Back to GetFilings.com

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

(Mark One)

Or

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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  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.

1

Table of Contents

Western Wireless Corporation
Form 10-Q
For the Quarter Ended June 30, 2003

Table of Contents

2

Table of Contents

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

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

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

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

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

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

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

1.     Organization:

     Western Wireless Corporation (“Western Wireless,” “the Company,” “we,” “our” and “us”) provides wireless communications services in the United States principally through the ownership and operation of cellular systems. We provide cellular operations primarily in rural areas in 19 western states under the CellularONE® and Western Wireless® brand names.

     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.

     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, 2002, has been derived from audited financial statements. The unaudited interim condensed consolidated financial statements dated June 30, 2003 and 2002, 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 contained in the Company’s Form 10-K for the year ended December 31, 2002.

2.     Summary of Significant Accounting Policies:

Supplemental Cash Flow Disclosure:

     Cash paid for interest was $80.1 million and $77.8 million for the six months ended June 30, 2003 and 2002, respectively. Cash paid for taxes was $1.4 million and $1.2 million for the six months ended June 30, 2003 and 2002, respectively.

Reclassifications:

     Certain amounts in prior years’ financial statements have been reclassified to conform to the 2003 presentation.

Principles of Consolidation:

     The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its affiliate investments in which we have a greater than 50% interest. All affiliate investments in which we have a non-controlling interest, but have significant influence, are accounted for using the equity method. All significant intercompany accounts and transactions have been eliminated. As of June 30, 2003, we consolidate six of WWI’s operating entities; Slovenia, Austria, Ireland, Bolivia, Haiti and Ghana.

     U.S. headquarter functions of WWI and majority owned European, South American and Caribbean consolidated subsidiaries are recorded as of the date of the financial statements. Our consolidated Ghanaian entity and entities accounted for using the equity method are presented on a one-quarter lag. We believe presenting financial information on a one-quarter lag for certain entities is necessary to provide adequate time to convert the results into United States generally accepted accounting principles (“GAAP”) and ensure quality and accurate information to the users of our financial statements.

6

Table of Contents

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

Long-Lived Assets:

     On January 1, 2003, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). This statement relates to 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 (“ARO”) 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. For us, an ARO includes those costs associated with removing component equipment that is subject to retirement from cell sites that reside upon leased property, predominantly concrete footings.

     We believe that based on the current state of wireless technology and foreseeable developments in this technology, we will need to retain our current cell sites and other facilities in order to sustain our business into the foreseeable future. Most of our leases provide for multiple renewal periods and we expect to renegotiate extensions of our leases beyond the original lease term and current renewal periods. We cannot currently estimate the range of settlement dates, and believe a likely settlement date would be one that extends past the original lease terms. Our cell sites in urban areas required extensive zoning and permitting approvals that have value to the landlord and significantly reduce the likelihood that a landlord would elect to change the use of this property. Further, our rural cell sites are in locations where it is very unlikely a landlord would elect to enforce any remediation obligation since the cell site represents the best use of this property. We do not have sufficient historical experience to determine the probability of enforcement of the remediation for either urban or rural cell sites and believe the most likely probability of enforcement is close to zero. Accordingly, we believe our ARO is insignificant.

Derivative Financial Instruments:

     In February 2003, we entered into interest rate swaps with a total notional value of $296 million. The interest rate swaps were entered into as hedges of the fair value of $100 million of the 10 1/2% Senior Subordinated Notes due June 2006 (the “2006 Notes”) and all of the 10 1/2% Senior Subordinated Notes due February 2007 (the “2007 Notes”). The interest rate swaps expire on the 2006 and 2007 Notes’ respective maturity dates. On a quarterly basis, we will pay a floating rate of interest equal to the three month LIBOR plus a fixed margin, ranging from 7.45% to 7.75%, and receive fixed rate payments of 10.50% in return semi-annually. The fair value of the interest rate swaps was $4.0 million as of June 30, 2003 and is classified as other long-term debt in our condensed consolidated balance sheet.

     The terms of the interest rate swap agreements and the 2006 Notes and 2007 Notes are such that effectiveness can be measured using the short-cut method defined in SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”). These interest rate swap agreements had no impact on results of operations for the six months ended June 30, 2003.

     We are currently evaluating these interest rate swap agreements and the financial impacts resulting from the retirement of the 2006 Notes and the 2007 Notes (see Note 3). If we chose to keep the interest rate swaps in place, they will no longer qualify for hedge accounting under SFAS No. 133 and we will recognize a gain of approximately $4 million in the third quarter of 2003 based on the fair market value of the swaps at June 30, 2003. If we chose to cancel the swaps, we will recognize a loss of up to $2 million, net, based on certain contractual cancellation fees offset by the fair market value of the swaps at June 30, 2003.

7

Table of Contents

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

Stock-Based Compensation Plans:

     In December 2002, we adopted SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS No. 148”), which amends SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”). As permitted under SFAS No. 148, we have elected to continue to follow the intrinsic value method under Accounting Principles Board (“APB”) No. 25, “Accounting for Stock Issued to Employees,” in accounting for our stock-based compensation plans. The following table illustrates the effect on our net income (loss), basic income (loss) per share and diluted income (loss) per share if we had applied the fair value recognition provisions of SFAS No. 123 to our stock-based compensation plans:

     The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:

     The Black-Scholes option pricing model requires the input of highly subjective assumptions and does not necessarily provide a reliable measure of fair value.

Recently Issued Accounting Standards:

     In May 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS No. 150”), which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances), many of which were previously classified as equity. SFAS No. 150 is effective for us for financial instruments entered into or modified after May 31, 2003 and for fiscal periods beginning after June 15, 2003 for existing

8

Table of Contents

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

financial instruments. We adopted the provisions of SFAS No. 150 effective July 1, 2003 which had no impact on our financial position or results of operations.

     In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS No. 149”), which amends and clarifies the accounting guidance on derivative instruments and hedging activities that fall within the scope of SFAS No. 133. SFAS No. 149 also amends certain other existing pronouncements to provide more uniform reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 is effective for us on a prospective basis for contracts entered into or modified and for hedging relationships designated for fiscal periods beginning after June 30, 2003. We adopted the provisions of SFAS No. 149 effective July 1, 2003 on a prospective basis which will have no material effect on our financial position or results of operations.

     In January 2003, the FASB issued Financial Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities” (“FIN No. 46”). The objective of FIN No. 46 is to improve financial reporting by companies involved with variable interest entities (“VIE”). Prior to FIN No. 46, a company generally included another entity in its consolidated financial statements only if that company controlled the entity through voting interests. FIN No. 46 requires a variable interest entity to be consolidated by a company if that company is either subject to a majority of the risk of loss from the variable interest entity’s activities, entitled to receive a majority of the entity’s residual returns or both. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to currently existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain disclosure requirements apply to all financial statements issued after January 31, 2003 regardless of when the variable interest entity was established. We adopted the provisions of FIN No. 46 effective January 31, 2003 for new or revised agreements and adopted the provisions of FIN No 46 for existing agreements on July 1, 2003. The adoption of FIN No. 46 had no material effect on our financial position or results of operations.

     In October 2002, the FASB reached a consensus on Emerging Issues Task Force (“EITF”) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF No. 00-21”). EITF No. 00-21 addresses arrangements with multiple deliverables specifying how the arrangement consideration should be measured, whether the arrangement should be divided into separate units of accounting and how the arrangement should be allocated among the separate units of accounting. EITF No. 00-21 is applicable to an arrangement in which some, but not all of its deliverables are within the scope of other existing higher-level authoritative literature that does not provide guidance with respect to determining separate units of accounting. EITF No. 00-21 indicates a need for Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”), to be modified. EITF No. 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We adopted the provisions of EITF No. 00-21 effective July 1, 2003 on a prospective basis which will have no material effect on our financial position or results of operations.

9

Table of Contents

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

3.     Long-Term Debt:

     The aggregate amounts of principal maturities as of June 30, 2003, are as follows:

Credit Facility:

     At June 30, 2003, we had a $2.1 billion credit facility with a consortium of lenders (the “Credit Facility”) consisting of: (i) a $500 million term loan (“Term Loan A”); (ii) a $600 million term loan (“Term Loan B”); and (iii) two $500 million revolving loans (“Revolver A” and “Revolver B”).

     In July 2003, we amended the Credit Facility. With the amendment we reduced the commitment under Revolver A to $350 million and prepaid: (i) $150 million under Term Loan A; (ii) $100 million under Term Loan B; and (iii) $150 million under Revolver B. The commitment reduction in Revolver A and each such prepayment was applied to the earliest maturities first. In addition, among other modifications, we modified certain quarterly financial covenants and included a new covenant requiring our domestic operations to maintain a minimum ratio of annualized operating cash flow to senior secured indebtedness. The amendment will also require us to make mandatory prepayments from excess cash flow and from certain proceeds of certain indebtedness. In 2004, based on current assumptions, we may be required to prepay the Credit Facility between $40 million and $60 million in excess cash flow. These prepayments will not effect the amount available under Revolver A. The amended Credit Facility further limits the amount we are permitted to invest in our international subsidiaries from January 1, 2003 to $100 million plus certain other amounts received by us or our

10

Table of Contents

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

domestic subsidiaries from our international subsidiaries. Our applicable margin under Revolver A, Revolver B and Term Loan A, based upon our leverage ratio, has been increased to a range of 1.625% to 2.25% for Eurodollar advances and 0.625% to 1.25% for prime rate advances. The applicable margin for Term Loan B increased to 3.25% for Eurodollar advances and 2.25% for prime rate advances.

10½% Senior Subordinated Notes Due 2006 and 2007:

     At June 30, 2003 we had outstanding $187.1 million and $196.0 million of 10½% Senior Subordinated Notes due 2006 and 2007, respectively (the “2006 Notes” and the “2007 Notes”). On July 17, 2003 the Bank of New York, as trustee, notified holders of the 2006 Notes and the 2007 Notes that we have elected to redeem the entire principal amount of the 2006 Notes and 2007 Notes together with accrued interest on August 18, 2003. The redemption price for the 2006 Notes is 101.75% and the redemption price for the 2007 Notes is 103.5%. We will record an aggregate loss on the early redemption of the 2006 Notes and the 2007 Notes of approximately $14 million in the third quarter of 2003.

9.25% Senior Notes Due 2013:

     In July 2003, we issued $600 million of 9.25% Senior Notes due 2013 (the “2013 Notes”) at par. Interest is payable semi-annually. We may redeem the 2013 Notes at our option at any time on or after July 15, 2008, in whole or from time to time in part, at specified redemption prices, plus accrued and unpaid interest. In addition, on or before July 15, 2008, we may redeem any of the 2013 Notes at our option at any time, in whole, or from time to time in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the date of redemption at a specified rate. The 2013 Notes contain certain covenants that, among other things, limit our ability to incur additional indebtedness, make certain asset dispositions, make restricted payments, issue capital stock of certain wholly-owned subsidiaries and enter into certain mergers, sales or combinations. The 2013 Notes are unsecured and will rank equally in right of payment to all existing and future senior unsecured obligations of ours. Additionally, the 2013 Notes will rank senior in right of payment to all existing and future subordinated obligations including the 2006 Notes, 2007 Notes and the 2023 Notes (see below).

4.625% Convertible Subordinated Notes Due 2023:

     In June 2003, we issued $115 million of 4.625% Convertible Subordinated Notes due 2023 (the “2023 Notes”) at par. Interest is payable semi-annually. The 2023 Notes are convertible into Class A common stock at a per share price of $15.456, subject to adjustment, at any time or, at our option, an equivalent amount of cash in lieu of shares of common stock. In addition, holders may require that we repurchase all or a portion of the 2023 Notes on June 15, 2013 and June 15, 2018 at par plus accrued interest payable in cash or Class A common stock, at our option. Between June 18, 2006 and June 18, 2010, we may redeem in whole or in part the 2023 Notes in cash at par plus accrued interest plus a make whole amount equal to the present value of the remaining scheduled interest payments through and including June 15, 2010, subject to the closing sales price of our common stock exceeding the conversion price by 150% for 20 trading days in any consecutive 30 day trading period immediately prior to notification of redemption. Between June 18, 2010 and June 18, 2013, we may redeem in cash at par plus accrued interest all or a portion of the 2023 Notes subject to the closing sales price of our common stock exceeding the conversion price by 125% for 20 trading days in any consecutive 30 day trading period immediately prior to notification of redemption. After June 18, 2013, the 2023 Notes are redeemable at par plus accrued interest. The 2023 Notes are subordinate in right of payment to the Credit Facility, the 2013 Notes and all indebtedness and other liabilities of our subsidiaries.

11

Table of Contents

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

Slovenian Credit Facility:

     In April 2002, Western Wireless International d.o.o. (“Vega”) 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 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. Additionally, WWIC has agreed not to sell or dispose of any majority owned subsidiary without the approval of the Slovenian lenders. In May 2003, WWI contributed an additional $2.9 million in equity to Vega as a result of Vega’s revenue shortfalls during the three months ended March 31, 2003. As of June 30, 2003, Vega is not in compliance with certain covenants, including its network coverage, minimum service revenue and minimum subscriber covenants. As a result, WWI and the participating banks are negotiating, and have substantially agreed to, all material terms of an amended credit facility. Under the terms of the drafted amendment, the following changes to the terms of the Slovenian Credit Facility will be made: (i) all undrawn commitments will be cancelled; (ii) substantially all of Vega’s operating and financial covenants will be eliminated; (iii) WWIC will guarantee the loan and WWIC will agree to financial and other covenants; (iv) balances of approximately $21.4 million in collateral accounts supporting the existing loan will be utilized to pay down principal; and (v) the repayment schedule for outstanding borrowings will remain unchanged. We have obtained a waiver of certain covenants through August 28, 2003. So long as the amendment process is moving forward in an acceptable manner, we believe that no action to accelerate the loans under the Slovenian Credit Facility will be taken. Based on the facts, we have presented the Slovenian Credit Facility in the current portion of long-term debt as required by U.S. GAAP. Once the amendment is in place, the long-term portion of the Slovenian Credit Facility will be classified as long-term based on the original maturities schedule. However, there can be no assurance that the participating banks will grant the amendment. In the event Vega does not obtain the amendment, the outstanding balance under the Slovenian Credit Facility could become payable upon demand. As of June 30, 2003, Vega had $86.0 million outstanding under the Slovenian Credit Facility.

Bolivian Bridge Loan:

     In October 2000, NuevaTel, S.A. (“NuevaTel”), a subsidiary of WWI, entered into a bridge loan facility (“Bolivian Bridge Loan”) to provide funding for the build-out and implementation of NuevaTel’s network in Bolivia. WWI has guaranteed its pro rata share (71.5%), based upon its ownership interest in NuevaTel, of the Bolivian Bridge Loan. The loan was originally scheduled to mature in its entirety in October 2002. Currently, the maturity date of the Bolivian Bridge Loan has been extended to August 19, 2003 and may be extended to September 30, 2003 at the sole discretion of the lender. Minimum net worth and capitalization covenants have also been extended. In March 2003, the Overseas Private Investment Corporation (“OPIC”) approved a $50 million loan guarantee for the refinancing of the Bolivian Bridge Loan (“Bolivian Refinancing”). The final terms of the Bolivian Refinancing are still being negotiated with prospective lenders. We expect, but there can be no assurance, the Bolivian Bridge Loan will be refinanced in the third quarter of 2003 at which time WWIC will be required to provide $11.6 million as cash collateral for a letter of credit in favor of OPIC until such time as NuevaTel satisfies certain financial and other conditions. Until the Bolivian Refinancing is finalized, we intend to seek additional extensions of the Bolivian Bridge Loan maturity date, but there can be no assurance that any necessary extension will be granted or that the Bolivian Refinancing will be consummated. As of June 30, 2003, the outstanding amount under the Bolivian Bridge Loan was $34.7 million and the facility was fully drawn.

12

Table of Contents

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

Use of Proceeds:

     Subsequent to the end of the quarter, we used the proceeds from the 2013 Notes, the 2023 Notes and the sale of our minority interest in VIP-Net GSM d.o.o. (“VIP-Net”, see Note 6) to prepay $400 million of the Credit Facility, applied to earliest maturities first, as provided for under the Credit Facility amendment. The remainder of the proceeds will be used to redeem the 2006 Notes and 2007 Notes, as discussed above.

     The following represents the aggregate amounts of principal maturities taking the previously mentioned transactions into consideration:

4. Commitments and Contingencies:

Shelf Registration Statement:

     In April 2003, we filed a Form S-3 as a shelf registration statement (the “Shelf Registration Statement”) with the SEC. In addition, we have agreed to file a shelf registration statement with the SEC to register the resale of the 2023 Notes and the shares of Class A common stock issuable upon their conversion. In the event certain registration defaults relating to the filing, effectiveness or availability of that shelf registration statement exist, then for the first 90-day period that such default exists the annual rate of interest on the 2023 Notes will increase by 0.25%. For any additional days that such a registration default exists, the annual rate of interest on the 2023 Notes will increase by 0.50%. We have also agreed to file a registration statement pursuant to which we will either offer to exchange the 2013 Notes for substantially similar notes that are registered or, in certain circumstances, register the resale of the 2013 Notes. In the event certain registration defaults relating to the filing, effectiveness or availability of the registration statement exist, then for each 90-day period that such default exists the annual rate of interest on the 2013 Notes will increase by 0.25% to a maximum of 1.00%. We intend to file additional registration statements as well as use the Shelf Registration Statement to effect these registrations.

Ghana:

     Under the terms of the Ghana license, Western Telesystems Ghana Ltd. (“Westel”) was required to meet certain customer levels and build-out requirements by February 2002. Westel was unable to meet the required customer levels due to the inability of the regulator to provide spectrum and enforce interconnection with the incumbent telephone company, and all development has been stifled. The National Communication Authority of Ghana (“NCA”) has assessed a penalty claim of $71 million for not meeting these build-out requirements. Westel has contested this fine on the basis that the government and the NCA failed to deliver the key commitments of spectrum and interconnection and does not believe the enforcement of these penalties is probable, but there can be no assurance to that effect. WWC’s net investment in Westel at June 30, 2003 was approximately $5.0 million.

13

Table of Contents

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

Haiti:

     In accordance with the Rights Agreements entered into in September 1998 by WWI with two of the shareholders of Communication Cellulaire d’ Haiti, S.A. (“COMCEL”), WWI’s Haitian subsidiary, these two minority shareholders have the right to elect that WWI purchase all of their shares at fair market value, as defined in the agreements, within the 30 day period after COMCEL’s issuance of its December 31, 2003 financial statements. Island Cellular LLC, a limited liability company organized under the laws of New York, and High Ridge Holdings, Inc., a Delaware corporation, own a 20% and 4% interest, respectively, in COMCEL at June 30, 2003. If WWI and the two shareholders cannot agree on a fair market valuation of COMCEL, all of the shares of COMCEL may be sold to a third party.

5. 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 (loss) per share is calculated using the weighted average number of shares of outstanding stock during the period. Diluted income (loss) per common share incorporates the incremental shares issuable upon the assumed exercise of stock options and upon the assumed conversion of our 2023 Notes in 2003 as if conversion to common shares had occurred at the issue date. For those years presented with net losses, the options outstanding are antidilutive, thus basic and diluted loss per share are equal. Dilutive weighted average shares issuable upon the exercise of stock options, which were not included in the calculation, were 50,000 and 334,000 for the three months and six months ended June 30, 2002, respectively, because they were antidilutive. As of June 30, 2003, 1,141,000 shares issuable upon the assumed conversion of our 2023 Notes could potentially dilute earnings per share in the future but were excluded from the calculation of diluted earnings per common share for the six months ended June 30, 2003 because they were antidilutive.

14

Table of Contents

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

     The following table sets forth the computation of basic and diluted income (loss) per share: