8-K 1 v92917e8vk.htm FORM 8-K Western Wireless Corporation Form 8-K
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 11, 2003

 
WESTERN WIRELESS CORPORATION

(Exact name of registrant as specified in its charter)
         
Washington   000-28160   91-1638901

(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)
         
3650 131st Avenue S.E., Bellevue, Washington       98006

(Address of principal executive offices)       (Zip Code)
     
Registrant’s telephone number, including area code   (425) 586-8700
   
 

(Former name or former address, if changes since last report)

 


Item 5. Other Events
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This Current Report is being filed in connection with the Company’s registration statements to be filed with the Securities and Exchange Commission. The registration statements have not yet become effective. The securities being registered under the registration statements may not be sold, nor may offers to buy be accepted, prior to the time the registration statements become effective. This Form 8-K shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Item 5. Other Events

     On February 14, 2003, Western Wireless Corporation (the “Company”) filed a Current Report on Form 8-K (the “February 14, 2003 8-K”) which included, as an exhibit, its press release dated February 13, 2003, announcing, among other things, its fourth quarter and full year 2002 financial results. This press release included the non-GAAP financial measure, “free cash flow.”

     On April 14, 2003, the Company filed a Current Report on Form 8-K (the “April 14, 2003 8-K”) which reported a reconciliation of the non-GAAP financial measure free cash flow previously disclosed in the February 14, 2003 8-K to what the Company believed was its most directly comparable financial measure calculated in accordance with GAAP.

     On May 1, 2003, the Company furnished a Current Report on Form 8-K, as amended by Form 8-K/A on May 2, 2003 (as amended, the “May 1, 2003 8-K”), which included, as an exhibit, its press release dated May 1, 2003, announcing, among other things, its first quarter 2003 financial results. This press release included the non-GAAP financial measure, “free cash flow,” and a reconciliation of such non-GAAP financial measure to what the Company believed was its most directly comparable financial measure calculated in accordance with GAAP.

FREE CASH FLOW

     In the February 14, 2003 8-K, the April 14, 2003 8-K and the May 1, 2003 8-K, the Company reported the non-GAAP financial measure free cash flow which it defined as EBITDA less capital expenditures. In such reports, the Company reconciled free cash flow to income (loss) from continuing operations before provision for income taxes and cumulative change in accounting principle. Commencing with its quarterly press release for the second quarter of 2003 furnished on a Current Report on Form 8-K on August 4, 2003 (as amended by Form 8-K/A on August 7, 2003), the Company has redefined free cash flow as net cash provided by (used in) operating activities; (i) less purchase of property and equipment; (ii) adding back interest and financing expense, net; and (iii) adjusting for changes in operating assets and liabilities, cash paid for taxes and other, net. The Company believes that the GAAP financial measure most directly comparable to the non-GAAP financial measure free cash flow, as the Company currently defines it, is net cash provided by (used in) operating activities. In order to present such non-GAAP financial measure and the reconciliation of such non-GAAP financial measure to its most

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directly comparable GAAP financial measure for the periods covered by the reports listed above consistently with the non-GAAP financial measure and the reconciliation of such non-GAAP financial measure to its most directly comparable GAAP financial measure reported in the quarterly press release for the second quarter of 2003, the Company has set forth below a reconciliation of net cash provided by (used in) operating activities to free cash flow for each of the periods covered by the reports listed above.

Adjustments to Reconcile Net Cash Provided By (Used In)
Operating Activities to Free Cash Flow

(Dollars in Thousands)

                                                   
      Year ended December 31,
     
      2002   2001
     
 
      Domestic   International   Consolidated   Domestic   International   Consolidated
     
 
 
 
 
 
Net cash provided by (used in) operating activities
  $ 229,405     $ (83,545 )   $ 145,860     $ 186,740     $ (113,810 )   $ 72,930  
 
Purchase of property and equipment
    (160,676 )     (139,752 )     (300,428 )     (261,431 )     (116,797 )     (378,228 )
 
Interest and financing expense, net
    110,080       46,611       156,691       138,384       23,469       161,853  
 
Interest allocation
    36,248       (36,248 )             20,477       (20,477 )        
 
Changes in operating assets and liabilities
    (2,306 )     18,673       16,367       6,093       (5,255 )     838  
 
Cash paid for taxes
            2,583       2,583                          
 
Other, net
    (5,813 )     (6,818 )     (12,631 )     (6,684 )     1,238       (5,446 )
 
   
     
     
     
     
     
 
 
Free cash flow
  $ 206,938     $ (198,496 )   $ 8,442     $ 83,579     $ (231,632 )   $ (148,053 )
 
   
     
     
     
     
     
 
Net cash used in investing activities
                  $ (304,326 )                   $ (432,869 )
 
                   
                     
 
Net cash provided by financing activities
                  $ 171,726                     $ 381,744  
 
                   
                     
 
                                                   
      Three months ended March 31,
     
      2003   2002
     
 
      Domestic   International   Consolidated   Domestic   International   Consolidated
     
 
 
 
 
 
Net cash provided by (used in) operating activities
  $ 70,909     $ (3,805 )   $ 67,104     $ 60,470     $ (15,538 )   $ 44,932  
 
Purchase of property and equipment
    (30,605 )     (21,143 )     (51,748 )     (35,275 )     (42,734 )     (78,009 )
 
Interest and financing expense, net
    23,780       14,699       38,479       29,004       10,003       39,007  
 
Interest allocation
    10,447       (10,447 )             7,822       (7,822 )        
 
Changes in operating assets and liabilities
    (6,328 )     (2,321 )     (8,649 )     (11,559 )     1,314       (10,245 )
 
Cash paid for taxes
            681       681               393       393  
 
Other, net
    (960 )     (2,346 )     (3,306 )     (850 )     (1,015 )     (1,865 )
 
   
     
     
     
     
     
 
 
Free cash flow
  $ 67,243     $ (24,682 )   $ 42,561     $ 49,612     $ (55,399 )   $ (5,787 )
 
   
     
     
     
     
     
 
Net cash used in investing activities
                  $ (49,740 )                   $ (79,401 )
 
                   
                     
 
Net cash provided by (used in) financing activities
                  $ (3,162 )                   $ 39,897  
 
                   
                     
 

     Free cash flow is a non-GAAP financial measure which the Company defines as net cash provided by (used in) operating activities; (i) less purchase of property and

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equipment; (ii) adding back interest and financing expense, net; and (iii) adjusting for changes in operating assets and liabilities, cash paid for taxes and other, net.

     The Company views free cash flow as a liquidity measure and, as such, believes that the GAAP financial measure most directly comparable to free cash flow is net cash provided by (used in) operating activities. The Company has presented free cash flow because this financial measure, in combination with other financial measures, is an integral part of the Company’s internal reporting system. The Company believes the ability of a company in the wireless industry to generate positive free cash flow has a positive impact on shareholder value. Free cash flow provides an important measurement of the cash generated by the Company after capital reinvestment in its business and is an indicator of the Company’s ability to service its long-term debt and other corporate cash requirements. Free cash flow does not include expenditures for domestic taxes as the Company currently has significant accumulated net operating losses and does not believe it will pay cash domestic income taxes in the near future.

     Free cash flow should not be construed as an alternative to net income (loss), as determined in accordance with GAAP or as an alternative to net cash provided by (used in) operating activities, as determined in accordance with GAAP. The Company believes free cash flow is useful to investors as a means to evaluate the cash-generating capabilities of the Company, as recurring capital expenditures are required in the wireless industry to sustain its subscriber base and revenue growth. Further, the Company considers trends in free cash flow when making decisions regarding the allocation of financial resources.

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SIGNATURE

     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
(Registrant)
         
Date: September 11, 2003   By:   /s/ Jeffery A. Christianson
       
        Jeffrey A. Christianson
Senior Vice President and General
Counsel

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