UNITED STATES





Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period Ended June 30, 2000

Commission File Number: 000-22939

Nextlink Communications, Inc.

Nextlink Capital, Inc.




|                                                                           |  |                                      
|-------------------------------------------------------------------------- |  | -------------------------------------
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Delaware                                                                   |  | 54-1983517                           
|Washington                                                                 |  | 91-1716062                           
|(State or other jurisdiction of
	incorporation or organization)            |  | (I.R.S. Employer
	Identification No.)
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|1505 Farm Credit Drive
	McLean, VA(Address of principal executive offices) |  | 22102(Zip Code)                      

(703) 547-2000



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 
[   ].

As of August 8, 2000, the
number of shares of Class A and Class B common stock of
 NEXTLINK Communications, Inc. issued and outstanding was
257,204,894 and 105,649,526, respectively, and there were
1,000 shares of common stock of NEXTLINK Capital, Inc.,
 all of which 1,000 shares were held by NEXTLINK
Communications, Inc.

NEXTLINK Capital, Inc. meets
the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.



---






---



PART I.

FINANCIAL INFORMATION

Item 1(a)  Financial Statements

NEXTLINK COMMUNICATIONS, INC.



CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except for per share amounts)


(Amounts as of June 30, 2000 are unaudited)


|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |            |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------- | ------------ | --------- |  | --------- | ---------- | --------- | -
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | June 30,                                             |           | December 31,
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | 2000                                                 |           | 1999        
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |             
|ASSETS                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Current assets:                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                    |                                                      | $         | 1,761,067    |           |  | $         | 868,463    |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Marketable securities                                                                                                                                                                                                                                                                                                                                                                        |                                                      |           | 1,024,419    |           |  |           | 1,013,301  |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Accounts receivable, net of allowance for doubtful accounts of
	$9,255 and $4,246, respectively                                                                                                                                                                                                                                                                                              |                                                      |           | 142,218      |           |  |           | 80,746     |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Other current assets                                                                                                                                                                                                                                                                                                                                                                         |                                                      |           | 41,269       |           |  |           | 24,498     |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Pledged securities                                                                                                                                                                                                                                                                                                                                                                           |                                                      |           | 21,777       |           |  |           | 40,759     |          
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total current assets                                 |           |              | 2,990,750 |  |           |            | 2,027,767 |  
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Property and equipment, net of accumulated depreciation of
	$241,606 and $174,134, respectively                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 1,754,657 |              |           |  | 1,180,021 |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Investment in fixed wireless licenses, net                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 985,867   |              |           |  | 933,128   |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Goodwill and other intangibles, net                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 3,106,853 |              |           |  | 91,428    |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Other assets, net                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 249,789   |              |           |  | 364,764   |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total assets                                         |           | $            | 9,087,916 |  |           | $          | 4,597,108 |  
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Current liabilities:                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Accounts payable                                                                                                                                                                                                                                                                                                                                                                             |                                                      | $         | 161,627      |           |  | $         | 81,841     |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Other accrued liabilities                                                                                                                                                                                                                                                                                                                                                                    |                                                      |           | 227,487      |           |  |           | 119,795    |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Accrued interest payable                                                                                                                                                                                                                                                                                                                                                                     |                                                      |           | 46,456       |           |  |           | 45,578     |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Current portion of long-term obligations                                                                                                                                                                                                                                                                                                                                                     |                                                      |           | 13,501       |           |  |           | 2,003      |          
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total current liabilities                            |           |              | 449,071   |  |           |            | 249,217   |  
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Long-term debt                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 4,346,613 |              |           |  | 3,733,342 |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Other long-term liabilities                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 39,295    |              |           |  | 15,319    |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total liabilities                                    |           |              | 4,834,979 |  |           |            | 3,997,878 |  
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Redeemable preferred stock, par value $0.01 per share,
	25,000,000 shares authorized: 12,346,979 and
	12,324,796  shares issued and outstanding on June 30,
	2000 and December 31, 1999, respectively; aggregate
	liquidation preference of $1,663,311 and $625,952 on
	June 30, 2000 and December 31, 1999, respectively |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      | 1,635,727 |              |           |  | 612,352   |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|Stockholders equity (deficit):                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Common Stock, par value $0.02 per share, stated at amounts
	paid in; Class A, 1,000,000,000 shares authorized,
	254,229,399 and 150,457,264 shares issued and outstanding on
	 June 30, 2000 and December 31, 1999, respectively;
	Class B, 120,000,000 shares authorized, 105,649,526 and
	 117,485,100 shares issued and outstanding on June 30,
	2000 and December 31, 1999, respectively |                                                      |           | 4,212,069    |           |  |           | 1,139,232  |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Deferred compensation                                                                                                                                                                                                                                                                                                                                                                        |                                                      |           | (91,266      | )         |  |           | (85,489    | )        
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Accumulated other comprehensive income                                                                                                                                                                                                                                                                                                                                                       |                                                      |           | (5,340       | )         |  |           | 150,634    |          
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                          | Accumulated deficit                                                                                                                                                                                                                                                                                                                                                                          |                                                      |           | (1,498,253   | )         |  |           | (1,217,499 | )        
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total stockholders equity (deficit)                 |           |              | 2,617,210 |  |           |            | (13,122   | )
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              | Total liabilities and stockholders equity (deficit) |           | $            | 9,087,916 |  |           | $          | 4,597,108 |  
|                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                              |                                                      |           |              |           |  |           |           

See accompanying notes to unaudited interim consolidated
financial statements.

1



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NEXTLINK COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars in thousands, except for per share amounts)


(Unaudited)


|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |         |             |  
|--------------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------------- | -------- | ------------------------- | ----------- | ---- | ------- | ------ | ----------- | - | -------- | ------- | ----------- | - | -------- | ------- | ----------- | -
|                                                                                  |                                     |                                             |          |                          
|                                                                                  |                                     | Three Months Ended June 30,                 |          | Six Months Ended June 30,
|                                                                                  |                                     |                                             |          |                          
|                                                                                  |                                     | 2000                                        |          | 1999                      |             | 2000 |         | 1999  
|                                                                                  |                                     |                                             |          |                           |             |      |         |       
|Revenue                                                                           |                                     | $                                           | 140,649  |                           |             | $    | 60,657  |        |             | $ | 246,498  |         |             | $ | 109,243  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Costs and expenses:                                                               |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Operating                           |                                             |          | 96,884                    |             |      |         | 53,368 |             |   |          | 172,907 |             |   |          | 97,067  |            
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Selling, general and administrative |                                             |          | 112,405                   |             |      |         | 59,099 |             |   |          | 205,370 |             |   |          | 111,433 |            
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Stock-based compensation            |                                             |          | 17,228                    |             |      |         | 1,117  |             |   |          | 26,213  |             |   |          | 2,176   |            
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Depreciation                        |                                             |          | 40,869                    |             |      |         | 23,102 |             |   |          | 81,252  |             |   |          | 42,139  |            
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Amortization                        |                                             |          | 35,542                    |             |      |         | 4,195  |             |   |          | 41,155  |             |   |          | 8,011   |            
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | In-process research and development |                                             |          | 36,166                    |             |      |         |       |             |   |          | 36,166  |             |   |          |        |            
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                  |                                     | Total costs and expenses                    |          |                           | 339,094     |      |         |        | 140,881     |   |          |         | 563,063     |   |          |         | 260,826     |  
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|Loss from operations                                                              |                                     |                                             | (198,445 | )                         |             |      | (80,224 | )      |             |   | (316,565 | )       |             |   | (151,583 | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Interest income                                                                   |                                     |                                             | 46,067   |                           |             |      | 17,522  |        |             |   | 91,098   |         |             |   | 37,285   |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Interest expense                                                                  |                                     |                                             | (107,305 | )                         |             |      | (60,063 | )      |             |   | (215,664 | )       |             |   | (110,753 | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Other income and expense, net                                                     |                                     |                                             | 885      |                           |             |      |        |        |             |   | 225,576  |         |             |   |         |        
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                  |                                     | Net loss                                    |          | $                         | (258,798    | )    |         | $      | (122,765    | ) |          | $       | (215,555    | ) |          | $       | (225,051    | )
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|Preferred stock dividends and accretion of preferred stock
	redemption obligation |                                     |                                             | (31,764  | )                         |             |      | (17,054 | )      |             |   | (65,199  | )       |             |   | (33,654  | )      
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                  |                                     | Loss applicable to common shares            |          | $                         | (290,562    | )    |         | $      | (139,819    | ) |          | $       | (280,754    | ) |          | $       | (258,705    | )
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                  |                                     | Loss per common share (basic and diluted)   |          | $                         | (0.95       | )    |         | $      | (0.56       | ) |          | $       | (0.98       | ) |          | $       | (1.10       | )
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        
|                                                                                  |                                     | Weighted average shares (basic and diluted) |          |                           | 305,145,306 |      |         |        | 249,763,592 |   |          |         | 286,982,516 |   |          |         | 234,687,928 |  
|                                                                                  |                                     |                                             |          |                           |             |      |         |        |             |   |          |         |             |   |          |        

See accompanying notes to unaudited interim consolidated
financial statements.

2



---



NEXTLINK COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollars in thousands)


(Unaudited)


|                      |                                                                              |                                                |   |             |          |   |   |            |         |  
|--------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------- | - | ----------- | -------- | - | - | ---------- | ------- | -
|                      |                                                                              |                                               
|                      |                                                                              | Six Months Ended June 30,                     
|                      |                                                                              |                                               
|                      |                                                                              | 2000                                           |   | 1999       
|                      |                                                                              |                                                |   |            
|OPERATING ACTIVITIES: |                                                                              |                                                |   |             |          |   |   |           
|                     
|                     
|                     
|                     
|                      | Net loss                                                                     |                                                | $ | (215,555    | )        |   | $ | (225,051   | )      
|                     
|                     
|                     
|                     
|                      | Adjustments to reconcile net loss to net cash used in operating
	activities: |                                                |   |             |          |   |   |            |        
|                     
|                     
|                     
|                     
|                      |                                                                              | Stock-based compensation                       |   |             | 26,213   |   |   |            | 2,176   |  
|                     
|                     
|                     
|                     
|                      |                                                                              | Equity in loss of affiliates                   |   |             | 2,287    |   |   |            | 1,049   |  
|                     
|                     
|                     
|                     
|                      |                                                                              | Gain on sale of investments                    |   |             | (226,539 | ) |   |            |        |  
|                     
|                     
|                     
|                     
|                      |                                                                              | Depreciation and amortization                  |   |             | 122,407  |   |   |            | 50,150  |  
|                     
|                     
|                     
|                     
|                      |                                                                              | Accretion of interest on senior discount notes |   |             | 56,773   |   |   |            | 23,447  |  
|                     
|                     
|                     
|                     
|                      |                                                                              | Write-off of in-process technology             |   |             | 36,166   |   |   |            |        |  
|                     
|                     
|                     
|                     
|                      | Changes in assets and liabilities:                                           |                                                |   |             |          |   |   |            |        
|                     
|                     
|                     
|                     
|                      |                                                                              | Accounts receivable                            |   |             | (25,615  | ) |   |            | (13,520 | )
|                     
|                     
|                     
|                     
|                      |                                                                              | Other assets                                   |   |             | (13,436  | ) |   |            | (5,796  | )
|                     
|                     
|                     
|                     
|                      |                                                                              | Accounts payable                               |   |             | 10,213   |   |   |            | (19,325 | )
|                     
|                     
|                     
|                     
|                      |                                                                              | Accrued expenses and other liabilities         |   |             | 64,505   |   |   |            | 848     |  
|                      |                                                                              |                                                |   |             |          |   |   |           
|                      | Net cash used in operating activities                                        |                                                |   | (162,581    | )        |   |   | (186,022   | )      
|                     
|                     
|                     
|                     
|INVESTING ACTIVITIES: |                                                                              |                                                |   |             |          |   |   |           
|                     
|                     
|                     
|                     
|                      | Purchase of property and equipment                                           |                                                |   | (457,516    | )        |   |   | (261,174   | )      
|                     
|                     
|                     
|                     
|                      | Investment in fixed wireless licenses                                        |                                                |   | (33,948     | )        |   |   | (482,905   | )      
|                     
|                     
|                     
|                     
|                      | Release of pledged securities                                                |                                                |   | 29,571      |          |   |   | 21,135     |        
|                     
|                     
|                     
|                     
|                      | Purchase of marketable securities                                            |                                                |   | (10,328,355 | )        |   |   | (3,497,315 | )      
|                     
|                     
|                     
|                     
|                      | Maturity of marketable securities                                            |                                                |   | 10,380,557  |          |   |   | 3,402,711  |        
|                     
|                     
|                     
|                     
|                      | Proceeds from the sale of equity investment                                  |                                                |   | 245,112     |          |   |   |           |        
|                     
|                     
|                     
|                     
|                      | Cash acquired in acquisition                                                 |                                                |   | 50,792      |          |   |   |           |        
|                     
|                     
|                     
|                     
|                      | Investments in unconsolidated entities                                       |                                                |   | (33,239     | )        |   |   |           |        
|                     
|                     
|                     
|                     
|                      | Costs incurred in connection with acquisitions                               |                                                |   | (11,467     | )        |   |   |           |        
|                      |                                                                              |                                                |   |             |          |   |   |           
|                      | Net cash used in investing activities                                        |                                                |   | (158,493    | )        |   |   | (817,548   | )      

 Continued 

3



---



NEXTLINK COMMUNICATIONS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS  (Continued)

(Dollars in thousands)


(Unaudited)


|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |           |         |           | 
|----------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------- | --------- | --------- | - | --------- | ------- | --------- | 
|                                    |                                                                        |                                                                                                                                                              
|                                    |                                                                        | Six Months Ended June 30,                                                                                                                                    
|                                    |                                                                        |                                                                                                                                                              
|                                    |                                                                        | 2000                                                                                                                                                          |                                           | 1999     
|                                    |                                                                        |                                                                                                                                                               |                                           |          
|FINANCING ACTIVITIES:               |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                   
|                                   
|                                   
|                                   
|                                    | Net proceeds from issuance of redeemable preferred stock               |                                                                                                                                                               | $                                         | 849,046   |           |           | $ |          |        
|                                   
|                                   
|                                   
|                                   
|                                    | Repayment of capital leases and other obligations                      |                                                                                                                                                               |                                           | (3,129    | )         |           |   | (1,534    | )      
|                                   
|                                   
|                                   
|                                   
|                                    | Proceeds from issuance of common stock through employee benefit
	plans |                                                                                                                                                               |                                           | 42,569    |           |           |   | 12,459    |        
|                                   
|                                   
|                                   
|                                   
|                                    | Dividends paid on convertible preferred stock                          |                                                                                                                                                               |                                           | (32,708   | )         |           |   | (6,500    | )      
|                                   
|                                   
|                                   
|                                   
|                                    | Proceeds from issuance of senior notes, net of discount                |                                                                                                                                                               |                                           |          |           |           |   | 1,000,000 |        
|                                   
|                                   
|                                   
|                                   
|                                    | Proceeds from sale of common stock                                     |                                                                                                                                                               |                                           |          |           |           |   | 311,183   |        
|                                   
|                                   
|                                   
|                                   
|                                    | Costs incurred in connection with financing                            |                                                                                                                                                               |                                           | (17,100   | )         |           |   | (20,000   | )      
|                                   
|                                   
|                                   
|                                   
|                                    | Proceeds from draws on credit facility                                 |                                                                                                                                                               |                                           | 375,000   |           |           |   |          |        
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    |                                                                        |                                                                                                                                                               | Net cash provided by financing activities |           |           | 1,213,678 |   |           |         | 1,295,608 | 
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    | Net increase in cash and cash equivalents                              |                                                                                                                                                               |                                           | 892,604   |           |           |   | 292,038   |        
|                                   
|                                   
|                                   
|                                   
|                                    | Cash and cash equivalents, beginning of period                         |                                                                                                                                                               |                                           | 868,463   |           |           |   | 319,496   |        
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    | Cash and cash equivalents, end of period                               |                                                                                                                                                               | $                                         | 1,761,067 |           |           | $ | 611,534   |        
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|SUPPLEMENTAL CASH FLOW DISCLOSURES: |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                   
|                                   
|                                   
|                                   
|                                    | Noncash financing and investing activities:                            |                                                                                                                                                               |                                           |           |           |           |   |           |        
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                        | Redeemable preferred stock dividends, paid in redeemable
	preferred shares                                                                                    |                                           | $         | 30,262    |           |   | $         | 25,836  |          
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    |                                                                        | Accrued redeemable preferred stock dividends, payable in
	redeemable preferred shares and accretion of preferred stock
	redemption obligation and issue costs |                                           | $         | 2,230     |           |   | $         | 1,318   |          
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    |                                                                        | Common stock issued in acquisitions                                                                                                                           |                                           | $         | 2,868,287 |           |   | $         | 350,648 |          
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          
|                                    |                                                                        |                                                                                                                                                               | Cash paid for interest                    |           | $         | 158,921   |   |           | $       | 85,211    | 
|                                    |                                                                        |                                                                                                                                                               |                                           |           |           |           |   |          

See accompanying notes to unaudited interim consolidated
financial statements.

4



---



PART II.  OTHER INFORMATION

NEXTLINK COMMUNICATIONS, INC.



NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


1.  Basis of Presentation

The consolidated financial statements include the accounts of
NEXTLINK Communications, Inc., a Delaware corporation, and
its majority-owned subsidiaries (together with its predecessors,
referred to, collectively, as the Company). The Company, through
predecessor entities, was formed in September 1994 and, through
its subsidiaries, provides competitive local, long distance and
enhanced telecommunications and data transmission and related
services in selected markets in the United States. The Company is
 majority controlled by Craig O. McCaw through Eagle River
Investments, LLC, an entity controlled by Mr. McCaw,
and Mr. McCaws other personal holdings of the
Companys Class A and B common stock.

The Companys financial statements include 100% of the
assets, liabilities and results of operations of subsidiaries of
which the Company has control. The Companys investments in
unconsolidated companies in which it has a less than majority
interest but exercises significant influence are accounted for on
 the equity method and are included in other assets. Investments
in entities in which the Company has no significant influence are
 accounted for by the cost method and are also included in other
assets. All significant intercompany accounts and transactions
have been eliminated.

The interim financial statements are unaudited and have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements
prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted
pursuant to such rules and regulations. These condensed
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes
thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 1999, as
filed with the Securities and Exchange Commission on
March 30, 2000.

The financial information included herein reflects all
adjustments (consisting only of normal recurring adjustments)
which, in the opinion of management, are necessary for a fair
presentation of the results for interim periods. The results of
operations for the three-month and six-month periods ended
June 30, 2000 are not necessarily indicative of the results
to be expected for the full year.

On June 15, 2000, the Company affected a two-for-one stock
split in the form of a 100% stock dividend to holders of its
common stock as of the June 1, 2000 record date. Share and
per share data has been adjusted to reflect the stock dividend.

2.  Significant Transactions

On June 16, 2000, the Company acquired Craig O.
McCaws 50% interest in LHP, L.L.C. which owns 100% of
INTERNEXT, L.L.C., in exchange for approximately
6.8 million shares of the Companys Class A common
 stock and the assumption of $9.9 million in liabilities. As
 a result of the transaction, the Company now owns 100% of
INTERNEXT L.L.C., which owns exclusive rights to multiple
dark fibers and empty conduits in the
16,000 mile, 50 city North American inter-city broadband
network that is currently being constructed. The transaction was
accounted for as a reorganization of entities under common
control and, accordingly, was recorded by the Company at
Mr. McCaws historical cost.

On June 16, 2000, the Company merged with Concentric Network
 Corporation (Concentric), a provider of high-speed digital
subscriber line, or DSL, web hosting, e-commerce, and other
Internet and data transmission services. In the merger (the
Concentric merger), the Company issued shares of the
Companys Class A common stock and assumed liabilities
of Concentric. The aggregate value of the common stock and the
assumed liabilities was approximately $3.4 billion.

The Concentric merger was accounted for using the purchase method
 of accounting. The consideration and preliminary purchase price
allocation was as follows (in thousands):

5



---



|                                          |  |   |           | 
|----------------------------------------- |  | - | --------- | 
|                                         
|                                         
|                                         
|                                         
|Stock issued                              |  | $ | 2,542,356 | 
|                                         
|                                         
|                                         
|                                         
|Liabilities, warrants and options assumed |  |   | 878,729   | 
|                                          |  |   |           | 
|Preliminary consideration                 |  | $ | 3,421,085 | 
|                                          |  |   |           | 
|In-process technology                     |  |   | 36,166    | 
|                                         
|                                         
|                                         
|                                         
|Fair value of intangible assets acquired  |  |   | 246,234   | 
|                                         
|                                         
|                                         
|                                         
|Fair value of tangible assets             |  |   | 331,777   | 
|                                         
|                                         
|                                         
|                                         
|Preliminary goodwill                      |  |   | 2,806,908 | 
|                                          |  |   |           | 
|                                          |  | $ | 3,421,085 | 
|                                          |  |   |           | 

As a result of the Concentric merger, each issued and outstanding
 share of Concentric common stock was converted into
1.2868 shares of the Companys Class A common
stock. As a result, approximately 68 million shares of the
Companys Class A common stock were issued to
Concentric common stockholders. The Company assumed all
obligations under Concentrics $150 million of
12 3/4% senior notes due 2007 outstanding at the time
of the merger. The 12 3/4% senior notes rank pari passu
 with the Companys other outstanding senior notes.
Additionally, outstanding shares of Concentrics preferred
stock were converted into 195,079 shares of the
Companys 13 1/2% Series E senior redeemable
exchangeable preferred stock due 2010, and 53,296 shares of
the Companys 7% Series F convertible redeemable
preferred stock due 2010. The 7% preferred stock is convertible
into an aggregate of 1.7 million shares of the
Companys Class A common stock.

In connection with the Concentric merger, outstanding warrants to
 purchase Concentric common stock were automatically converted
into warrants to acquire shares of the Companys
Class A common stock based on the 1.2868 exchange ratio
applicable to the Concentric common stock. Also, the Company
assumed certain Concentric employee stock option and other
benefit plans. As a result of the Concentric merger, holders of
Concentric options and warrants outstanding at the time of the
merger had the right to acquire approximately 17.6 million
shares of the Companys Class A common stock in the
aggregate.

The results of operations of Concentric have been included in the
 accompanying condensed consolidated statements of operations of
the Company from June 16, 2000, the date of acquisition. The
 accompanying condensed consolidated financial statements also
reflect the allocation of the purchase price, which is subject to
 adjustment. The preliminary goodwill of $2.8 billion is
being amortized on a straight line basis over five years. Other
acquired intangible assets which include developed technology,
customer lists, work force and trade names are being amortized on
 a straight line basis over four years.

Of the $3.4 billion purchase price, $36.2 million was
allocated to in-process technology. The Company retained
professional appraisal consultants to assist the Company with the
 assessment and allocation of a portion of the purchase price to
the in-process technology. These allocations represent the
estimated fair value based on risk-adjusted future cash flows
related to the incomplete projects. At the date of the Concentric
 merger, the development of these projects had not yet reached
technological feasibility and the technology had no alternative
future uses. As such, the entire $36.2 million of in-process
 technology acquired was expensed as of the acquisition date.

The pro forma operating results of the Company and Concentric for
 the six months ended June 30, 2000 and 1999 have been
prepared assuming the merger occurred on January 1, 2000 and
 January 1, 1999, respectively (dollars in thousands).

|                                           |  |                  |          |                  |  |   |          |  
|------------------------------------------ |  | ---------------- | -------- | ---------------- |  | - | -------- | -
|                                           |  | Six Months Ended |          | Six Months Ended
|                                           |  | June 30, 2000    |          | June 30, 1999   
|                                           |  |                  |          |                 
|Pro forma revenue                          |  | $                | 352,882  |                  |  | $ | 172,335  |  
|                                          
|                                          
|                                          
|                                          
|Pro forma net loss                         |  | $                | (568,060 | )                |  | $ | (562,525 | )
|                                          
|                                          
|                                          
|                                          
|Pro forma loss applicable to common shares |  | $                | (1.62    | )                |  | $ | (1.86    | )

The pro forma results do not purport to represent what the
Companys results of operations would have actually been had
 the merger occurred on the date indicated and are not indicative
 of future results.

6



---



3.  Long Term Debt Financing

In February 2000, the Company and certain of its subsidiaries, as
 guarantors, entered into a $1.0 billion secured credit
facility (the facility) with various lenders. The facility is
comprised of a $387.5 million senior secured multi-draw term
 loan A, a $225.0 million senior secured term
loan B, and a $387.5 million revolving credit facility.
 At closing, the Company borrowed $150.0 million of the term
 loan A and the entire $225.0 million of the term
loan B. As of June 30, 2000, no additional borrowings
have been made under the facility.

The security for the facility consists of all of the assets
purchased with the proceeds of the facility, the stock of certain
 of the Companys direct subsidiaries, all assets of the
Company and up to $125.0 million of its guaranteed debt, and
 all assets of certain of the Companys subsidiaries.

Amounts drawn under the facility will bear interest, at the
option of the Company, at an alternate base rate or
reserve-adjusted LIBOR plus, in each case, applicable margins.
Initially, the applicable margins for the term loan A and
the revolving credit facility are 175 basis points over the
alternate base rate and 275 basis points over LIBOR. After
June 30, 2003, the applicable margins for the term
loan A and the revolving credit facility range from
62 1/2 to 150 basis points over the alternate base rate
 and from 162 1/2 to 250 basis points over LIBOR, based
 on the ratio of the Companys consolidated total debt to
annualized consolidated EBITDA. The applicable margin for the
term loan B is fixed at 250 basis points over the
alternate base rate and 350 basis points over LIBOR.
Specific rates are determined by actual borrowings under each
facility. Interest on the term loans and the revolving credit
facility is payable on the earlier of the last day of each
interest period, or each successive date three months after the
first day of such interest period.

The term loan A and the revolving credit facility mature on
December 31, 2006, and the term loan B matures on
June 30, 2007. In each case, the maturity dates are subject
to acceleration to October 31, 2005 if the Company has not
refinanced its 12 1/2% Senior Notes due 2006 by
April 15, 2005. The term loans A and B and the
revolving credit facility provide for automatic and permanent
quarterly reductions of the amount available for borrowing under
those facilities, beginning on March 31, 2004. The term
loan B contains nominal amortization provisions beginning
March 31, 2004 until maturity.

The facility contains certain covenants, which, among other
things, limit additional indebtedness, certain investments and
other transactions, and dividend payments.

4.  Reclassifications

Certain reclassifications have been made to prior period amounts
in order to conform to the current presentation.

5.  Reportable Segments

The Company has three reportable segments as defined by SFAS
No. 131, Disclosures about Segments of an Enterprise
and Related Information: a switched voice telecommunication
 services segment, an interactive voice response, or IVR,
services segment, and as a result of the Concentric merger, a
data services segment. The switched voice telecommunications
services segment is the Companys largest segment and
includes operations relating to the Companys bundled local
and long distance switched services, dedicated services, shared
tenant services, and long distance services. These services have
similar network operations and technology requirements and are
sold through similar sales channels to a similar targeted
customer base. Therefore, the Company manages these services as a
 single segment that is divided into geographic profit centers,
or markets, within the United States. The Companys IVR
services segment manages an IVR platform that is reported as a
separate segment due to differences in technology requirements,
sales and marketing strategy, and targeted customer base. The
Companys data services include Internet access, high speed
digital subscriber line (DSL) access, web hosting and
 e-commerce, as well as customized Virtual Private Network
(VPN) and data center services. The Company currently
 manages its data services as a single profit center, reported as
 a separate segment due to differences in technology and
operating requirements. There are no significant inter-segment
transactions.

7



---



The Companys segments contributed the following percentages
 to the Companys total revenue and net loss. Data services
include results from operations for Concentric for the period
following the completion of the merger on June 16, 2000:

|                            |                                         |                |  |                |   |      |  |      |   |  |  |      |   |  |  |      |  
|--------------------------- | --------------------------------------- | -------------- |  | -------------- | - | ---- |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                            |                                         |                |  |               
|                            |                                         | Three Months   |  | Six Months    
|                            |                                         | Ended June 30, |  | Ended June 30,
|                            |                                         |                |  |               
|                            |                                         | 2000           |  | 1999           |   | 2000 |  | 1999
|                            |                                         |                |  |                |   |      |  |     
|Voice Services and other:   |                                         |                |  |                |   |      |  |      |   |  |  |      |   |  |  |     
|                           
|                           
|                           
|                           
|                            | Revenue                                 |                |  | 87.7           | % |      |  | 92.9 | % |  |  | 90.8 | % |  |  | 91.7 | %
|                           
|                           
|                           
|                           
|                            | Net loss                                |                |  | 96.5           | % |      |  | 98.6 | % |  |  | 95.4 | % |  |  | 98.1 | %
|                           
|                           
|                           
|                           
|Data Services:              |                                         |                |  |                |   |      |  |      |   |  |  |      |   |  |  |     
|                           
|                           
|                           
|                           
|                            | Revenue                                 |                |  | 7.6            | % |      |  |     |   |  |  | 4.3  | % |  |  |     |  
|                           
|                           
|                           
|                           
|                            | Net loss                                |                |  | 2.5            | % |      |  |     |   |  |  | 3.0  | % |  |  |     |  
|                           
|                           
|                           
|                           
|Interactive Voice Response: |                                         |                |  |                |   |      |  |      |   |  |  |      |   |  |  |     
|                           
|                           
|                           
|                           
|                            | Revenue                                 |                |  | 4.7            | % |      |  | 7.1  | % |  |  | 4.9  | % |  |  | 8.3  | %
|                           
|                           
|                           
|                           
|                            | Net loss (excluding corporate overhead) |                |  | 1.0            | % |      |  | 1.4  | % |  |  | 1.6  | % |  |  | 1.9  | %

6.  Comprehensive Income

Comprehensive income includes the Companys net income, as
well as changes in equity from other sources. The following table
 reflects the Companys calculation of comprehensive income
for the three and six-month periods ended June 30, 2000 and
1999 (in thousands):

|                                                     |                                                                                                   |                    |          |                  |   |      |          |        |  |   |          |          |   |   |          |         | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------ | -------- | ---------------- | - | ---- | -------- | ------ |  | - | -------- | -------- | - | - | -------- | ------- | 
|                                                     |                                                                                                   |                    |          |                 
|                                                     |                                                                                                   | Three Months Ended |          | Six Months Ended
|                                                     |                                                                                                   | June 30,           |          | June 30,        
|                                                     |                                                                                                   |                    |          |                 
|                                                     |                                                                                                   | 2000               |          | 1999             |   | 2000 |          | 1999  
|                                                     |                                                                                                   |                    |          |                  |   |      |          |       
|Loss applicable to common stockholders               |                                                                                                   | $                  | (290,562 | )                |   | $    | (139,819 | )      |  | $ | (280,754 | )        |   | $ | (258,705 | )      
|                                                    
|                                                    
|                                                    
|                                                    
|Other comprehensive income (loss):                   |                                                                                                   |                    |          |                  |   |      |          |        |  |   |          |          |   |   |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Unrealized holding gains (losses) and foreign currency
	translation adjustments during the period |                    |          | (9,096           | ) |      |          | 28,454 |  |   |          | 102,049  |   |   |          | 148,296 | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Less: Realized gains transferred to current period earnings                                       |                    |          |                 |   |      |          |       |  |   |          | (258,023 | ) |   |          |        | 
|                                                     |                                                                                                   |                    |          |                  |   |      |          |        |  |   |          |          |   |   |          |        
|Other comprehensive (loss) income                    |                                                                                                   |                    | (9,096   | )                |   |      | 28,454   |        |  |   | (155,974 | )        |   |   | 148,296  |        
|                                                    
|                                                    
|                                                    
|                                                    
|Comprehensive loss applicable to common stockholders |                                                                                                   | $                  | (299,658 | )                |   | $    | (111,365 | )      |  | $ | (436,728 | )        |   | $ | (110,409 | )      
|                                                     |                                                                                                   |                    |          |                  |   |      |          |        |  |   |          |          |   |   |          |        

The Companys changes in other comprehensive income
(loss), includes unrealized gains and losses on
available-for-sale investments and, for the three month period
ending June 30, 2000, it also includes foreign currency
translation adjustments relating to Concentrics foreign
operations from the date of the Concentric merger. Realized gains
 transferred to current period earnings in the six month period
ending June 30, 2000, relate to the sale of an equity
investment.

8



---



7.  Redeemable Preferred Stock

Shares of issued and outstanding preferred stock, redeemable in
amounts equal to their respective aggregate liquidation
preferences, are summarized in the table below (dollars in
thousands):

|                                                                            |       |                                   |           |                                  |  |               |           |                   |  |   |         |           |  |   |         |         | 
|--------------------------------------------------------------------------- | ----- | --------------------------------- | --------- | -------------------------------- |  | ------------- | --------- | ----------------- |  | - | ------- | --------- |  | - | ------- | ------- | 
|                                                                            |       |                                   |           |                                  |  |              
|                                                                            |       |                                   |           | Aggregate Liquidation Preference
|                                                                            |       | Shares Issued & Outstanding as of |           | as of                           
|                                                                            |       |                                   |           |                                 
|                                                                            |       | June 30, 2000                     |           | December 31, 1999                |  | June 30, 2000 |           | December 31, 1999
|                                                                            |       |                                   |           |                                  |  |               |           |                  
|14% Series A Senior Exchangeable Redeemable Preferred
	Shares(1)            |       |                                   | 9,125,809 |                                  |  |               | 8,324,796 |                   |  | $ | 456,290 |           |  | $ | 425,952 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|6 1/2% Series B Cumulative Convertible Preferred
	Stock(2)                  |       |                                   | 2,122,795 |                                  |  |               | 4,000,000 |                   |  | $ | 106,140 |           |  | $ | 200,000 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Series C Cumulative Convertible Participating Preferred
	Stock(3)           |       |                                   | 584,375   |                                  |  |               |          |                   |  | $ | 584,375 |           |  |   |        |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Series D Convertible Participating Preferred Stock(3)                       |       |                                   | 265,625   |                                  |  |               |          |                   |  | $ | 265,625 |           |  |   |        |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|13 1/2 Series E Senior Redeemable Exchangeable
	Preferred Stock Due 2010(4) |       |                                   | 195,079   |                                  |  |               |          |                   |  | $ | 197,274 |           |  |   |        |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|7% Series F Convertible Redeemable Preferred Stock Due
	2010(5)             |       |                                   | 53,296    |                                  |  |               |          |                   |  | $ | 53,607  |           |  |   |        |        
|                                                                            |       |                                   |           |                                  |  |               |           |                   |  |   |         |           |  |   |         |        
|                                                                            | Total |                                   |           | 12,346,979                       |  |               |           | 12,324,796        |  |   | $       | 1,663,311 |  |   | $       | 625,952 | 
|                                                                            |       |                                   |           |                                  |  |               |           |                   |  |   |         |           |  |   |         |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company is required to redeem all of the Series A shares
	 outstanding on February 1, 2009 at a redemption price equal
	 to 100% of the liquidation preference thereof, plus accumulated
	and unpaid dividends to the date of redemption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(2) | The Company is required to redeem all of the Series B shares
	 outstanding on March 31, 2010 at a redemption price equal
	to 100% of the liquidation preference thereof, plus accumulated
	and unpaid dividends to the date of redemption. The Company may
	redeem the Series B shares any time after April 16,
	2006 at a redemption price equal to 100% of the liquidation
	preference. In May 2000, certain holders of the 6 1/2%
	preferred stock converted their shares into approximately
	8.1 million shares of the Companys Class A common
	 stock, based on the then current conversion rate of 4.58 
	shares of Class A common stock for each share of 6 1/2%
	 preferred stock converted, in consideration for a payment by the
	 Company of approximately $4.7 million, which has been
	reported as a preferred stock dividend.                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | The Company may redeem the Series C and Series D shares
	 at any time after the later of January 20, 2005 and the
	date when the Company has redeemed its 12 1/2% Senior
	Notes due 2006 in full. Holders of the Series C and
	Series D shares may require the Company to redeem those
	shares during the 180-day period commencing January 20,
	2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | The Series E shares were issued in the Concentric merger in
	exchange for certain outstanding shares of preferred stock issued
	 by Concentric. The Company may redeem the Series E shares,
	in whole or in part, at any time on or after June 1, 2003,
	at redemption rates (expressed as a percentage of the liquidation
	 preference) commencing with 106.75% on June 1, 2003 and
	declining to 100% on June 1, 2008, plus accumulated and
	unpaid dividends to the date of redemption. In addition, prior to
	 June 1, 2001, the Company may, at its option, redeem up to
	a maximum of 35% of the initially issued Concentric Series B
	 Preferred from the net proceeds of one or more public equity
	offerings or the sale of common stock to a strategic investor.
	The Company is required to redeem the Series E shares at
	their liquidation preference, plus accumulated and unpaid
	dividends on June 1, 2010. On any scheduled dividend payment
	 date, the Company may, at its option, exchange in whole, but not
	 in part, the then outstanding Series E shares for
	13 1/2% senior subordinated debentures due 2010 with a
	principal amount equal to the aggregate liquidation preference of
	 the exchanged Series E shares.
|   
|(5) | The Series F shares were issued in the Concentric merger in
	exchange for certain outstanding shares of preferred stock issued
	 by Concentric. The Company may redeem the Series F shares,
	in whole or in part, at any time on or after June 1, 2003 at
	 redemption rates commencing with 105.125% declining to 100% on
	June 1, 2010. The Company is required to redeem the
	Series F shares at their liquidation preference, plus
	accumulated and unpaid dividends, on September 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

9



---



The Companys authorized capital stock also includes
7,445,000 shares of preferred stock, net of shares
designated as redeemable preferred stock set forth above, as to
which the rights and terms have not yet been designated. The
Company may issue shares of preferred stock in one or more series
 upon authorization by its Board of Directors. Under the
Companys Certificate of Incorporation, the Board of
Directors has the authority to fix the rights and terms,
conversion rights, voting rights, redemption rights and terms,
liquidation preferences and any other rights, preferences,
privileges and restrictions applicable to each series of
preferred stock.

8.  Subsequent Events

In July 2000, the Company sold 268,750 shares of
Series G cumulative convertible participating preferred
stock and 131,250 shares of Series H convertible
participating preferred stock to several Forstmann
Little & Co. investment funds, each with a
liquidation preference of $1,000 per share plus accrued and
unpaid dividends. The sale generated gross proceeds of
$400.0 million and increased Forstmann Littles
investment in the Company to $1.25 billion, including the
$850.0 million of the Companys convertible preferred
stock purchased by Forstmann Little in January 2000. The
Series G and Series H stock are convertible into shares
 of the Companys Class A common stock at a conversion
rate of $31.625 per share, and provide for a 3.75% annual
dividend that is payable quarterly. The holders may convert the
preferred stock into Class A common stock at any time after
January 20, 2001, and the Company may redeem the preferred
stock at any time after the later of July 6, 2005 and the
date when the Company has redeemed its 12 1/2% Senior
Notes due 2006 in full. Holders of the preferred stock will also
have the option of requiring redemption of the preferred stock
during the 180-day period commencing on July 6, 2010.

10



---



PART I.

FINANCIAL INFORMATION

Item 1(b)  Financial Statements

NEXTLINK Capital, Inc.



BALANCE SHEETS


(Amounts as of June 30, 2000 are unaudited)


|                                                                             |  |          |     |              |  |   |     | 
|---------------------------------------------------------------------------- |  | -------- | --- | ------------ |  | - | --- | 
|                                                                             |  | June 30, |     | December 31,
|                                                                             |  | 2000     |     | 1999        
|                                                                             |  |          |     |             
|ASSETS                                                                      
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Cash in bank                                                                 |  | $        | 100 |              |  | $ | 100 | 
|                                                                             |  |          |     |              |  |   |     | 
|SHAREHOLDERS EQUITY                                                        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Common stock, no par value, 1,000 shares authorized, issued
	and outstanding |  | $        | 100 |              |  | $ | 100 | 
|                                                                             |  |          |     |              |  |   |     | 

NOTES TO BALANCE SHEETS

1.  Description

NEXTLINK Capital, Inc. (NEXTLINK Capital) is a Washington
corporation and a wholly owned subsidiary of NEXTLINK
Communications, Inc. (NEXTLINK). NEXTLINK Capital was formed
 for the sole purpose of obtaining financing from external
sources and is a joint obligor on its and NEXTLINKs
12 1/2% Senior Notes due April 15, 2006. NEXTLINK
Capital was initially funded with a $100 contribution from
NEXTLINK and has had no operations to date. NEXTLINK
Capitals sole source for the repayment of the
12 1/2% Senior Notes will be from the operations of
NEXTLINK. Therefore, these balance sheets should be read in
conjunction with the consolidated financial statements of
NEXTLINK.

2.  Basis of Presentation

The interim financial statements are unaudited and have been
prepared, pursuant to the rules and regulations of the Securities
 and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements
prepared in accordance with accounting principles generally
accepted in the U.S. have been condensed or omitted pursuant
 to such rules and regulations. These condensed consolidated
financial statements should be read in conjunction with NEXTLINK
Capitals audited consolidated financial statements and
notes thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 1999, as
filed with the Securities and Exchange Commission on
March 30, 2000.

11



---





|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
	Condition and Results of Operation

Overview

Since 1996, we have provided high-quality bundled local and long
distance, as well as dedicated voice telecommunications services
to the rapidly growing business market. We believe that
increasing usage of both telephone service and newer data,
application and information services will continue to increase
demand for telecommunications capacity, and for new
telecommunications services and applications. Our acquisition of
Concentric Network Corporation on June 16, 2000 enables us
to offer a complete, single source communications solution to our
 customers by combining our voice and data services with
Concentrics Internet access, web hosting, data center and
application service provider services.

Our acquisition of Concentric has significantly accelerated
implementation of our data services strategy and, in particular,
has significantly enhanced our ability to market Internet access
services utilizing Concentrics status as an ISP with
significant peering arrangements. Our Internet access offerings
now include dedicated access facilities targeted at businesses
that desire single or multipoint high-speed, dedicated
connections to the Internet, at speeds ranging from 56 Kbps
to 45 Mbps. Our Internet access offerings also include DSL
services that include a wide range of dedicated access speeds.

In addition, the acquisition of Concentric enables us to provide
virtual private networks and web hosting services. Virtual
private network, or VPN, services enable our customers to deploy
tailored, Internet Protocol-based mission-critical business
applications for internal enterprise, business-to-business and
business-to-customer data communications while also affording
high-speed access to the Internet. VPN services offer our
customers a secure network on which to communicate and access
information between an organizations geographically
dispersed locations, collaborate with external groups or
individuals, including customers, suppliers, and other business
partners and use the Web to access information on the Internet
and communicate with other Web users.

We also now are able to offer a range of applications hosting
services, including hosting and Web site traffic management
solutions for Internet-centric businesses, and Web hosting,
e-commerce, and streamed media services designed for
small-to-medium sized businesses. Together, these Web hosting
services manage a customers Web-based infrastructure and
operational needs allowing customers to focus on their Web-based
content. In addition, we provide server management tools and
services to completely manage customers servers for them.

To serve our customers broad and expanding
telecommunications needs, we have assembled a unique collection
of high-bandwidth, local and inter-city network assets, both in
North America and Europe. We intend to integrate these assets
with advanced communications technologies and services in order
to become one of the leading global providers of a comprehensive
array of communications services.

To accomplish this, we have:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | built 31 metropolitan and regional broadband fiber optic networks
	 in 19 states, generally focused on the central business
	districts of the cities we serve, and we are continuing to build
	additional networks;                                                                                                                                                                                                                               
|
| |  | become the nations largest holder of fixed wireless
	spectrum by acquiring Federal Communications Commission, or FCC,
	licenses covering 95% of the population of the 30 largest
	U.S. cities, which we will use to extend the reach of our
	networks to additional customers;                                                                                                                                                                   
|
| |  | acquired rights to use unlit fiber optic strands, known as dark
	fiber, and an empty conduit that will allow us to deploy
	additional fiber optic strands in a North American inter-city
	broadband network now being completed that will traverse over
	16,000 miles and to connect more than 50  cities in the
	 United States and Canada, including most of the major
	metropolitan markets that our current and planned local networks
	serve;
|
| |  | announced plans to expand our existing European operations
	through an agreement (in principal) to purchase:                                                                                                                                                                                                                                                                                                                                      



| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | five metropolitan networks with nearly 250 route miles and
	more than 800,000  fiber miles in London, Frankfurt,
	Brussels, Amsterdam and Paris,

12



---





| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | rights to multiple dark fibers, plus an empty conduit, on a
	3,700 mile inter-city network that will connect
	21 cities through five European countries and
|
| |  | transatlantic fiber optic capacity connecting North America and
	Europe, initially at 2.5 Gbps and expanding to 10  Gbps
	 by the end of 2002; and         



| |   |                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | acquired, through a Canadian joint venture, six broadband fixed
	wireless spectrum licenses covering Toronto, Montreal, Vancouver,
	 Ottawa, Edmonton, Calgary and surrounding areas, which the joint
	 venture plans to use, in conjunction with other network assets,
	to offer voice and data services comparable to those offered in
	the U.S.

Our local and inter-city networks employ fiber optic technology,
which uses light waves to transmit signals over cables consisting
 of many glass fiber strands. Fiber optic strands have enough
capacity to carry tens of thousands times more traffic than
traditionally-configured copper wire. In our newer markets, we
install as many as 400 advanced fiber strands in each network,
with built-in capacity for future growth. Our national network
will consist of 24 of the most advanced fiber strands and an
empty conduit through which we can deploy numerous additional
fiber strands. Recent advances in transmission technology,
notably dense wave division multiplexing, or DWDM, have
substantially increased the effective capacity of advanced fiber
strands.

Our goal is to own our networks or control them through the
acquisition of dark fiber, which we believe will enable us to
deliver higher quality and new services at a lower cost, thereby
increasing our operating margins. Ownership of networks or rights
 to dark fiber gives us the flexibility to deploy optical
transmission equipment designed to support a variety of
communications technologies, enabling us to maximize our
networks capacity and performance. For example, we have
begun to install Internet Protocol, or IP, routers, which will
enable us to carry Internet traffic more efficiently and to
provide more data services. We also have been installing
Asynchronous Transfer Mode, or ATM, routers and switches in our
local networks, which will enable us to meet the demands of
large, high-volume customers. This flexibility will allow us to
offer our customers a wide range of technology options to meet
their changing needs and introduce new technologies as they
become available.

Another key component of our strategy is to own or control the
physical connection for the short distance between our
customers facilities and our networks. To make this
connection, today we frequently lease the existing copper
telephone wires from the dominant local telephone company. To
reduce our reliance on these leased connections, we intend to
increase the number of customers connected directly to our
networks. In some cases, we will make this direct connection by
constructing a new fiber optic extension from our network to the
customers premises. In other cases, using our fixed
wireless spectrum, we will deploy a high-bandwidth wireless
connection between an antenna on the roof of the customers
premises and an antenna attached to our fiber rings. These
wireless connections offer high-quality broadband capacity and,
in many cases, cost less than fiber to install. We have deployed
wireless direct connections to our networks in five markets, and
plan to have them deployed in a total of 25 markets by the
end of 2000.

We are also deploying DSL technology to meet the high bandwidth
needs of those customers whose connection to our network remains
over copper wire. DSL technology increases the effective capacity
 of existing copper telephone wires. We are installing our own
DSL equipment to provide these services ourselves, and we also
resell other providers DSL services.



| |                                  
| | ---------------------------------
| | Acquisition of Concentric Network

On June 16, 2000, we consummated the acquisition of
Concentric. In the merger and after giving effect to the
June 15, 2000 two-for-one split, approximately
68 million shares of our Class A common stock were
issued to Concentric common stockholders. In connection with the
Concentric merger, we assumed Concentrics outstanding
warrants and employee stock option and other benefit plans and,
to the extent such warrants and plans provided for the issuance
or purchase of Concentric common stock, they now provide for the
issuance or purchase of shares of our Class A common stock.

In the merger, each issued and outstanding share of preferred
stock of Concentric was converted into a share of a corresponding
 series of our preferred stock, with substantially identical
terms as the corresponding series of preferred stock of
Concentric (giving effect to amendments approved by the holders
of those shares). Additionally, as a result of the merger, we
have assumed the payment obligations and all other covenants
required to be performed or observed by Concentric with respect
to its 12 3/4% senior notes due 2007.

13



---





| |                                                             
| | ------------------------------------------------------------
| | Acquisition of Interest in North American Inter-City Network

Immediately prior to the time the Concentric merger became
effective, Craig O. McCaw contributed 100% of his interest
in LHP to us, in exchange for approximately 6.8 million
shares of our Class A common stock and the assumption of
$9.9 million in liabilities. LHP owns 100% of
INTERNEXT, L.L.C., which owns exclusive interests in
multiple dark fibers and empty conduits in a North
American inter-city telecommunications network currently under
construction. Following the consummation of this exchange, we own
 100% of the LHP equity interests. We granted Mr. McCaw
certain registration rights with respect to the Class A
common stock issued to Mr. McCaw in the exchange.
Mr. McCaw is a member of our board of directors and controls
 Eagle River Investments, L.L.C., our largest stockholder.

Results of Operations

Revenue grew 131.9% to $140.6 million during the second
quarter of 2000 from $60.7 million in the same period in
1999. Year to date revenue of $246.5 million represented a
125.6% increase from $109.2 million for the comparable
period in 1999. Revenue reported consisted of the following
components (in thousands):

|                                 |               |                    |         |         |  |                  |        |        |  |      |       |          |   |   |         |         |  |   |        |         |  |  |       |       |  
|-------------------------------- | ------------- | ------------------ | ------- | ------- |  | ---------------- | ------ | ------ |  | ---- | ----- | -------- | - | - | ------- | ------- |  | - | ------ | ------- |  |  | ----- | ----- | -
|                                 |               |                    |         |         |  |                  |        |       
|                                 |               | Three Months Ended |         |         |  | Six Months Ended |        |       
|                                 |               | June 30,           |         |         |  | June 30,         |        |       
|                                 |               |                    |         |         |  |                  |        |       
|                                 |               | 2000               |         | 1999    |  | % Change         |        | 2000   |  | 1999 |       | % Change
|                                 |               |                    |         |         |  |                  |        |        |  |      |       |         
|Voice services                   |               | $                  | 115,414 |         |  | $                | 47,810 |        |  |      | 141.4 | %        |   | $ | 207,248 |         |  | $ | 82,679 |         |  |  | 150.7 | %    
|                                
|                                
|                                
|                                
|Shared tenant services           |               |                    | 4,171   |         |  |                  | 3,148  |        |  |      | 32.5  | %        |   |   | 8,209   |         |  |   | 6,161  |         |  |  | 33.2  | %    
|                                
|                                
|                                
|                                
|Long distance telephone services |               |                    | 3,839   |         |  |                  | 5,405  |        |  |      | (29.0 | )%       |   |   | 8,317   |         |  |   | 11,344 |         |  |  | (26.7 | )%   
|                                
|                                
|                                
|                                
|Enhanced services                |               |                    | 6,594   |         |  |                  | 4,294  |        |  |      | 53.6  | %        |   |   | 12,093  |         |  |   | 9,059  |         |  |  | 33.5  | %    
|                                
|                                
|                                
|                                
|Data services                    |               |                    | 10,631  |         |  |                  |       |        |  |      |      |          |   |   | 10,631  |         |  |   |       |         |  |  |      |      
|                                 |               |                    |         |         |  |                  |        |        |  |      |       |          |   |   |         |         |  |   |        |         |  |  |       |      
|                                 | Total revenue |                    | $       | 140,649 |  |                  | $      | 60,657 |  |      |       | 131.9    | % |   | $       | 246,498 |  |   | $      | 109,243 |  |  |       | 125.6 | %

Voice services revenue, consisting of bundled local and long
distance, as well as dedicated services, grew 141.4% to
$115.4 million for the second quarter of 2000 from
$47.8 million in the same period of 1999. For the six months
 ended June 30, 2000, voice services revenue grew 150.7% to
$207.3 million from $82.7 million for the comparable
period in 1999. This revenue growth can be attributed primarily
to an increase in customer access lines installed, which was
driven by growth in our existing markets as well as by new
markets launched. At June 30, 2000, access lines in service
totaled 627,162 compared to 284,021 as of June 30, 1999, an
increase of 120.8%. Access line installations grew 78.8% to
106,023 and 81.3% to 199,127 for the three and six months ended
June 30, 2000 compared to 59,308 and 109,839 for the same
periods of 1999.

Through our NEXTLINK One subsidiary, we provide shared tenant
services, including telecommunications management services, to
groups of small and medium-sized businesses located in the same
office building. The increase in revenue was attributable to
growth in the number of buildings serviced and revenue from
equipment sales.

Revenue from our stand-alone long distance telephone services
declined for the three and six-month periods ended June 30,
2000 from the same periods in 1999, due in part to continued
decline in services provided to these customers, as well as the
conversion of those customers onto our local networks, as we
began servicing those customers with our bundled local and long
distance services. We expect this trend to continue in future
periods.

Enhanced services revenue consists of services provided by our
NEXTLINK Interactive subsidiary including interactive voice
response, or IVR, services. IVR is a platform that allows a
consumer to dial into a computer-based system using a toll-free
number and a touch-tone telephone and access a variety of
information by following a customized menu. Simultaneously, a
profile of the caller is left behind for either our use or the
use of our customer. Enhanced services revenue grew for the three
 and six month periods ended June 30, 2000 compared to the
same periods in 1999 primarily due to an increase in demand from
new and existing customers.

Data services, which reflects revenue from Concentric for the
period following the completion of the Concentric merger,
includes virtual private networks, or VPN services, Internet
access services and applications hosting services. VPN services
enable customers to deploy tailored, IP-based business
applications for internal enterprise, business-to-business and
business-to-customer data communications on the private network
while also affording high-speed access to the Internet. Internet
access services include services marketed to enterprise
customers, such as

14



---



dedicated access facilities and DSL services, and residential and
 small business dial-up access services which offers access at
speeds up to 56 kbps across the United States and Canada.
Applications hosting services include sophisticated high-end
hosting and Web site traffic management solutions for
Internet-centric businesses, in addition to Web hosting,
e-commerce and streamed media services designed for
small-to-medium sized businesses.

The table below provides expenses by classification and as a
percentage of revenue:

|                    |                                   |                             |   |                    |  |        |  |         |   |  |   |        |  |  |  |      |  
|------------------- | --------------------------------- | --------------------------- | - | ------------------ |  | ------ |  | ------- | - |  | - | ------ |  |  |  | ---- | -
|                    |                                   |                            
|                    |                                   | Expense Classification as a
|                    |                                   | Percentage of Revenue      
|                    |                                   |                            
|                    |                                   |                             |   |                   
|                    |                                   | Three Months Ended          |   | Three Months Ended
|                    |                                   | June 30, 2000               |   | June 30, 1999     
|                    |                                   |                             |   |                   
|                    |                                   |                             |   | % of               |  |        |  | % of   
|                    |                                   | Amount                      |   | Revenue            |  | Amount |  | Revenue
|                    |                                   |                             |   |                    |  |        |  |        
|                    |                                   |                             |   |                    |  |       
|                    |                                   |                             |   | ($s in thousands)  |  |       
|                   
|                   
|                   
|                   
|Costs and expenses: |                                   |                             |   |                    |  |        |  |         |   |  |   |        |  |  |  |     
|                   
|                   
|                   
|                   
|                    | Operating                         |                             | $ | 96,884             |  |        |  | 68.9    | % |  | $ | 53,368 |  |  |  | 88.0 | %
|                   
|                   
|                   
|                   
|                    | Sales, general and administrative |                             |   | 112,405            |  |        |  | 79.9    | % |  |   | 59,099 |  |  |  | 97.4 | %
|                   
|                   
|                   
|                   
|                    | Stock-based compensation          |                             |   | 17,228             |  |        |  | 12.2    | % |  |   | 1,117  |  |  |  | 1.8  | %
|                   
|                   
|                   
|                   
|                    | Depreciation                      |                             |   | 40,869             |  |        |  | 29.1    | % |  |   | 23,102 |  |  |  | 38.1 | %
|                   
|                   
|                   
|                   
|                    | Amortization                      |                             |   | 35,542             |  |        |  | 25.3    | % |  |   | 4,195  |  |  |  | 6.9  | %

|                    |                                   |                             |   |                   |  |        |  |         |   |  |   |         |  |  |  |       |  
|------------------- | --------------------------------- | --------------------------- | - | ----------------- |  | ------ |  | ------- | - |  | - | ------- |  |  |  | ----- | -
|                    |                                   |                            
|                    |                                   | Expense Classification as a
|                    |                                   | Percentage of Revenue      
|                    |                                   |                            
|                    |                                   |                             |   |                  
|                    |                                   | Six Months Ended            |   | Six Months Ended 
|                    |                                   | June 30, 2000               |   | June 30, 1999    
|                    |                                   |                             |   |                  
|                    |                                   |                             |   | % of              |  |        |  | % of   
|                    |                                   | Amount                      |   | Revenue           |  | Amount |  | Revenue
|                    |                                   |                             |   |                   |  |        |  |        
|                    |                                   |                             |   |                   |  |       
|                    |                                   |                             |   | ($s in thousands) |  |       
|                   
|                   
|                   
|                   
|Costs and expenses: |                                   |                             |   |                   |  |        |  |         |   |  |   |         |  |  |  |      
|                   
|                   
|                   
|                   
|                    | Operating                         |                             | $ | 172,907           |  |        |  | 70.1    | % |  | $ | 97,067  |  |  |  | 88.9  | %
|                   
|                   
|                   
|                   
|                    | Sales, general and administrative |                             |   | 205,370           |  |        |  | 83.3    | % |  |   | 111,433 |  |  |  | 102.0 | %
|                   
|                   
|                   
|                   
|                    | Stock-based compensation          |                             |   | 26,213            |  |        |  | 10.6    | % |  |   | 2,176   |  |  |  | 2.0   | %
|                   
|                   
|                   
|                   
|                    | Depreciation                      |                             |   | 81,252            |  |        |  | 33.0    | % |  |   | 42,139  |  |  |  | 38.6  | %
|                   
|                   
|                   
|                   
|                    | Amortization                      |                             |   | 41,155            |  |        |  | 16.7    | % |  |   | 8,011   |  |  |  | 7.3   | %

Operating expenses consist of costs directly related to providing
 facilities-based network, enhanced communications services, and
include salaries, benefits and related costs of operations and
engineering personnel. Operating expenses increased 81.5% in the
second quarter of 2000 to $96.9 million, an increase of
$43.5 million over the same period in 1999. For the six
months ended June 30, 2000, operating expenses increased
78.1% to $172.9 million from $97.1 million over the
same period in 1999. The increase was attributable to increased
network costs related to provisioning higher volumes of local,
long distance and enhanced communications services, an increase
in employees, and an increase in other related costs primarily to
 expand our switched local and long distance service businesses
in existing and planned markets as well as the inclusion of
Concentric operating expenses from June 16, 2000, the date
the Concentric merger was completed. We expect operating expenses
 to continue to increase in future periods in connection with our
 growth and expansion plans.

Selling, general and administrative, or SG&A, expenses
include salaries, benefits and related personnel costs for
non-operating and non-engineering personnel, facilities expenses,
 sales and marketing, information systems costs, consulting and
legal fees. SG&A increased 90.2% to $112.4 million from
$59.1 million in the second quarter of 1999. For the six
months ended June 30, 2000, SG&A increased 84.3% to
$205.4 million from $111.4 million in the same period
of 1999. Consistent with the cost drivers of our operating
expenses, the increase was primarily due to an increase in the
number of our employees, and other costs associated with the
expansion of our local and long distance service businesses in
our existing and planned markets, as well as the inclusion of
Concentric SG&A expenses from the merger date. We expect
SG&A to continue to increase in future periods in connection
with growth and expansion plans.

Stock-based compensation expense was recorded in connection with
compensatory stock options granted to employees and, in the
second quarter of 2000, includes the cost associated with
restricted stock granted to certain key Concentric officers and
employees in connection with the Concentric merger. Compensation
expense is recognized over the vesting periods of compensatory
stock options based on the excess of the fair value of the stock

15



---



options at the date of grant over the exercise price. Stock-based
 compensation expense increased $16.1 million in the second
quarter of 2000 to $17.2 million relative to
$1.1 million in the second quarter of 1999. For the six
months ended June 30, 2000, stock-based compensation expense
 increased $24.0 million to $26.2 million from
$2.2 million in the same period of 1999. The increase was
due to the issuance of compensatory stock options to senior
executives during the latter half of 1999 and in the first and
second quarter of 2000 and the issuance of $8.0 million of
restricted stock to Concentric employees in association with the
Concentric merger. We expect stock-based compensation expense to
continue to increase due to the potential issuance of additional
performance-based shares of restricted stock to certain
Concentric key officers and employees in accordance with the
terms of the Concentric merger.

Depreciation expense increased 76.9% to $40.9 million from
$23.1 million in the second quarter of 1999. For the six
months ended June 30, 2000, depreciation expense increased
92.8% to $81.3 million from $42.1 million in the same
period of 1999. The increase was primarily due to placement in
service of additional telecommunications network assets,
including switches, fiber optic cable, network electronics and
related equipment and the impact of Concentrics
depreciation expense included from the merger date. We expect
depreciation expense to continue to increase as we expand our
networks and install additional equipment associated with voice
and data technologies. Amortization expense increased
$31.3 million to $35.5 million in the second quarter of
 2000 and $33.1 million to $41.2 million for the
six months ended June 30, 2000 due to amortization of
additional goodwill arising from the Concentric merger.

Interest expense increased 78.7% to $107.3 million from
$60.1 million in the second quarter of 1999. For the six
months ended June 30, 2000, interest expense increased 94.7%
 to $215.7 million from $110.8 million in the same
period of 1999. The increase was primarily due to an increase in
our average outstanding indebtedness over the respective periods,
 resulting, to a large extent, from the issuance of senior notes
in June 1999 and November 1999, a $375.0 million draw on our
 senior secured credit facility in the first quarter of 2000, and
 the inclusion of interest expense associated with
Concentrics senior notes, from the merger date. For more
information, see Liquidity and Capital Resources.

Interest income increased 162.9% to $46.1 million from
$17.5 million in the second quarter of 1999. For the six
months ended June 30, 2000, interest income increased 144.3%
 to $91.1 million from $37.3 million in the same period
 of 1999. The increase in interest income corresponds with the
increase in our cash and investment balances.

We reported a net loss of $258.8 million for the second
quarter of 2000 compared to a net loss of $122.8 million for
 the same quarter of 1999. The increased loss is a result of
increases in costs associated with the expansion of our business.
 For the six months ended June 30, 2000, we reported a net
loss of $215.6 million compared to a net loss of
$225.1 million for the six months ended June 30, 1999.
Increases in costs, as discussed above, for the six months
ended June 30, 2000, were offset by our $226.5 million
gains on investments resulting in lower net loss than for the
comparable period in 1999.

The table below summarizes EBITDA, which is the Companys
operating loss adjusted for stock based compensation,
depreciation, amortization and in-process technology write-offs:

|       |  |                                                     |         |                     |  |                  |       |                  |  |        |         |         |  |        |       |         |  |   |          |   |  |  |       |    |  |   |         |   |  |  |       |   
|------ |  | --------------------------------------------------- | ------- | ------------------- |  | ---------------- | ----- | ---------------- |  | ------ | ------- | ------- |  | ------ | ----- | ------- |  | - | -------- | - |  |  | ----- | -- |  | - | ------- | - |  |  | ----- | --
|       |  |                                                    
|       |  | EBITDA as a Percentage of Revenue ($s in thousands)
|       |  |                                                    
|       |  |                                                     |         |                     |  |                  |       |                 
|       |  | Three Months                                        |         | Three Months        |  | Six Months Ended |       | Six Months Ended
|       |  | Ended June 30, 2000                                 |         | Ended June 30, 1999 |  | June 30, 2000    |       | June 30, 1999   
|       |  |                                                     |         |                     |  |                  |       |                 
|       |  |                                                     |         | % of                |  |                  |       | % of             |  |        |         | % of    |  |        |       | % of   
|       |  | Amount                                              |         | Revenue             |  | Amount           |       | Revenue          |  | Amount |         | Revenue |  | Amount |       | Revenue
|       |  |                                                     |         |                     |  |                  |       |                  |  |        |         |         |  |        |       |        
|EBITDA |  | $                                                   | (68,640 | )                   |  |                  | (48.8 | )%               |  | $      | (51,810 | )       |  |        | (85.4 | )%      |  | $ | (131,781 | ) |  |  | (53.5 | )% |  | $ | (99,257 | ) |  |  | (90.9 | )%

EBITDA is not a generally accepted accounting principle measure
but rather a measure employed by management to view operating
results adjusted for major non-cash items. EBITDA has been
consistently improving as a percentage of revenue due to revenue
growth and the decrease in operating and SG&A as a percentage
 of revenue as indicated above. In absolute dollars, our EBITDA
loss has increased due to business expansion costs as discussed
above.

16



---



The table below provides selected additional key operating data:

|                               |  |                |         |      |  |                |         |         |  |          |       |   |  |  |         |  |  |  |      |  
|------------------------------ |  | -------------- | ------- | ---- |  | -------------- | ------- | ------- |  | -------- | ----- | - |  |  | ------- |  |  |  | ---- | -
|                               |  |                |         |      |  |                |         |        
|                               |  | As of June 30, |         |      |  | As of Dec. 31, |         |        
|                               |  |                |         | Year |  |                |         | 6 month
|                               |  | 2000           |         | 1999 |  | % Change       |         | 1999    |  | % Change
|                               |  |                |         |      |  |                |         |         |  |         
|Operating data(1):             |  |                |         |      |  |                |         |         |  |          |       |   |  |  |         |  |  |  |      |  
|                              
|                              
|                              
|                              
|Route miles(2)                 |  |                | 5,380   |      |  |                | 3,228   |         |  |          | 66.7  | % |  |  | 4,285   |  |  |  | 25.6 | %
|                              
|                              
|                              
|                              
|Fiber miles(3)                 |  |                | 435,992 |      |  |                | 263,559 |         |  |          | 65.4  | % |  |  | 378,200 |  |  |  | 15.3 | %
|                              
|                              
|                              
|                              
|On-net buildings connected(4)  |  |                | 1,738   |      |  |                | 986     |         |  |          | 76.3  | % |  |  | 1,320   |  |  |  | 31.7 | %
|                              
|                              
|                              
|                              
|Off-net buildings connected(5) |  |                | 43,264  |      |  |                | 16,850  |         |  |          | 156.8 | % |  |  | 28,656  |  |  |  | 51.0 | %
|                              
|                              
|                              
|                              
|Access lines in service(6)     |  |                | 627,162 |      |  |                | 284,021 |         |  |          | 120.8 | % |  |  | 428,035 |  |  |  | 46.5 | %
|                              
|                              
|                              
|                              
|Employees(7)                   |  |                | 6,155   |      |  |                | 2,952   |         |  |          | 108.5 | % |  |  | 3,500   |  |  |  | 75.9 | %



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The operating data for all periods presented include the
	statistics of the Las Vegas network, which we manage and in which
	 we have a 40% membership interest.                                                                                                                                                                                                                                                                                                                                                     
|(2) | Route miles refers to the number of operational miles of the
	telecommunications path in which fiber optic cables owned or
	leased by us are installed.                                                                                                                                                                                                                                                                                                                                                              
|(3) | Fiber miles refers to the number of route miles installed along a
	 telecommunications path, multiplied by our estimate of the
	number of fibers along that path.                                                                                                                                                                                                                                                                                                                                                    
|(4) | Represents buildings physically connected to our networks,
	excluding those connected by unbundled incumbent local exchange
	carrier facilities.                                                                                                                                                                                                                                                                                                                                                                     
|(5) | Represents buildings connected to our networks through leased or
	unbundled incumbent carriers facilities.                                                                                                                                                                                                                                                                                                                                                                                                           
|(6) | Represents the number of access lines in service for which we are
	 billing services. We define an access line as a telephone
	connection between a customer purchasing local telephone services
	 and our network. This connection does not include the concept of
	 access line equivalents, or ALEs, and is a one-for-one
	relationship with no multipliers used for trunk ratios, except
	for those trunks over which primary rate interface, or PRI,
	service is provided, which are counted as 23 access lines.
|(7) | Employees as of June 30, 2000 include the combined employee
	base of Concentric and NEXTLINK.                                                                                                                                                                                                                                                                                                                                                                                                                        

Liquidity and Capital Resources

Our business is capital-intensive and, as such, has required and
will continue to require substantial capital investment. We build
 high capacity networks with broad market coverage, a strategy
that initially increases our level of capital expenditures and
operating losses and requires us to make a substantial portion of
 our capital investments before we realize any revenue from them.
 These capital expenditures, together with the associated early
operating expenses, will continue to result in negative cash flow
 unless and until we are able to establish an adequate customer
base. We believe, however, that over the long term this strategy
will enhance our financial performance by increasing the capacity
 of, and traffic flow over, our networks.



| |             
| | ------------
| | Capital Uses

During the first six months of 2000, cash used in operating
activities was $162.6 million, compared to
$186.0 million used in the same period in the prior year.
The decrease was primarily due to the timing of expenditures and
customer receipts.

During the first six months of 2000, cash used in investing
activities was $158.5 million, compared to
$817.5 million used in the same period in the prior year.
Although our investment in property and equipment increased from
$261.2 million for the first six months of 1999 to
$457.5 million for the same period of 2000, it was offset by
 a decline in investments in fixed wireless licenses
year-over-year, from $482.9 million invested in the first
six months of 1999, predominantly in respect of our acquisitions
of the assets of WNP Communications, Inc. and NEXTEL
Communications interest in the NEXTBAND joint venture, to
$33.9 million for the six months ended June 30, 2000.
In addition, cash used in investing activity decreased for the
first six months of 2000 due to the receipt of
$245.1 million from the sale of an equity investment and
$50.8 million of cash acquired in the Concentric merger.

We expect to make substantial capital expenditures in 2000 and
beyond relating to our existing and planned network development
and operations. These expenditures include:



| |   |                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the purchase and installation of switches, routers, servers and
	other data-related equipment and related electronics in existing
	networks, for expansion of existing networks and in networks to
	be constructed or acquired in new markets;

17



---





| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the purchase and installation of fiber optic cable and
	electronics to expand existing networks and develop new networks,
	 including the connection of new buildings;                                                        
| |  | the development of our comprehensive information technology
	platform;                                                                                                                                                        
| |  | the purchase and installation of equipment associated with the
	deployment of fixed wireless services using our fixed wireless
	spectrum;                                                                                     
| |  | funding of the commitments to build our North American inter-city
	 network, our European inter-city and metro networks, and our
	transatlantic capacity, and related expenses we expect to incur
	in building these networks;
| |  | the purchase and installation of equipment associated with
	deployment of DSL and other data services;                                                                                                                        
| |  | the funding of the Wispra Networks Canadian joint venture, of
	which we are a member; and                                                                                                                                     
| |  | the funding of operating losses and working capital.                                                                                                                                                                          

Our strategic plan also calls for expansion into additional
market areas. This expansion will require significant additional
capital for:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | potential acquisitions of businesses or assets;                                               
| |  | design, development and construction of new networks; and                                     
| |  | the funding of operating losses and working capital during the
	start-up phase of each market.

In connection with the Concentric merger and pursuant to the
terms of Concentrics 12  3/4% senior notes, on
July 14, 2000, we made an offer to the note holders to
purchase any outstanding 12 3/4% senior notes for a
purchase price equal to 101% of the principal amount of the
notes, plus accrued and unpaid interest. This offer expires on
August 15, 2000. We will be obligated to pay note holders an
 aggregate of $150.2 million if the entire outstanding
principal amount of the 12  3/4% senior notes is
tendered for purchase prior to the expiration date of the offer.

Acquired Debt and Redeemable Preferred
Stock

In connection with the Concentric merger, we assumed the payment
obligations and all other covenants required to be performed or
observed by Concentric with respect to the $150 million of
Concentrics 12  3/4% senior notes due 2007
outstanding at the time of the merger. The 12 
3/4% senior notes rank pari passu with our other outstanding
 senior notes. With the consent of the holders of
Concentrics 12  3/4% senior notes due 2007, and
in consideration for the payment of a consent fee of
approximately $3.0 million, we conformed certain covenants
contained in the indenture relating to Concentrics senior
notes to corresponding covenants in our predecessor
corporations 10  1/2% senior notes due 2009.

We may redeem the 12  3/4% senior notes, in whole or in
 part, at any time on or after December 15, 2002, at
redemption rates (expressed as a percentage of the principal
amount) commencing with 106.375% on December 15, 2002, and
declining to 100.0% on December 15, 2005, plus accrued and
unpaid interest to the date of redemption.

As a result of the Concentric merger, the 195,079 shares of
Concentrics 13  1/2% senior redeemable
exchangeable preferred stock outstanding at the time of the
merger were converted into an equal number of shares of our
13  1/2% Series E senior redeemable exchangeable
preferred stock, which has substantially identical terms as the
Concentric 13 1/2% preferred stock. With the consent of the
holders of Concentrics 13  1/2% series B
redeemable exchangeable preferred stock due 2010, and in
consideration for the payment of a consent fee of approximately
$3.8 million, we conformed certain covenants contained in
the certificate of designations relating to Concentrics
preferred stock to corresponding covenants in our predecessor
corporations 10  1/2% senior notes due 2009. Each
 share has a liquidation preference of $1,000 per share. The
 Company may redeem the Series E shares, in whole or in
part, at any time on or after June 1, 2003, at redemption
rates (expressed as a percentage of the liquidation preference)
commencing with 106.75% on June 1, 2003 and declining to
100% on June 1, 2008, plus accumulated and unpaid dividends
to the date of redemption. In addition, prior to June 1,
2001, the Company may, at its option, redeem up to a maximum of
35% of the initially issued Concentric Series B Preferred
from the net proceeds of one or more public equity offerings or
the sale of common stock to a strategic investor. The Company is
required to redeem the Series E shares at their liquidation
preference, plus accumulated and unpaid dividends on June 1,
 2010. On any scheduled dividend payment date, the Company may,
at its option, exchange in whole, but not in part, the

18



---



then outstanding Series E shares for
13 1/2% senior subordinated debentures due 2010 with a
principal amount equal to the aggregate liquidation preference of
 the exchanged Series E shares. Dividends on the
13 1/2% preferred stock accrue at a rate of
13 1/2% per annum of the liquidation preference thereof
 and are payable quarterly in arrears. Dividends are payable in
cash, except that on each dividend payment date occurring on or
prior to June 1, 2003, dividends may be paid, at our option,
 by the issuance of additional shares of Series E preferred
stock having an aggregate liquidation preference equal to the
amount of such dividends.

In addition, as a result of the Concentric merger,
53,296 shares of Concentric 7% convertible redeemable
preferred stock outstanding at the time of the merger were
converted into an equal number of shares of our 7% Series F
convertible redeemable preferred stock, which has substantially
identical terms to Concentrics 7% preferred stock. Each
share of 7% preferred stock has a liquidation preference of
$1,000 per share. The Company may redeem the Series F
shares, in whole or in part, at any time on or after June 1,
 2003 at redemption rates commencing with 105.125% declining to
100% on June 1, 2010. The Company is required to redeem the
Series F shares at their liquidation preference, plus
accumulated and unpaid dividends, on September 1, 2010.
Dividends on the 7% preferred stock accrue at the rate of
7% per annum of the liquidation preference thereof and are
payable quarterly in arrears. Dividends are payable in cash,
except that on each dividend payment date dividends may be paid,
at our option, by the issuance of additional shares of
Series F preferred stock having an aggregate liquidation
preference equal to the amount of such dividends. The holder of
shares of Series F preferred stock has the right, at its
option, to convert at any time any shares of Series F
preferred stock into shares of our Class A common stock at
the conversion price of $31.0258.



| |                  
| | -----------------
| | Capital Resources

As of June 30, 2000, we had unrestricted cash and marketable
 securities of $2,785.5 million. During the first six months
 of 2000, cash provided by financing activities was
$1,213.7 million, compared to $1,295.6 million in the
same period in the prior year. We received $849.0 million
net of financing fees, from the issuance of preferred stock to
Forstmann Little & Co. and $375.0 million from
 the draws on credit facility in the first six months of 2000.
During the same period in 1999, we received $1,000.0 million
 from a public offering of senior notes and $311.2 million
for a public offering of our Class A common stock.

Secured Credit Facility.In February 2000, we and certain
of our subsidiaries, as guarantors, entered into a
$1.0 billion Secured Credit Facility (the facility) with
various lenders. The security for the facility consists of all of
 the assets purchased with the proceeds thereof, the stock of
certain of our subsidiaries, all assets of NEXTLINK and, to the
extent of $125.0 million of guaranteed debt, all assets of
certain of our subsidiaries. A portion of the facility is
available to provide working capital and for other general
corporate purposes with the remainder available to provide
financing for the construction, acquisition or improvement of
telecommunication assets. The facility consists of a
$387.5 million multi-draw term loan A, a $225.0 million
 term loan B, and a $387.5 million revolving facility. In
addition, the facility may be increased by up to an additional
$1.0 billion under certain circumstances. At closing, we
borrowed $150.0 million of the term loan A and the entire
$225.0 million of the term loan B. As of June 30,
2000, no additional borrowings had been made under the facility.

The revolving credit facility and the term loan A mature on
December 31, 2006, and the term loan B matures on
June 30, 2007. The maturity date for each of the facilities
may be accelerated to October 31, 2005 unless we have
refinanced our $350 million 12 1/2% Senior Notes
by April 15, 2005. Amounts drawn under the revolving credit
facility and the term loans bear interest, at our option, at the
alternate base rate or reserve-adjusted London Interbank Offered
Rate (LIBOR) plus, in each case, applicable margins.

January Forstmann Little Investment.In December 1999,
several Forstmann Little & Co. investment funds
agreed to invest $850.0 million in NEXTLINK, to be used to
expand our networks and services, introduce new technologies and
fund our business plan. The investment was completed in January
2000. In the transaction, the investors acquired shares of two
series of convertible preferred stock that together are
convertible into Class A common stock at a conversion price
of $31.625 per share and provide for a 3.75% dividend
payable quarterly. The holders may convert the preferred stock
into Class A common stock at any time after January 20,
 2001, and we may redeem the preferred stock at any time after
the later of January 20, 2005 and the date we have redeemed
our 12 1/2% Senior Notes due 2006 in full. Holders of
the preferred stock will also have the option of requiring
redemption of the preferred stock during the 180-day period
commencing January 20, 2010.

July Forstmann Little Investment.In July 2000, Forstmann
Little & Co. invested an additional
$400.0 million in NEXTLINK increasing their total investment
 to $1.25 billion. In the transaction, the investors
acquired two

19



---



series of convertible preferred stock which together are
convertible into shares of our Class A common stock at a
conversion rate of $31.625 per share and provide for a 3.75%
 dividend payable quarterly. The holders may convert the
preferred stock into Class A common stock at any time after
January 20, 2001, and the Company may redeem the preferred
stock at any time after the later of July 6, 2005 and the
date when the Company has redeemed its 12 1/2% Senior
Notes due 2006 in full. Holders of the preferred stock will also
have the option of requiring redemption of the preferred stock
during the 180-day period commencing on July 6, 2010.



| |                     
| | --------------------
| | Liquidity Assessment

We believe that the amounts available under the secured credit
facility, cash and marketable securities on hand at June 30,
 2000, the proceeds of the additional investment by Forstmann
Little in July 2000, and revenues from operations will provide
sufficient funds for us to expand our business as planned and to
fund operating losses until the latter half of 2001. However, the
 amount of future funding requirements will depend on a number of
 factors, including the success of our business, the dates at
which we further expand our network, the types of services we
offer, staffing levels, acquisitions and customer growth, as well
 as other factors that are not within our control including
competitive conditions, government regulatory developments and
capital costs. In the event our plan or assumptions change or
prove to be inaccurate, or available borrowings under the secured
 credit facility, cash and investments on hand and cash generated
 from operations prove to be insufficient to fund our growth in
the manner and at the rate currently anticipated, we may be
required to delay or abandon some or all of our development and
expansion plans or we may be required to seek additional sources
of financing earlier than currently anticipated. In the event we
are required to seek additional financing, there can be no
assurance that such financing will be available on acceptable
terms or at all.

Information Regarding Forward Looking Statements

Some statements and information contained in this report are not
historical facts, but are forward-looking statements,
 as such term is defined in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by the use of forward-looking terminology, such as
believes, expects, plans,
may, will, would,
could, should, or anticipates
 or the negative of these words or other variations of these
words or other comparable words, or by discussions of strategy
that involve risks and uncertainties. Such forward-looking
statements include, but are not limited to, statements regarding:



| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | market development, the number of markets we expect to serve, and
	 the expected number of addressable business lines in such
	markets;                                                                                                                                     
|
| |  | network development, including those with respect to IP and ATM
	network and facilities development and deployment, broadband
	fixed wireless technology, testing and installation, high speed
	technologies such as DSL, and matters relevant to our national
	network; and
|
| |  | liquidity and financial resources, including anticipated capital
	expenditures, funding of capital expenditures and anticipated
	levels of indebtedness.                                                                                                                    

All such forward-looking statements are qualified by the inherent
 risks and uncertainties surrounding expectations generally, and
also may materially differ from our actual experience involving
any one or more of these matters and subject areas. The operation
 and results of our business also may be subject to the effect of
 other risks and uncertainties in addition to the relevant
qualifying factors identified in this report and in the
Risk Factors section of our Annual Report on
Form 10-K for the year ended December 31, 1999, filed
with the Securities and Exchange Commission on March 30,
2000, including, but not limited to:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions in the geographic areas that we are
	targeting for communications services;                               
|
| |  | the ability to achieve and maintain market penetration and
	revenue levels sufficient to provide financial viability to our
	business;
|
| |  | access to sufficient debt or equity capital to meet our operating
	 and financing needs;                                              
|
| |  | the quality and price of similar or comparable communications
	services offered or to be offered by our competitors; and              
|
| |  | future telecommunications-related legislation or regulatory
	actions.                                                                 

20



---



New Accounting Standards

In June 1998, the Financial Accounting Standards Board
(FASB) issued SFAS No. 133 Accounting for
Derivative Instruments and Hedging Activities, which
establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. The
standard was initially proposed to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999,
however the FASB issued SFAS 137 Accounting for
Derivative Instruments and Hedging Activities 
Deferral of the Effective Date of FASB Statement
No. 133, and the effective date of this SFAS has been
deferred until issuance by the FASB. Management believes that the
 adoption of SFAS 133 will not materially impact the
Companys results of operations or financial position.

In December 1999, the Securities and Exchange Commission
(the SEC) issued Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial
Statements (SAB No. 101) that provides
guidance for applying generally accepted accounting principles to
 revenue recognition, presentation, and disclosure in financial
statements. Subsequently, the SEC has amended the implementation
date so that the Company is required to adopt the provisions of
SAB No. 101 in the fourth fiscal quarter of 2000. We are
currently reviewing the impact of SAB No. 101 but we believe
 that the bulletin will not materially impact the Companys
results of operations or financial position.



|        |                                                          
|------- | ---------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosure about Market Risk

We currently have instruments sensitive to market risks relating
to exposure to changing interest rates. As disclosed in the
consolidated financial statements, we had $4,346.6 million
in fixed rate debt and $1,635.7 million in fixed rate
redeemable preferred stock as of June 30, 2000. We do not
have significant cash flow exposure to changing interest rates on
 our long term debt and redeemable preferred stock because the
interest rates are fixed. However, the estimated fair values of
the fixed-rate debt and redeemable preferred stock are subject to
 market risk.

We also maintain an investment portfolio consisting of
U.S. government and other securities with an average
maturity of less than one year. These securities are classified
as available for sale. If interest rates were to
increase or decrease immediately, it could have a material impact
 on the fair value of these financial instruments. However,
changes in interest rates would not likely have a material impact
 on interest earned on our investment portfolio. We do not
currently hedge these interest rate exposures.



PART II.


OTHER INFORMATION




|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

The Company, as successor to Concentric in the Concentric merger,
 is a defendant in a lawsuit filed in New Jersey state court on
November 1, 1999. The complaint seeks statutory damages,
treble damages, and injunctive relief under the Telephone
Consumer Protection Act of 1991 and alleges that, in or about
March and June 1999, 9Net Avenue, Inc. (9Net Avenue),
transmitted unsolicited facsimiles advertising its services. The
suit has been brought as a purported class action on behalf of
all recipients of the allegedly unsolicited faxes. Although
Concentric purchased only the assets of 9Net Avenue, and did not
assume any liabilities related to 9Net Avenues activities
prior to the October 1999 asset purchase, plaintiff contends that
 Concentric succeeded to any liability 9Net Avenue incurred in
connection with the alleged faxes. The Company believes that it
will successfully avoid liability in this case, there can be no
assurance that this litigation will not have a material adverse
impact on its operations. In addition, Concentric has received a
subpoena from the New Jersey Attorney General seeking information
 concerning the alleged transmission of unsolicited facsimile
advertising by 9Net Avenue and additional marketing materials
distributed by 9Net Avenue.



|        |                                          
|------- | -----------------------------------------
|Item 2. | Changes in Securities and Use of Proceeds

The initial public offering (IPO) of our Class A common
 stock took place in October 1997 (File No. 333-32001). The
net proceeds we received from the offering totaled approximately
$226.8 million. As of December 31, 1999, proceeds from
the IPO remain available for future network build out and working
 capital requirements. We have raised additional funding from
debt and additional equity offerings in 1998 and 1999. The
proceeds from these

21



---



recent offerings have been applied first in funding the expansion
 of our network and other working capital requirements.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of
Security Holders



| |                               
| | ------------------------------
| | Annual Meeting of Stockholders

The Company held its annual meeting of shareholders on
May 24, 2000. The following matters were voted upon at the
meeting:

Proposal 1: The following directors were elected by the
holders of Class A and Class B common stock, voting
together as a single class:

|                   |  |           |             |                |  |  |         | 
|------------------ |  | --------- | ----------- | -------------- |  |  | ------- | 
|Nominee            |  | Votes For |             | Votes Withheld
|                   |  |           |             |               
|Daniel F. Akerson  |  |           | 625,600,004 |                |  |  | 153,356 | 
|                  
|                  
|                  
|                  
|Nathaniel A. Davis |  |           | 625,600,261 |                |  |  | 153,099 | 
|                  
|                  
|                  
|                  
|Joseph L. Cole     |  |           | 625,600,361 |                |  |  | 152,999 | 
|                  
|                  
|                  
|                  
|William A. Hoglund |  |           | 625,263,561 |                |  |  | 489,799 | 
|                  
|                  
|                  
|                  
|Nicolas Kauser     |  |           | 625,600,361 |                |  |  | 152,999 | 
|                  
|                  
|                  
|                  
|Craig O. McCaw     |  |           | 625,257,711 |                |  |  | 495,649 | 
|                  
|                  
|                  
|                  
|Sharon L. Nelson   |  |           | 625,600,161 |                |  |  | 153,199 | 
|                  
|                  
|                  
|                  
|Jeffrey S. Raikes  |  |           | 625,257,761 |                |  |  | 495,599 | 
|                  
|                  
|                  
|                  
|Dennis M. Weibling |  |           | 625,263,461 |                |  |  | 489,899 | 

As provided in the terms of the Series C cumulative
convertible participating preferred stock, the holders of the
Series C preferred stock are entitled to elect one director
nominated by the holders of the Series C preferred stock.
The sole holder of Series C preferred stock nominated for
director and cast all of its 8,286,423 votes for Nicholas C.
 Forstmann. As provided in the terms of the Series D
convertible participating preferred stock, the holders of the
Series D preferred stock are entitled to elect one director
nominated by the holders of the Series D preferred stock.
The holders of the Series D preferred stock nominated for
director and cast all 5,152,312 votes for Sandra J.
Horbach.

Proposal 2: The amendment to NEXTLINKs Certificate of
Incorporation to increase the authorized common stock from
460,000,000 to 1,120,000,000 shares, divided into two
classes, 1,000,000,000 shares of Class A common stock
and 120,000,000 shares of Class B common stock, was
approved, as follows:

| |   |                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | by Class A common stock, Series C cumulative
	convertible participating preferred stock and Series D
	convertible participating preferred stock (voting on an
	as-converted to Class A common stock basis), voting together
	 as a single class, with 84,544,993 votes for, 8,618,037 votes
	against, and 32,204 abstentions;
| |  | by Class B common stock, voting as a separate class, with
	546,001,930 votes for, no votes against, and no
	abstentions; and                                                                                                                                                                                                 
| |  | by both classes common stock, Series C preferred stock and
	Series D preferred stock, voting together as a single class,
	 with 630,546,923 votes for, 8,618,037 votes against, and 32,204
	abstentions.                                                                                                                     

Each share of Class A common stock has one vote per share
and each share of Class B common stock has ten votes per
share.



| |                                                   
| | --------------------------------------------------
| | Action by Written Consent of Majority Stockholders

Effective May 24, 2000, our Board of Directors approved an
amendment to the NEXTLINK Communications, Inc. Stock Option
Plan to authorize an additional 10,500,000 shares of our
Class A common stock (21,000,000 after

22



---



giving effect to our June 15, 2000 two-for-one stock split)
to be issued under the plan, increasing the maximum number of
shares authorized for issuance under the plan to 51,500,000
(103,000,000 after giving effect to our June 15, 2000
two-for-one stock split). This amendment also has been approved
by one of our stockholders, Eagle River Investments, L.L.C.,
 pursuant to a written consent in lieu of stockholder meeting
dated May 24, 2000, pursuant to Section 228(a) of the
Delaware General Corporation Law. As of May 24, 2000, Eagle
River held shares of our Class A and Class B common
stock that represent shares with a majority of the total number
of votes attributable to all shares of outstanding common stock
and Series C and Series D preferred stock, the only
outstanding classes of capital stock of NEXTLINK entitled to vote
 on this matter. Because we are a corporation organized under the
 laws of the State of Delaware, our stockholders may take action
by written consent without a meeting. The Board has not solicited
 any proxies or consents from any other stockholders in
connection with this action. The amendments became effective
20 days after June 15, 2000, the date on which we
mailed the information statement to stockholders of NEXTLINK, in
accordance with rules of the Securities and Exchange Commission.



|        |                  
|------- | -----------------
|Item 5. | Other Information

None.



|        |                                 
|------- | --------------------------------
|Item 6. | Exhibits and Reports on Form 8-K

(a)  Exhibits

|               |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |        | Description
|               |        |            
|               | 2.1    |             |  | Amended and Restated Agreement and Plan of Merger, dated as of
	May 10, 2000, by and among Concentric Network Corporation,
	NEXTLINK Communications, Inc., Eagle River
	Investments, L.L.C., Craig O. McCaw and NM Acquisition
	Corp. (Incorporated by reference from Appendix A to the
	Proxy Statement/ Information Statement/ Prospectus, dated
	May 12, 2000, filed as part of Amendment No. 1 to the
	Registration Statement on Form S-4 of NM Acquisition
	Corp. (Commission File No. 333-34974))
|               | 3.1.1  |             |  | Amended and Restated Certificate of Incorporation of NEXTLINK
	Communications, Inc. (f/k/a NM Acquisition Corp.)                                                                                                                                                                                                                                                                                                                                                                                       
|               | 3.1.2  |             |  | Certificate of Amendment of Certificate of Incorporation of
	NEXTLINK Communications, Inc. (f/k/a NM Acquisition
	Corp.)                                                                                                                                                                                                                                                                                                                                                                               
|               | 3.1.3  |             |  | Certificate of Amendment of Certificate of Incorporation of
	NEXTLINK Communications, Inc.                                                                                                                                                                                                                                                                                                                                                                                                             
|               | 3.1.4  |             |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of 14%
	 Series A Senior Exchangeable Redeemable Preferred Shares
	and Qualifications, Limitations and Restrictions Thereof                                                                                                                                                                                                                                                      
|               | 3.1.5  |             |  | Certificate of Designation of Powers, Preferences and Relative,
	Participating, Optional and Other Special Rights of
	6 1/2% Series B Cumulative Convertible Preferred
	Stock and Qualifications, Limitations and Restrictions Thereof                                                                                                                                                                                                                                                                 
|               | 3.1.6  |             |  | Certificate of Designation of Powers, Preferences and Relative,
	Participating, Optional and Other Special Rights of Series C
	 Cumulative Convertible Participating Preferred Stock and
	Qualifications, Limitations and Restrictions Thereof                                                                                                                                                                                                                                                         
|               | 3.1.7  |             |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of
	Series D Convertible Participating Preferred Stock and
	Qualifications, Limitations and Restrictions Thereof                                                                                                                                                                                                                                                                 
|               | 3.1.8  |             |  | Certificate of Designation of Voting Power, Designation
	Preferences and Relative, Participating, Optional and Other
	Special Rights and Qualifications, Limitations and Restrictions
	of 13 1/2% Series E Senior Redeemable Exchangeable
	 Preferred Stock Due 2010                                                                                                                                                                                                                                   
|               | 3.1.9  |             |  | Certificate of Designation of Voting Power, Designation
	Preferences and Relative, Participating, Optional and Other
	Special Rights and Qualifications, Limitations and Restrictions
	of 7% Series F Convertible Redeemable Preferred Stock
	Due 2010                                                                                                                                                                                                                                                 
|               | 3.1.10 |             |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of
	Series G Cumulative Convertible Participating Preferred
	Stock and Qualifications, Limitation and Restrictions Thereof                                                                                                                                                                                                                                                       
|               | 3.1.11 |             |  | Certificate of Designation of the Powers, Preferences and
	Relative, Participating, Optional and Other Special Rights of
	Series H Convertible Participating Preferred Stock and
	Qualifications, Limitation and Restrictions Thereof                                                                                                                                                                                                                                                                  
|               | 3.2    |             |  | Restated By-laws of NEXTLINK Communications, Inc. (f/k/a
	NM Acquisition Corp.)                                                                                                                                                                                                                                                                                                                                                                                                                        

23



---



|               |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |       | Description
|               |       |            
|               | 3.3   |             |  | Articles of Incorporation of NEXTLINK Capital, Inc.
	(Incorporated herein by reference to exhibit 3.3 filed with
	the Registration Statement on Form S-4 of NEXTLINK
	Communications, L.L.C. (the predecessor of NEXTLINK
	Communications, Inc.) and NEXTLINK Capital, Inc.
	(Commission File No. 333-4603))                                                                                                                                                                                                       
|               | 3.4   |             |  | By-laws of NEXTLINK Capital, Inc. (Incorporated herein by
	reference to exhibit 3.4 filed with the Registration
	Statement on Form S-4 of NEXTLINK
	Communications, L.L.C. (the predecessor of NEXTLINK
	Communications, Inc.) and NEXTLINK Capital, Inc.
	(Commission File No. 333-4603))                                                                                                                                                                                                                         
|               | 4.1.1 |             |  | Form of stock certificate of 14% Senior Exchangeable
	Redeemable Preferred Shares (Incorporated herein by reference to
	exhibit 4.4 filed with the Annual Report on Form 10-KSB
	 for the year ended December 31, 1996 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                                                                                                               
|               | 4.1.2 |             |  | Form of stock certificate of Class A common stock
	(Incorporated herein by reference to exhibit 4.4 filed with
	the Registration Statement on Form S-1 of NEXTLINK
	Communications, Inc. (Commission File No. 333-32001))                                                                                                                                                                                                                                                                                          
|               | 4.1.3 |             |  | Form of stock certificate of 6 1/2% Cumulative
	Convertible Preferred Stock (Incorporated herein by reference to
	exhibit 4.1.3 filed with the Annual Report on Form 10-K
	 for the year ended December 31, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                                                                                                                     
|               | 4.1.4 |             |  | Form of stock certificate of Series C Cumulative Convertible
	 Participating Preferred Stock (Incorporated herein by reference
	to exhibit 4.1.4 filed with the Annual Report on
	Form 10-K for the year ended December 31, 1999 of
	NEXTLINK Communications, Inc. and NEXTLINK Capital, 
	Inc.)                                                                                                                                                                                                                   
|               | 4.1.5 |             |  | Form of stock certificate of Series D Convertible
	Participating Preferred Stock (Incorporated herein by reference
	to exhibit 4.1.5 filed with the Annual Report on
	Form 10-K for the year ended December 31, 1999 of
	NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)                                                                                                                                                                                                                                
|               | 4.1.6 |             |  | Form of stock certificate of 13 1/2% Series E
	Senior Redeemable Exchangeable Preferred Stock Due 2010
	(Incorporated herein by reference to exhibit 4.3 filed with
	the Registration Statement on Form S-4 of Concentric Network
	 Corporation, predecessor to NEXTLINK Communications, Inc.
	(Commission File No. 333-58641))                                                                                                                                                                                    
|               | 4.1.7 |             |  | Form of stock certificate of 7% Series F Convertible
	Redeemable Preferred Stock Due 2010                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 4.1.8 |             |  | Form of stock certificate of Series G Cumulative Convertible
	 Participating Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 4.1.9 |             |  | Form of stock certificate of Series H Convertible
	Participating Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               | 4.2.1 |             |  | Indenture, dated as of April 25, 1996, by and among NEXTLINK
	 Communications, Inc., NEXTLINK Capital, Inc. and
	United States Trust Company of New York, as Trustee,
	relating to 12 1/2% Senior Notes due April 15,
	2006, including form of global note (Incorporated herein by
	reference to exhibit 4.1 filed with the Registration Statement on
	 Form S-4 of NEXTLINK Communications, L.L.C. (the
	predecessor of NEXTLINK Communications, Inc.) and NEXTLINK
	Capital, Inc. (Commission File No. 333-4603))
|               | 4.2.2 |             |  | First Supplemental Indenture, dated as of January 31, 1997,
	by and among NEXTLINK Communications, Inc., NEXTLINK
	Communications, L.L.C., NEXTLINK Capital, Inc. and
	United States Trust Company of New York, as Trustee
	(Incorporated herein by reference to exhibit 4.6 filed with
	the Annual Report on Form 10-KSB for the year ended
	December 31, 1996 of NEXTLINK Communications, Inc. and
	NEXTLINK Capital,  Inc.)                                                                                     
|               | 4.2.3 |             |  | Second Supplemental Indenture, dated June 3, 1998, amending
	Indenture dated April 25, 1996, by and among NEXTLINK
	Communications, Inc., NEXTLINK Capital, Inc. and United
	 States Trust Company of New York, as Trustee (Incorporated
	herein by reference to exhibit 4.10 filed with the
	Registration Statement on Form S-4 of NEXTLINK
	Communications, Inc. (Commission File No. 333-53975))                                                                                                                
|               | 4.2.4 |             |  | Third Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated April 25, 1996, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Capital, Inc., NEXTLINK
	Communications, Inc., f/k/a NM Acquisition Corp. and
	successor by merger to the Issuer, and United States Trust
	Company of New York, as Trustee                                                                                                                            
|               | 4.3.1 |             |  | Indenture dated September 25, 1997 between United States
	Trust Company, as Trustee and NEXTLINK Communications, 
	Inc., relating to the 9 5/8% Senior Notes due 2007
	(Incorporated herein by reference to exhibit 4.7 filed with
	the Registration Statement on Form S-3 of NEXTLINK
	Communications, Inc. (Commission File No. 333-77577))                                                                                                                                                                      

24



---



|               |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------- | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |       | Description
|               |       |            
|               | 4.3.2 |             |  | First Supplemental Indenture, dated June 3, 1998, amending
	Indenture dated September 25, 1997, by and between NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as Trustee (Incorporated herein by reference to
	exhibit 4.11 filed with the Registration Statement on
	Form  S-4 of NEXTLINK Communications, Inc.(Commission
	File No.  333-53975))                          
|               | 4.3.3 |             |  | Second Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated September 25, 1997, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc., f/k/a
	NM Acquisition Corp. and successor by merger to the Issuer, and
	United States Trust Company of New York, as Trustee                                       
|               | 4.4.1 |             |  | Indenture, dated March 3, 1998, between United States Trust
	Company, as Trustee and NEXTLINK Communications, Inc.,
	relating to the 9% Senior Notes due 2008 (Incorporated
	herein by reference to exhibit 4.7 filed with the Annual
	Report on Form 10-KSB for the year ended December 31,
	1997 of NEXTLINK Communications, Inc. and NEXTLINK
	Capital,  Inc.)                                         
|               | 4.4.2 |             |  | First Supplemental Indenture, dated June 3, 1998, amending
	Indenture dated March 3, 1998, by and between NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as Trustee (Incorporated herein by reference to
	exhibit 4.12 filed with the Registration Statement on
	Form  S-4 of NEXTLINK Communications, Inc. (Commission
	File No.  333-53975))                              
|               | 4.4.3 |             |  | Second Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated March 3, 1999, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the
	Issuer, and United States Trust Company of New York, as
	Trustee                                           
|               | 4.5.1 |             |  | Indenture, dated April 1, 1998, between United States Trust
	Company, as Trustee and NEXTLINK Communications, Inc.,
	relating to the 9.45% Senior Discount Notes due 2008
	(Incorporated herein by reference to exhibit 4.9 filed with
	the quarterly report on Form 10-Q for the quarterly period
	ended June 30, 1998 of NEXTLINK Communications, Inc.
	and NEXTLINK Capital, Inc.)                     
|               | 4.5.2 |             |  | First Supplemental Indenture, dated June 3, 1998, amending
	Indenture dated April 1, 1998, by and between NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as Trustee (Incorporated herein by reference to
	exhibit 4.13 filed with the Registration Statement on
	Form  S-4 of NEXTLINK Communications, Inc. (Commission
	File No.  333-53975))                              
|               | 4.5.3 |             |  | Second Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated April 1, 1998, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc., f/k/a
	NM Acquisition Corp. and successor by merger to the Issuer,
	and United States Trust Company of New York, as Trustee                                            
|               | 4.6.1 |             |  | Indenture, dated November 12, 1998, by and among NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as trustee relating to the
	10 3/4% Senior Notes due 2008 (Incorporated herein by
	reference to exhibit 4.1 filed with the Registration
	Statement on Form S-4 of NEXTLINK Communications, Inc.
	(Commission File No. 333-71749))                                           
|               | 4.6.2 |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated November 12, 1998, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the Issuer,
	 and United States Trust Company of New York, as Trustee                                        
|               | 4.7.1 |             |  | Indenture, dated June 1, 1999, by and among NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as Trustee, relating to the
	10 3/4% Senior Notes due 2009 (Incorporated herein by
	reference to exhibit 4.16 filed with the quarterly report on
	 Form 10-Q for the quarterly period ended September 30,
	 1999 of NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)   
|               | 4.7.2 |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated June 1, 1999, by and among NEXTLINK
	 Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the
	Issuer, and United States Trust Company of New York, as
	Trustee                                            
|               | 4.8.1 |             |  | Indenture, dated June 1, 1999, by and among NEXTLINK
	Communications Inc. and United States Trust Company of
	Texas, as Trustee, related to the 12 1/4% Senior
	Discount Notes due 2009 (Incorporated herein by reference to
	exhibit  4.17 filed with the quarterly report on
	Form 10-Q for the quarterly period ended September 30,
	1999 of NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)

25



---



|               |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |        | Description
|               |        |            
|               | 4.8.2  |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated June 1, 1999, by and among NEXTLINK
	 Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the
	Issuer, and United States Trust Company of Texas, as Trustee                                                                                             
|               | 4.9.1  |             |  | Indenture, dated November 17, 1999, by and among NEXTLINK
	Communications, Inc. and United States Trust Company of
	New York, as Trustee, relating to the
	10 1/2% Senior Notes due 2009 (Incorporated herein by
	reference to exhibit  4.1(i) filed with the Registration
	Statement on Form S-4 of NEXTLINK Communications, Inc.
	(Commission File No.  333-30388))                                                                                  
|               | 4.9.2  |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated November 17, 1999, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the
	Issuer, and United States Trust Company of New York, as
	Trustee                                                                                     
|               | 4.10.1 |             |  | Indenture, dated November 17, 1999, by and among NEXTLINK
	Communications, Inc. and United States Trust Company of
	Texas, as Trustee, relating to the 12 1/8% Senior
	Discount Notes due 2009 (Incorporated herein by reference to
	exhibit  4.1(ii) filed with the Registration Statement on
	Form S-4 of NEXTLINK Communications, Inc. (Commission
	File No.  333-30388))                                                                           
|               | 4.10.2 |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated November 17, 1999, by and among
	NEXTLINK Communications, Inc., as Issuer and predecessor to
	NM Acquisition Corp., NEXTLINK Communications, Inc.,
	f/k/a NM Acquisition Corp. and successor by merger to the
	Issuer, and United States Trust Company of Texas, as Trustee                                                                                         
|               | 4.11.1 |             |  | Indenture, dated as of December 18, 1997, between Concentric
	 Network Corporation, as Issuer and predecessor to NEXTLINK
	Communications, Inc., and Chase Manhattan Bank and Trust
	Company, National Association, as Trustee (Incorporated herein by
	 reference to exhibit 4.2 filed with the Registration
	Statement on Form S-4 of Concentric Network Corporation,
	predecessor to NEXTLINK Communications, Inc. (Commission
	File No. 333-45055))
|               | 4.11.2 |             |  | First Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated December 18, 1997, by and among
	Concentric Network Corporation (predecessor to NEXTLINK
	Communications, Inc.), as Issuer, and Chase Manhattan Bank
	and Trust Company, National Association, as Trustee                                                                                                                                                           
|               | 4.11.3 |             |  | Second Supplemental Indenture, dated as of June 15, 2000,
	amending Indenture dated December 18, 1997, by and among
	Concentric Network Corporation, as Issuer and predecessor to
	NEXTLINK Communications, Inc., NEXTLINK
	Communications,  Inc., f/k/a NM Acquisition Corp. and
	successor by merger to the Issuer, and Chase Manhattan Bank and
	Trust Company, National Association, as Trustee                                                    
|               | 4.12.1 |             |  | Note and Warrant Purchase Agreement, dated June 19, 1997, by
	 and between Concentric Network Corporation, predecessor to
	NEXTLINK Communications, Inc., and Williams Communications
	Group, Inc. (Incorporated herein by reference to
	exhibit 10.34 filed with the Registration Statement on
	Form S-1 of Concentric Network Corporation (Commission File
	No. 333-27241))                                                                          
|               | 4.12.2 |             |  | Warrant Agreement, dated as of December 18, 1997, between
	Concentric Network Corporation, predecessor to NEXTLINK
	Communications, Inc., and Chase Manhattan Bank and Trust
	Company, National Association, as warrant agent (Incorporated
	herein by reference to exhibit 10.45 filed with the
	Registration Statement on Form S-4 of Concentric Network
	Corporation (Commission File No. 333-45055))                                               
|               | 4.12.3 |             |  | Warrant Registration Rights Agreement, dated as of December 
	 18, 1997, between Concentric Network Corporation, predecessor to
	 NEXTLINK Communications, Inc., and the Initial Purchasers.
	(Incorporated herein by reference to exhibit 10.46 filed
	with the Registration Statement on Form S-4 of Concentric
	Network Corporation (Commission File No. 333-45055))                                                                                
|               | 4.12.4 |             |  | Stock Purchase Agreement by and between Concentric Network
	Corporation, predecessor to NEXTLINK Communications, Inc.,
	and Southwestern Bell Internet Services, Inc., dated
	October 19, 1998 (Incorporated herein by reference to
	exhibit 10.60 filed with the Quarterly Report on
	Form 10-Q for the quarter ended September 30, 1998 of
	Concentric Network Corporation)                                                                          
|               | 4.12.5 |             |  | Common Stock Purchase Warrant, dated June 29, 1999, issued
	to Microsoft Corporation by Concentric Network Corporation,
	predecessor to NEXTLINK Communications, Inc.                                                                                                                                                                                                                                                                                  
|               | 10.1.1 |             |  | Stock Option Plan of NEXTLINK Communications, Inc.                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 10.1.2 |             |  | Employee Stock Purchase Plan of NEXTLINK Communications, 
	Inc.                                                                                                                                                                                                                                                                                                                                                                                        

26



---



|               |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |        | Description
|               |        |            
|               | 10.1.3 |             |  | NEXTLINK Communications, Inc. Change of Control Retention
	Bonus and Severance Pay Plan (Incorporated herein by reference to
	 exhibit 10.3 filed with the Annual Report on Form 10-K
	 for the year ended December 31, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                                                              
|               | 10.1.4 |             |  | 1995 Stock Incentive Plan for Employees and Consultants of
	Concentric Network Corporation (predecessor to NEXTLINK
	Communications, Inc.) (Incorporated herein by reference to
	exhibit 10.4 filed with the Registration Statement on
	Form  S-1 of Concentric Network Corporation (predecessor to
	NEXTLINK Communications, Inc.) (Commission File No. 
	333-27241))                                                                                                  
|               | 10.1.5 |             |  | Amended and Restated 1996 Stock Plan of Concentric Network
	Corporation (predecessor to NEXTLINK Communications, Inc.)
	(Incorporated herein by reference to exhibit 10.5 filed with
	 the Registration Statement on Form S-1 of Concentric
	Network Corporation (predecessor to NEXTLINK
	Communications, Inc.) (Commission File No. 333-27241))                                                                                                                       
|               | 10.1.6 |             |  | 1997 Stock Plan of Concentric Network Corporation (predecessor to
	 NEXTLINK Communications, Inc.) (Incorporated herein by
	reference to exhibit 10.6 filed with the Registration
	Statement on Form S-1 of Concentric Network Corporation
	(predecessor to NEXTLINK Communications, Inc.) (Commission
	File No. 333-27241))                                                                                                                                            
|               | 10.1.7 |             |  | 1999 Non-Statutory Stock Option Plan of Concentric Network
	Corporation (predecessor to NEXTLINK Communications, Inc.)
	(Incorporated herein by reference to exhibit 10.50 filed
	with the Annual Report on Form 10-KA for the year ended
	December 31, 1998 of Concentric Network
	Corporation(predecessor to NEXTLINK Communications, Inc.))                                                                                                                          
|               | 10.2.1 |             |  | Registration Rights Agreement, dated as of January 15, 1997,
	 between NEXTLINK Communications, Inc. and the signatories
	listed therein (Incorporated herein by reference to exhibit 10.4
	filed with the Annual Report on Form 10-KSB for the year
	ended December 31, 1996 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                             
|               | 10.2.2 |             |  | Registration Rights Agreement, dated as of November 4, 1997,
	 between NEXTLINK Communications, Inc. and Wendy P.
	McCaw (Incorporated herein by reference to exhibit 10.5
	filed with the Annual Report on Form 10-K for the year ended
	 December 31, 1999 of NEXTLINK Communications, Inc. and
	 NEXTLINK Capital, Inc.)                                                                                                                                             
|               | 10.2.3 |             |  | Registration Right Agreement, dated as of June 30, 1999,
	between NEXTLINK Communications, Inc. and Craig O.
	McCaw (Incorporated herein by reference to exhibit 10.6
	filed with the Annual Report on Form 10-K for the year ended
	 December 31, 1999 of NEXTLINK Communications, Inc. and
	 NEXTLINK Capital, Inc.)                                                                                                                                                  
|               | 10.2.4 |             |  | Registration Rights Agreement dated as of January 20, 2000,
	between NEXTLINK Communications, Inc. and the purchasers
	listed on the signature pages thereto, relating to Class A
	common stock issuable upon conversion of Series C and D
	convertible preferred stock (Incorporated herein by reference to
	exhibit 10.7 filed with the Annual Report on Form 10-K
	for the year ended December 31, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)
|               | 10.2.5 |             |  | Registration Rights Agreement, dated January 14, 1999,
	between NEXTLINK Communications, Inc. and the Holders
	referred to therein. (Incorporated herein by reference to
	exhibit 10.2 filed with the current report on Form 8-K
	filed on January 19, 1999)                                                                                                                                                                                                            
|               | 10.2.6 |             |  | Registration Right Agreement, dated as of June 16, 2000,
	between NEXTLINK Communications, Inc. (f/k/a NM 
	Acquisition Corp.) and Craig O. McCaw (Incorporated herein
	by reference to exhibit 99.4 filed with the Current Report
	on Form 8-K filed on June 22, 2000 of NEXTLINK
	Communications, Inc.)                                                                                                                                                               
|               | 10.3.1 |             |  | Employment Agreement, effective September 21, 1999, by and
	between Daniel Akerson and NEXTLINK Communications, Inc.
	(Incorporated herein by reference to exhibit 10.11 filed
	with the quarterly report on Form 10-Q for the quarterly
	period ended September 30, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                 
|               | 10.3.2 |             |  | Letter agreement, dated June 9, 1998, between NEXTLINK
	Communications, Inc. and Jan Loichle (Incorporated herein by
	 reference to exhibit 10.10 filed with the Annual Report on
	Form 10-K for the year ended December 31, 1999 of
	NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)                                                                                                                                                                        
|               | 10.3.3 |             |  | Employment Agreement, dated as of January 3, 2000, by and
	between Nathaniel A. Davis and NEXTLINK
	Communications,  Inc. (Incorporated herein by reference to
	exhibit 10.11 filed with the Annual Report on Form 10-K
	 for the year ended December 31, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                            
|               | 10.3.4 |             |  | Employment Agreement, dated as of June 16, 2000, by and
	between Henry R. Nothhaft and NEXTLINK Communications, 
	 Inc. (f/k/a NM Acquisition Corp.)                                                                                                                                                                                                                                                                                                                    

27



---



|               |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------- | ------ | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |        | Description
|               |        |            
|               | 10.4.1 |             |  | Fiber Lease and Innerduct Use Agreement, dated February 23,
	1998, by and between NEXTLINK Communications, Inc. and
	Metromedia Fiber Network, Inc. (Incorporated herein by
	reference to exhibit 10.5 filed with the Annual Report on
	Form 10-KSB for the year ended December 31, 1997 of
	NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)                                                                                                                                                                                                                                                                   
|               | 10.4.2 |             |  | Amendment No. 1 to Fiber Lease and Innerduct Use Agreement,
	dated March 4, 1998, by and between NEXTLINK
	Communications, Inc. and Metromedia Fiber Network, Inc.
	 (Incorporated herein by reference to exhibit 10.6 filed
	with the Annual Report on Form 10-KSB for the year ended
	December 31, 1997 of NEXTLINK Communications, Inc. and
	NEXTLINK Capital, Inc.)                                                                                                                                                                                                                                                   
|               | 10.5.1 |             |  | Cost sharing and IRU Agreement, dated July 18, 1998, between
	 Level 3 Communications, LLC and INTERNEXT LLC.
	(Incorporated herein by reference to exhibit 10.8 filed with
	 the quarterly report on Form 10-Q for the quarterly period
	ended September 30, 1998 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                                                                                                                                                                          
|               | 10.5.2 |             |  | Guaranty Agreement, dated July 18, 1998, between NEXTLINK
	Communications, Inc. and Level 3
	Communications, LLC. (Incorporated herein by reference to
	exhibit 10.7 filed with the quarterly report on
	Form 10-Q for the quarterly period ended September 30,
	1998 of NEXTLINK Communications, Inc. and NEXTLINK
	Capital, Inc.)                                                                                                                                                                                                                                                                                       
|               | 10.5.3 |             |  | Amendment of Guaranty Agreement, dated as of June 16, 2000,
	between NEXTLINK Communications, Inc. (f/k/a NM 
	Acquisition Corp.) and Level 3 Communications, L.L.C.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|               | 10.6.1 |             |  | Credit and Guaranty Agreement, dated as of February 3, 2000,
	 among NEXTLINK Communications, Inc., certain subsidiaries
	of NEXTLINK Communications, Inc., as guarantors, various
	lenders, Goldman Sachs Credit Partners  L.P., as syndication
	 agent, Toronto Dominion (Texas), Inc., as administrative
	agent, Barclays Bank PLC, and The Chase Manhattan Bank, as
	co-documentation agents and Goldman Sachs Credit
	Partners L.P., and TD Securities (USA) Inc., as
	joint lead arrangers (Incorporated herein by reference to
	exhibit 10.1 filed with the current report on Form 8-K
	filed on February 16, 2000)
|               | 21     |             |  | Subsidiaries of the Registrant (Incorporated herein by reference
	to exhibit 21 filed with the Annual Report on Form 10-K
	 for the year ended December 31, 1999 of NEXTLINK
	Communications, Inc. and NEXTLINK Capital, Inc.)                                                                                                                                                                                                                                                                                                                                                                                            
|               | 27     |             |  | Financial Data Schedule                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

(b)  Reports on Form 8-K



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  Current Report on Form 8-K dated June 14,
	2000 reporting under (a) Item 2 that NEXTLINK
	Communications Inc. merged with and into NM Acquisition
	 Corp. and changed its name to NEXTLINK Communications Inc.
	Subsequently, Concentric Network Corporation merged with and into
	 NEXTLINK Communications Inc., and (b) Current Report
	on Form 8-K dated June 14, 2000 reporting under
	Item 2 the merger with Concentric Network Corporation and
	related transactions and under Item 5 that NEXTLINK
	Communications Inc. had entered into an agreement with
	Forstmann Little & Co. under which Forstmann Little
	 agreed to invest an additional $400 million in NEXTLINK
	Communications Inc.
|
| | (2)  Current Report on Form 8-K dated April 28,
	2000 reporting under Item 5 that NEXTLINK
	Communications, Inc. entered into an agreement in principle
	to purchase multiple European metro fiber optic networks, an
	inter-city Pan European fiber optic network and transatlantic
	fiber-optic capacity for $306 million and that NEXTLINK
	Communications, Inc. and Forstmann
	Little & Co. signed a commitment letter under which
	 Forstmann Little will invest, through the purchase of NEXTLINK
	convertible preferred stock, an additional $400 million in
	NEXTLINK Communications, Inc.                                                                                                        

28



---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned thereunto duly authorized.



| |                              
| | -----------------------------
| | NEXTLINK COMMUNICATIONS, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ MARK S. GUNNING

| |                                             
| | --------------------------------------------
| |                                             
| | Mark S. Gunning                             
| | Senior Vice President and                   
| | Chief Financial Officer                     
| | (Principal financial and accounting officer)

Date: August 14, 2000



| |                       
| | ----------------------
| | NEXTLINK CAPITAL, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ MARK S. GUNNING

| |                                             
| | --------------------------------------------
| |                                             
| | Mark S. Gunning                             
| | Senior Vice President and                   
| | Chief Financial Officer                     
| | (Principal financial and accounting officer)

Date: August 14, 2000

29