may
not be comparable to other similarly titled measures of other companies.
15
<PAGE> 16
EBITDA for the Company increased to $106.2 million for the six months
ended June 30, 1999, from $69.5 million for the same period in 1998. The
increase in EBITDA is directly related to continued revenue increases combined
with overall cost efficiencies gained from a growing subscriber base.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a credit facility (the "Credit Facility") with a
consortium of lenders providing for $750 million of revolving credit and a $200
million term loan. As of June 30, 1999, $780 million was outstanding under the
Credit Facility. The amount available for borrowing under the Credit Facility,
which is limited by certain financial covenants and other restrictions, was $170
million. Indebtedness under the Credit Facility matures on March 31, 2006. The
Credit Facility bears interest at variable rates. Substantially all the assets
of the Company are pledged as security for such indebtedness. The terms of the
Credit Facility restrict, among other things, the sale of assets, distribution
of dividends or other distributions and loans.
Western Wireless has issued $200 million principal amount of 10 1/2%
Senior Subordinated Notes Due 2006 (the "2006 Notes") at par and $200 million
principal amount of 10 1/2% Senior Subordinated Notes Due 2007 (the "2007"
Notes") at par. Indebtedness under the 2006 Notes and the 2007 Notes matures
June 1, 2006 and February 1, 2007, respectively. The Credit Facility prohibits
the repayment of all or any portion of the principal amounts of the 2006 Notes
or 2007 Notes prior to the repayment of all indebtedness under the Credit
Facility. The 2006 and 2007 Notes contain certain restrictive covenants which
impose limitations on the operations and activities of the Company and certain
of its subsidiaries, including the issuance of other indebtedness, the creation
of liens, the sale of assets, issuance of preferred stock of subsidiaries and
certain investments and acquisitions. The Company obtained the appropriate
waivers from the holders of these notes prior to consummation of the Spin-off at
a cost of $16 million.
In June 1998, a wholly owned subsidiary of the Company, through a
controlling interest in MMC, was notified by the Office of the Director of
Telecommunications Regulation that it was the preferred applicant for a
DCS-1800/GSM 900 mobile communication license in Ireland. The amount bid by MMC
on this license was $16.2 million, including related fees. We anticipate the
license to be granted and payment to be made prior to the end of the year.
For the remainder of 1999, the Company expects to spend approximately
$40 million for the continued expansion of its wireless infrastructure. The
Company will utilize operating cash flow and the Credit Facility for purposes of
funding its wireless system expansion.
Net cash provided by operating activities was $19.4 million for the six
months ended June 30, 1999. Adjustments to the $161.5 million net loss to
reconcile to net cash provided by operating activities included $82.2 million
loss from discontinued operations, $49.0 of depreciation and amortization, and
$66.5 for stock based compensation. Net cash provided by operating activities
was $36.6 million for the six months ended June 30, 1998.
Net cash used in investing activities was $154.4 million for the six
months ended June 30, 1999. Investing activities for such period consisted
primarily of $124.3 million in acquisitions of wireless properties, primarily
attributable to the purchase of the McAllen and Brownsville MSAs and Wyoming 4
and Oklahoma 1 RSAs. In addition, the Company purchased property and equipment
in the amount of $59.7 million. Net cash provided by investing activities was
$37.1 million for the six months ended June 30, 1998.
Net cash provided by financing activities was $138.1 million for the six
months ended June 30, 1999. Financing activities for such period consisted
primarily of additions to long-term debt mainly to finance the acquisition of
wireless properties. Net cash used in financing activities was $80.5 million for
the six months ended June 30, 1998.
In the ordinary course of business, the Company continues to evaluate
acquisition opportunities, joint ventures and other potential business
transactions. Such acquisitions, joint ventures and business transactions may be
material. Such transactions may also require the Company to seek additional
sources of funding through the issuance of additional debt and/or additional
equity at the parent or subsidiary level. There can be no assurance that such
funds will be available to the Company on acceptable or favorable terms.
16
<PAGE> 17
YEAR 2000 ISSUES
The Company, like most businesses, will be required to modify
significant portions of its information technology ("IT") and non-IT systems so
that they will function properly in the year 2000. Any of the Company's, or its
vendors', IT and non-IT systems that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. The Company's IT
and non-IT systems that are being addressed include: its wireless networks;
system which interconnect its wireless networks with landline systems; systems
which allow verification and billing of roaming traffic; internal communication
and data processing systems; billing software an related elements; and systems
of third party suppliers, including those of financial institutions,
payroll/benefits processors and credit bureaus.
Much of the Company's technology, including technology associated with
its critical systems, is purchased from third parties. The Company is dependent
on those third parties to assess the impact of the year 2000 issue on the
technology and services they supply and to take any necessary corrective action.
The Company cannot assure that these third parties will have taken the necessary
corrective action prior to the year 2000.
The Company has adopted a remediation plan to become year 2000
compliant. This plan consists of four key phases: (1) inventory of all systems,
(2) research, including obtaining information from third parties to determine
whether they have accurately assessed the problem and taken corrective action,
(3) implementation of and testing remediation efforts and (4) development of
contingency plans. The Company has completed the first two phases of its plan
and is currently testing and remediating its critical systems and developing
contingency plans to address the year 2000 issue. The Company expects to
substantially complete the third and fourth phases by the end of the third
quarter of 1999. Critical systems are those whose failure poses a risk of
disruption to the Company's ability to provide wireless services, to collect
revenues, to meet safety standards, or to comply with legal requirements. The
Company expects to incur internal staff costs as well as consulting and other
expenses related to infrastructure and facilities enhancements necessary to
complete the remediation of the systems for the year 2000. The Company cannot
assure that the remediation of its critical systems will be complete by the year
2000.
The Company expects to incur incremental consolidated expenses of not
more than $5 million through the end of 1999 to implement its plan for its
consolidated critical systems. Approximately $1 million has been spent through
June 30, 1999. The Company has redeployed internal resources to address the
problem. Additionally, the Company will incur capitalized costs that represent
ongoing investment in new systems and system upgrades, the timing of which is
being accelerated to facilitate year 2000 compliance and which is not expected
to have a material impact on the Company's financial position or results of
operations. This estimate assumes that third party suppliers have accurately
assessed the compliance of their products and that they will successfully
correct the issue in non-compliant products. Because of the complexity of
correcting the year 2000 issue, actual costs may vary from this estimate.
Based on its current assessments and its remediation plan, which are
based in part upon certain representations of third parties, the Company expects
that it will not experience a disruption of its operations as a result of the
change to the year 2000. However, there can be no assurance that either the
Company or the third parties who have supplied technology used in the Company's
critical systems will be successful in taking corrective action in a timely
manner. As part of its plan, the Company has developed, and is continuing to
develop, contingency plans for its critical systems which include, among other
things, identifying a core system of cell sites that are being designed to
operate for extended periods for mobile to mobile service independent of
external power supplies and landline telephone services. The Company believes
that these contingency plans will mitigate service disruption; however, the
Company cannot guarantee this. The Company will continuously test and update
these plans and systems as long as necessary.
17
<PAGE> 18
WESTERN WIRELESS CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material, pending legal proceedings to which the Company or
any of its subsidiaries or affiliates is a party or of which any of their
property is subject which, if adversely decided, would have a material adverse
effect on the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of Western Wireless
Corporation was held on May 20, 1999.
(b) The following directors were elected to serve a one year term:
John W. Stanton, John L. Bunce, Mitchell L. Cohen, Daniel J.
Evans, Jonathan M. Nelson, and Terence M. O'Toole.
(c) The following matters were voted upon at the meeting:
1. For the election of directors:
<TABLE>
<CAPTION>
For Withheld
----------- -------
<S> <C> <C>
John W. Stanton 363,265,507 244,749
John L. Bunce 363,268,970 241,286
Mitchell L. Cohen 363,268,903 241,353
Daniel J. Evans 363,337,275 172,981
Jonathan M. Nelson 363,269,224 241,032
Terence M. O'Toole 363,198,610 311,646
</TABLE>
2. For the amendment of the 1994 Management Incentive Stock
Option Plan to increase the number of shares issuable
under the Plan to 7.6 million shares:
<TABLE>
<S> <C>
For: 354,617,014
Against: 3,631,188
Abstain: 26,493
Broker non-votes: 5, 235,561
</TABLE>
3. Ratification of selection of Arthur Andersen LLP as the
Company's independent auditors for the year ending
December 31, 1999:
<TABLE>
<S> <C>
For: 363,483,938
Against: 6,969
Abstain: 19,349
</TABLE>
ITEM 5. OTHER INFORMATION
None.
18
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibit Description
------- -----------
<S> <C>
10.85(1) Agreement and Plan of Distribution between Western
Wireless Corporation and VoiceStream Wireless
Corporation dated April 9, 1999
10.86(1) Exchange Rights and Grant Agreement by and among
Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet Telecommunications, Inc.
and VoiceStream Wireless Corporation dated
December 17, 1998.
10.87(1) Exchange Rights and Grant Agreement by and among
Western PCS BTA I Corporation, Western Wireless
Corporation, SSPCS Corporation and VoiceStream
Wireless Corporation dated January 19, 1999.
10.88(2) First Amendment to Shareholders Agreement by and
among VoiceStream Wireless Corporation, Western
Wireless Corporation, Hutchison Telecommunications
Holdings (USA) Limited and Hutchison
Telecommunications PCS (USA) Limited dated May 3,
1999.
27.1 Financial Data Schedule
</TABLE>
1. Incorporated by reference to the exhibit filed with the
VoiceStream Wireless Corporation Form 10 (Commission File No.
000-25441) filed with the SEC on February 26, 1999.
2. Incorporated by reference to the exhibit filed with the
VoiceStream Wireless Corporation Form 10/A (Commission File No.
000-25441) filed with the SEC on April 13, 1999.
(b) Reports on Form 8-K
Form 8-K was filed on May 11, 1999, reporting Western Wireless
Corporation's financial and operating results for the first
quarter ended March 31, 1999.
A Form 8-K was filed on July 26, 1999, reporting Western
Wireless Corporation's financial and operating results for the
second quarter ended June 30, 1999.
19
<PAGE> 20
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 thereunto duly authorized.
Western Wireless Corporation
By: /s/ Theresa E. Gillespie By: /s/ Scott Soley
--------------------------- ---------------------------
Theresa E. Gillespie Scott Soley
Executive Vice President Director of Accounting
(Chief Accounting Officer)
Dated: August 5, 1999
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
10.85(1) Agreement and Plan of Distribution between Western Wireless
Corporation and VoiceStream Wireless Corporation dated April
9, 1999
10.86(1) Exchange Rights and Grant Agreement by and among Western PCS
BTA I Corporation, Western Wireless Corporation, Cook Inlet
Telecommunications, Inc. and VoiceStream Wireless
Corporation dated December 17, 1998.
10.87(1) Exchange Rights and Grant Agreement by and among Western PCS
BTA I Corporation, Western Wireless Corporation, SSPCS
Corporation and VoiceStream Wireless Corporation dated
January 19, 1999.
10.88(2) First Amendment to Shareholders Agreement by and among
VoiceStream Wireless Corporation, Western Wireless
Corporation, Hutchison Telecommunications Holdings (USA)
Limited and Hutchison Telecommunications PCS (USA) Limited
dated May 3, 1999.
27.1 Financial Data Schedule
</TABLE>
--------------------
1. Incorporated by reference to the exhibit filed with the
VoiceStream Wireless Corporation Form 10 (Commission File No.
000-25441) filed with the SEC on February 26, 1999.
2. Incorporated by reference to the exhibit filed with the
VoiceStream Wireless Corporation Form 10/A (Commission File No.
000-25441) filed with the SEC on April 13, 1999.
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTERN
WIRELESS CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR
THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,340
<SECURITIES> 0
<RECEIVABLES> 72,029
<ALLOWANCES> 8,754
<INVENTORY> 8,282
<CURRENT-ASSETS> 87,969
<PP&E> 543,190
<DEPRECIATION> 251,514
<TOTAL-ASSETS> 1,048,436
<CURRENT-LIABILITIES> 73,588
<BONDS> 1,180,000
0
0
<COMMON> 682,902
<OTHER-SE> (889,624)
<TOTAL-LIABILITY-AND-EQUITY> 1,048,436
<SALES> 9,872
<TOTAL-REVENUES> 252,414
<CGS> 15,824
<TOTAL-COSTS> 261,775
<OTHER-EXPENSES> (52,458)
<LOSS-PROVISION> 9,371
<INTEREST-EXPENSE> 46,800
<INCOME-PRETAX> (161,532)
<INCOME-TAX> 0
<INCOME-CONTINUING> (60,880)
<DISCONTINUED> (100,652)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (161,532)
<EPS-BASIC> (2.10)
<EPS-DILUTED> (2.10)
</TABLE>
