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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

Or

[   ]

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 000-28160

WESTERN WIRELESS CORPORATION

(425) 586-8700

     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 August 9, 2002
Class A Common Stock, no par value			72,229,605
Class B Common Stock, no par value			6,774,724

Table of Contents

Western Wireless Corporation
Form 10-Q
For the Quarter Ended June 30, 2002

Table of Contents

Page

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2002, and December 31, 2001

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2002, and June 30, 2001

4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002, and June 30, 2001

5

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

23

Item 2.

Changes in Securities

23

Item 3.

Defaults Upon Senior Securities

23

Item 4.

Submission of Matters to a Vote of Security Holders

23

Item 5.

Other Information

23

Item 6.

Exhibits and Reports on Form 8-K

23

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PART I — FINANCIAL INFORMATION

WESTERN WIRELESS CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)

				June 30,				December 31,
				2002				2001
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	41,897			$	45,240
	Accounts receivable, net of allowance for doubtful accounts of $21,256 and $21,095, respectively				152,903				151,787
	Inventory				25,036				34,331
	Marketable securities				18,263				21,016
	Prepaid expenses and other current assets				34,339				49,402
		Total current assets			272,438				301,776
Property and equipment, net of accumulated depreciation of $640,568 and $530,805, respectively					861,857				838,078
Licensing costs and other intangible assets, net of accumulated amortization of $20,515 and $15,170, respectively					1,181,522				1,184,516
Investments in and advances to unconsolidated affiliates					35,451				32,752
Other assets					33,240				13,298
				$	2,384,508			$	2,370,420
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
	Accounts payable			$	61,002			$	83,005
	Accrued liabilities and other				193,516				175,016
	Construction accounts payable				48,140				93,764
	Current portion of long-term debt				94,407				55,471
		Total current liabilities			397,065				407,256
Long-term debt, net of current portion					2,300,196				2,237,374
Deferred income taxes					85,510
		Total liabilities			2,782,771				2,644,630
Minority interests in consolidated subsidiaries					23,641				25,089
Commitments and contingencies (Note 7)
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, 72,229,605 and 71,881,603 shares issued and outstanding, respectively
		Class B, 6,774,724 and 6,981,072 shares issued and outstanding, respectively			669,067				668,158
	Deferred compensation				(98	)
	Accumulated other comprehensive loss				(21,840	)			(24,181	)
	Deficit				(1,069,033	)			(943,276	)
		Total net capital deficiency			(421,904	)			(299,299	)
				$	2,384,508			$	2,370,420

See accompanying notes to condensed consolidated financial statements.

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WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Dollars in thousands, except per share data)
(Unaudited)

					Three months ended June 30,								Six months ended June 30,
					2002				2001				2002				2001
Revenues:
	Subscriber revenues				$	204,826			$	170,530			$	403,397			$	331,640
	Roamer revenues					64,394				68,839				125,375				131,036
	Fixed line revenues					13,383				302				26,999				381
	Equipment sales and other revenues					16,184				12,891				33,680				25,979
		Total revenues				298,787				252,562				589,451				489,036
Operating expenses:
	Cost of service					93,107				59,562				182,972				114,529
	Cost of equipment sales					28,549				20,718				55,317				37,131
	General and administrative					50,293				52,320				110,532				103,513
	Sales and marketing					46,422				39,229				86,134				81,571
	Depreciation and amortization					58,588				52,685				120,103				95,304
	Asset disposition					7,556								7,556
	Stock based compensation, net									6,251								12,247
		Total operating expenses				284,515				230,765				562,614				444,295
Other income (expense):
	Interest and financing expense, net					(39,311	)			(40,806	)			(78,670	)			(82,918	)
	Equity in net income (loss) of unconsolidated affiliates					841				543				2,488				(2,412	)
	Other, net					(714	)			(619	)			4,483				(290	)
		Total other expense				(39,184	)			(40,882	)			(71,699	)			(85,620	)
Minority interests in consolidated subsidiaries						2,590				5,058				5,825				9,548
Loss before provision for income taxes						(22,322	)			(14,027	)			(39,037	)			(31,331	)
Provision for income taxes						(7,433	)							(86,720	)
Loss before cumulative change in accounting principle						(29,755	)			(14,027	)			(125,757	)			(31,331	)
Cumulative change in accounting principle																		(5,580	)
		Net loss			$	(29,755	)		$	(14,027	)		$	(125,757	)		$	(36,911	)
Basic and diluted loss per share:
	Before cumulative change in accounting principle				$	(0.38	)		$	(0.18	)		$	(1.59	)		$	(0.40	)
	Cumulative change in accounting principle																	(0.07	)
Basic and diluted loss per share					$	(0.38	)		$	(0.18	)		$	(1.59	)		$	(0.47	)
Weighted average shares outstanding:
	Basic and diluted					78,969,000				78,635,000				78,940,000				78,487,000
Comprehensive loss:
	Net loss				$	(29,755	)		$	(14,027	)		$	(125,757	)		$	(36,911	)
	Unrealized gain (loss) on marketable securities:
		Reclassification adjustment																(1,984	)
		Unrealized holding gain (loss)				(1,657	)			1,667				(2,753	)			(3,795	)
			Net unrealized gain (loss)			(1,657	)			1,667				(2,753	)			(5,779	)
	Foreign currency translation					11,275				(4,811	)			6,766				(5,185	)
	Unrealized gain (loss) on hedges					(3,765	)			80				(1,672	)			(1,092	)
Total comprehensive loss					$	(23,902	)		$	(17,091	)		$	(123,416	)		$	(48,967	)

See accompanying notes to condensed consolidated financial statements.

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WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

				Six months ended June 30,
				2002				2001
Operating activities:
	Net loss			$	(125,757	)		$	(36,911	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Cumulative change in accounting principle							5,580
		Gain on sale of marketable securities							(8,006	)
		Depreciation and amortization			122,129				96,696
		Deferred income taxes			85,510
		Asset disposition			7,556
		Stock based compensation							12,247
		Equity in net (income) loss of unconsolidated affiliates			(2,488	)			2,412
		Minority interests in consolidated subsidiaries			(5,825	)			(9,548	)
		Adjustment of interest rate hedges to fair market value			(811	)			7,380
		Other, net			2,025				2,478
		Changes in operating assets and liabilities			13,280				(21,227	)
		Net cash provided by operating activities			95,619				51,101
Investing activities:
	Purchase of property and equipment				(160,460	)			(155,284	)
	Additions to licensing costs and other intangible assets				(5,602	)			(25,138	)
	Proceeds from sale of marketable securities								26,636
	Purchase of marketable securities								(3,896	)
	Receipts from and (investments in) unconsolidated subsidiaries				(722	)			2,962
	Long-term deposits				(18,655	)
	Payments to VoiceStream Wireless								(24,500	)
	Purchase of minority interests in Western Wireless International								(14,140	)
		Net cash used in investing activities			(185,439	)			(193,360	)
Financing activities:
	Additions to long-term debt				141,841				608,461
	Repayment of long-term debt				(58,503	)			(440,000	)
	Minority interest contributions				520				19,978
	Other				565				1,500
		Net cash provided by financing activities			84,423				189,939
Effect of exchange rate changes					2,054
Change in cash and cash equivalents					(3,343	)			47,680
Cash and cash equivalents, beginning of period					45,240				23,278
Cash and cash equivalents, end of period				$	41,897			$	70,958

See accompanying notes to condensed consolidated financial statements.

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization:

     Western Wireless Corporation provides wireless communications services in the United States principally through the ownership and operation of cellular systems. The Company provides cellular operations primarily in rural areas in 19 western states under the CELLULARONE^® brand name. In April 2002, the Company launched service in Amarillo, Texas under the Western Wireless brand name.

     The Company owns approximately 98% of Western Wireless International Holding Corporation (“WWI”) which, through consolidated subsidiaries and equity investments, is a provider of wireless and other communications services worldwide.

     Throughout this document, Western Wireless Corporation and its subsidiaries are referred to as “the Company,” “we,” “our” or “us.” The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) that permit reduced disclosures for interim periods. The condensed consolidated balance sheet as of December 31, 2001, has been derived from audited financial statements. The unaudited interim condensed consolidated financial statements dated June 30, 2002 and 2001, are presented herein, and 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. 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 our annual audited financial statements and footnotes thereto for the year ended December 31, 2001, contained in our Form 10-K dated March 29, 2002.

2. Summary of Significant Accounting Policies:

     Supplemental cash flow disclosure:

     Cash paid for interest was $78.4 million and $75.4 million for the six months ended June 30, 2002 and 2001, respectively.

     Reclassifications:

     Certain amounts in prior years’ financial statements have been reclassified to conform to the 2002 presentation.

     Principles of Consolidation:

     U.S. headquarter functions and majority owned European, South American and Caribbean consolidated subsidiaries are recorded as of the date of the financial statements. During the first quarter of 2002, we brought the results of Bolivia and Haiti current with the date of the financial statements. Entities accounted for using the equity method and our consolidated Ghanaian subsidiary are presented on a one quarter lag. For the six months ended June 30, 2001, consolidated subsidiaries in Iceland, Ghana, Bolivia and Haiti, along with entities accounted for using the equity method, were recorded on a one quarter lag. The inclusion of an additional quarter of operations for Bolivia and Haiti in the first quarter for 2002 had an insignificant impact on our consolidated operating results.

     Recently issued accounting standards:

     In July 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”). SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 supersedes Emergency Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.

     In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”). SFAS No. 145 requires that gains and losses from the extinguishments of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30 (“Opinion No. 30”). Applying the provisions of Opinion No. 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual and infrequent that meet criteria for classification as an extraordinary item. We have adopted the provisions of SFAS No. 145 during the second quarter of 2002 and have recognized a gain of $1.3 million in other income on the repurchase of approximately $17 million of our 10½% Senior Subordinated Notes due 2006 and 2007.

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). This statement deals with the costs of closing facilities and removing assets. SFAS No. 143 requires entities to record the fair value of a legal liability for an asset retirement obligation in the period it is incurred if a reasonable estimate of fair value can be made. This cost is initially capitalized and amortized over the remaining life of the underlying asset. Once the obligation is ultimately settled, any difference between the final cost and the recorded liability is recognized as a gain or loss on disposition. SFAS No. 143 is effective for us beginning January 1, 2003. We are currently evaluating the impact this statement will have on our future consolidated financial results.

     On January 1, 2002, we adopted SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 addresses how acquired goodwill and other intangible assets are recorded upon their acquisition as well as how they are to be accounted for after they have been initially recognized in the financial statements. Under this statement, goodwill, including excess net book value associated with equity method investments, and other intangible assets with indefinite useful lives, on a prospective basis, will no longer be amortized. Upon adoption of SFAS 142, we ceased amortization of our domestic licenses as we determined that these assets meet the definition of indefinite life intangible assets. The fair value of our domestic licenses was estimated using the discounted present value of expected future cash flows. The determination of fair value is a complex consideration that involves significant assumptions and estimates. Assumptions and estimates made by us were based on our best judgments and included among other things: (i) an assessment of market and economic conditions including discount rates; (ii) future operating performance; (iii) competition and market share; and (iv) the nature and cost of technology utilized. We completed the assessment for impairment of our indefinite life intangible assets required upon the implementation of SFAS No. 142 and determined that in the aggregate they were not impaired. In the future, impairment must be assessed at least annually for these assets, or when indications of impairment exist. It is possible that future assessments could cause us to conclude that impairment indications exist. Accordingly, there are no assurances that future valuations will result in the conclusion that our domestic licenses are not impaired.

     In connection with the adoption of SFAS No. 142, we have incurred a non-cash charge of approximately $85.5 million for the six months ended June 30, 2002 as a provision for income taxes mainly to increase the valuation allowance related to our net operating loss carryforwards. This non-cash charge includes $71.4 million in one-time charges required because we have significant deferred tax liabilities related to our domestic licenses. Historically, we did not need a valuation allowance for the portion of our net operating loss carryforward equal to the amount of license amortization expected to occur during the net operating loss carryforward period. Since we ceased amortizing domestic licenses on January 1, 2002 for book purposes and we can no longer estimate the amount, if any, of deferred tax liabilities related to our domestic licenses which will reverse during the net operating loss carryforward period, we have increased the valuation allowance accordingly. Further, since January 1, 2002, we continue to amortize our licenses for federal income tax purposes. As previously discussed, license costs are no longer amortized for book purposes. The ongoing difference between book and tax amortization resulted in an additional non-cash charge as a provision for income taxes of approximately $14.1 million for the six months ended June 30, 2002. The additional non-cash charge to the income tax provision results from growth in our deferred tax liability that cannot be estimated to reverse during our net operating loss carryforward period.

     On January 1, 2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). SFAS No. 144 supersedes SFAS 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS No. 121”). SFAS No. 144 primarily addresses significant issues relating to the implementation of SFAS No. 121 and develops a single accounting model for long-lived assets to be disposed of, whether previously held and used or newly acquired. We periodically evaluate whether there has been any indication of impairment of our long-lived assets.

     3. Marketable Securities:

     Marketable securities are classified as available-for-sale and are stated at fair market value. Information regarding our marketable securities is summarized as follows:

(Dollars in thousands)

     Our net unrealized holding gains and losses are included as an increase to accumulated other comprehensive loss. Realized gains and losses are determined on the basis of specific identification.

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

4. Prepaid Expenses and Other Current Assets:

5. Licensing Costs and Other Intangible Assets:

     Upon adoption of SFAS No. 142, as described in Note 2, we ceased amortization related to domestic licensing costs beginning on January 1, 2002.

     We include the amortization of deferred financing costs in interest and financing expense. The following table represents current and expected amortization expense, net of deferred financing costs, for each of the following periods:

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     The following table reconciles our net loss adjusted to exclude amortization expense related to intangible assets, assuming the adoption of SFAS No, 142 had occurred on January 1, 2001:

6. Debt:

     Long-Term Debt:

The aggregate amounts of principal maturities as of June 30, 2002, are as follows:

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     Irish Bridge Loan:

     In April 2001, Meteor Mobile Communications Limited (“MMC”), a subsidiary of WWI, entered into a bridge loan facility agreement (the “Irish Bridge Loan”) with two banks to provide funding for the development and operation of MMC’s network in Ireland. In April 2002, a subsidiary of WWI repaid the remainder of the outstanding principal plus interest.

     Slovenian Credit Facility:

     In April 2002, Western Wireless International d.o.o. (“Vega”), a subsidiary of WWI, entered into a credit facility agreement (the “Slovenian Credit Facility”) with a consortium of banks to provide funding for the implementation and expansion of Vega’s network in Slovenia. The total amount of the Slovenian Credit Facility is 116 million euro. Under the terms of the Slovenian Credit Facility, all outstanding principal is required to be repaid in predetermined semi-annual installments beginning on May 30, 2004 and ending on November 30, 2009. Interest is accrued mainly at EURIBOR plus an applicable margin, initially ranging from 1.25% to 3.25% based on Vega’s financial and technical performance. Further, the Slovenian Credit Facility requires Vega to enter into interest rate hedge agreements on a minimum of 50% of the outstanding balance under the Slovenian Credit Facility to manage the interest rate exposure pertaining to borrowings under the Slovenian Credit Facility.

     The Slovenian Credit Facility contains certain borrowing conditions and restrictive covenants, including: minimum subscribers; population coverage; certain cash flow requirements; minimum contributed capital and debt service coverage. Western Wireless International Corporation (“WWIC”), a subsidiary of WWI, has guaranteed the Slovenian Credit Facility under the following circumstances: failure to meet specified network construction milestones, the subsidiary’s insolvency, or abandonment of the project. Further, WWIC has made a commitment that is collateralized by cash to contribute up to a maximum of 16 million euro in additional capital to provide for cumulative operating cash flow shortfalls and cash balance deficiencies, if any. In the second quarter of 2002, Vega’s revenues were 1.3 million euro below the minimum revenues required under the covenants contained in the Slovenian Credit Facility. In August 2002, pursuant to the Slovenian Credit Facility, WWIC exercised the right to contribute an additional 1.3 million euro to Vega as a result of the revenue shortfall. As of June 30, 2002, Vega had approximately $54 million available to borrow under the Slovenian Credit Facility, $27 million of which is restricted for payment on future purchases by Vega from its equipment supplier. We expect that there will be additional revenue or other financial covenant shortfalls in the future which may limit the availability of borrowings under the Slovenian Credit Facility, subject to WWIC’s right to contribute additional amounts in order to cure such shortfalls.

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

7. Commitments and contingencies:

     Purchase Commitments:

     In order to ensure adequate supply and availability of certain wireless system equipment requirements and service needs, we have committed to purchase from various suppliers, wireless communications equipment and services. Information regarding these commitments as of June 30, 2002, is as follows:

     International Contingencies:

     Ivory Coast:

     WWI owns a 40% interest in Cora de Comstar (“Cora”), which has operated under a provisional operating license since the company was formed in 1995. This interest is accounted for by WWI on the equity method. When the provisional license was issued to Cora, the government established certain conditions by which the provisional license would become a long-term license. On July 6, 2001, the government announced its intention to require Cora and the two other wireless operators in Côte d’Ivoire to each pay a license fee of 40 billion CFA francs, or approximately $53 million, in order to obtain their long-term licenses. WWI believes that this requirement violates the terms of the provisional license and is a breach of Cora’s contract with the government. However, in February 2002, Cora agreed to an interim payment plan of approximately $0.1 million per month, funded by Cora’s operating cash flows, until Cora is able to obtain additional funding or renegotiates the license fee and terms. Despite the ongoing negotiations, the government issued Cora the long-term license in the second quarter of 2002. WWI’s net investment in Cora at June 30, 2002 is $5 million.

     Ghana:

     Under the terms of the Ghana license, a subsidiary of WWI, Western Telesystems Ghana Limited (“Westel”) was required to meet certain customer levels and build-out requirements by February 2002. Due to the inability of the regulator to provide spectrum and enforce interconnection with the incumbent telephone company, all development has been stifled. Westel was unable to meet the required customer levels. The National Communication Authority of Ghana (“NCA”) has assessed a penalty claim of $71 million for not meeting these build-out requirements. Westel is currently in discussions with the NCA and other government officials to settle these matters and does not believe the enforcement of these penalties is probable. WWI’s net investment in Westel at June 30, 2002 is approximately $5 million.

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Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

8. Income (Loss) per Common Share:

     Statement of Financial Accounting Standards No. 128, “Earnings Per Share,” requires two presentations of income per share — “basic” and “diluted.” Basic income per share is calculated using the weighted average number of shares outstanding during the period. Diluted income per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of outstanding stock options using the “treasury stock” method.

     Income (loss) per share is calculated using the weighted average number of shares of outstanding stock during the period. For those periods presented with net losses, any stock options outstanding are antidilutive, thus basic and diluted loss per share are equal. Weighted average shares issuable upon the exercise of stock options, which were not included in the calculation were 2,264,300 and 2,043,400 for the six months ended June 30, 2002 and 2001, respectively, because they were antidilutive.

     The components of basic and diluted loss per share are as follows:

(Dollars in thousands, except per share data)
				Three months ended June 30,								Six months ended June 30,
				2002				2001				2002				2001
Numerator:
	Loss before cumulative change in accounting principle			$	(29,755	)		$	(14,027	)		$	(125,757	)		$	(31,331	)
	Cumulative change in accounting principle																(5,580	)
		Net loss		$	(29,755	)		$	(14,027	)		$	(125,757	)		$	(36,911	)
Denominator:
	Weighted-average shares:
		Basic			78,969,000				78,635,000				78,940,000				78,487,000
	Effect of dilutive securities:
		Dilutive options
	Weighted-average shares:
		Diluted			78,969,000				78,635,000				78,940,000				78,487,000
Basic and diluted loss per share:
	Before cumulative change in accounting principle			$	(0.38	)		$	(0.18	)		$	(1.59	)		$	(0.40	)
	Cumulative change in accounting principle																(0.07	)
Basic and diluted loss per share				$	(0.38	)		$	(0.18	)		$	(1.59	)		$	(0.47	)