þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2011 | ||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware (State or Other Jurisdiction of Incorporation or Organization) |
91-1671412 (I.R.S. Employer Identification No.) |
|
1875 Explorer Street, Suite 1000 Reston, Virginia (Address of Principal Executive Offices) |
20190 (Zip Code) |
Large accelerated filer þ
|
Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Number of Shares Outstanding |
||
Title of Class | on May 2, 2011 | |
Common Stock, $0.001 par value per share
|
170,197,413 |
1
Item 1. | Financial Statements. |
March 31, |
December 31, |
|||||||
2011 | 2010 | |||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 2,428,251 | $ | 1,767,501 | ||||
Short-term investments
|
355,730 | 537,539 | ||||||
Accounts receivable, less allowance for doubtful accounts of
$56,247 and $41,282
|
849,875 | 788,000 | ||||||
Handset and accessory inventory
|
227,137 | 227,191 | ||||||
Deferred income taxes, net
|
233,649 | 186,988 | ||||||
Prepaid expenses and other
|
349,954 | 393,658 | ||||||
Total current assets
|
4,444,596 | 3,900,877 | ||||||
Property, plant and equipment, less accumulated depreciation
of $2,218,485 and $2,028,266
|
3,092,450 | 2,960,046 | ||||||
Intangible assets, less accumulated amortization of $139,283
and $130,847
|
449,389 | 433,208 | ||||||
Deferred income taxes, net
|
455,049 | 486,098 | ||||||
Long-term investments
|
254,484 | | ||||||
Other assets
|
371,280 | 410,458 | ||||||
Total assets
|
$ | 9,067,248 | $ | 8,190,687 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 179,796 | $ | 300,030 | ||||
Accrued expenses and other
|
819,827 | 827,253 | ||||||
Deferred revenues
|
167,650 | 158,690 | ||||||
Current portion of long-term debt
|
491,975 | 446,995 | ||||||
Total current liabilities
|
1,659,248 | 1,732,968 | ||||||
Long-term debt
|
3,576,499 | 2,818,423 | ||||||
Deferred revenues
|
20,419 | 20,476 | ||||||
Deferred credits
|
84,708 | 88,068 | ||||||
Other long-term liabilities
|
219,472 | 211,179 | ||||||
Total liabilities
|
5,560,346 | 4,871,114 | ||||||
Commitments and contingencies (Note 4)
|
||||||||
Stockholders equity
|
||||||||
Undesignated preferred stock, par value $0.001,
10,000 shares authorized 2011 and 2010, no
shares issued or outstanding 2011 and 2010
|
| | ||||||
Common stock, par value $0.001, 600,000 shares
authorized 2011 and 2010, 169,729 shares issued
and outstanding 2011, 169,661 shares issued and
outstanding 2010
|
169 | 169 | ||||||
Paid-in capital
|
1,380,014 | 1,364,705 | ||||||
Retained earnings
|
2,112,708 | 2,015,950 | ||||||
Accumulated other comprehensive income (loss)
|
14,011 | (61,251 | ) | |||||
Total stockholders equity
|
3,506,902 | 3,319,573 | ||||||
Total liabilities and stockholders equity
|
$ | 9,067,248 | $ | 8,190,687 | ||||
2
Three Months Ended, |
||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Operating revenues
|
||||||||
Service and other revenues
|
$ | 1,546,328 | $ | 1,217,670 | ||||
Digital handset and accessory revenues
|
76,509 | 65,476 | ||||||
1,622,837 | 1,283,146 | |||||||
Operating expenses
|
||||||||
Cost of service (exclusive of depreciation and amortization
included below)
|
444,877 | 349,525 | ||||||
Cost of digital handsets and accessories
|
211,503 | 172,828 | ||||||
Selling, general and administrative
|
535,557 | 419,426 | ||||||
Depreciation
|
146,796 | 120,740 | ||||||
Amortization
|
9,123 | 7,956 | ||||||
1,347,856 | 1,070,475 | |||||||
Operating income
|
274,981 | 212,671 | ||||||
Other expense
|
||||||||
Interest expense, net
|
(81,159 | ) | (85,726 | ) | ||||
Interest income
|
6,211 | 5,599 | ||||||
Foreign currency transaction gains (losses), net
|
8,494 | (25,083 | ) | |||||
Other expense, net
|
(4,367 | ) | (4,358 | ) | ||||
(70,821 | ) | (109,568 | ) | |||||
Income before income tax provision
|
204,160 | 103,103 | ||||||
Income tax provision
|
(107,402 | ) | (54,641 | ) | ||||
Net income
|
$ | 96,758 | $ | 48,462 | ||||
Net income, per common share, basic
|
$ | 0.57 | $ | 0.29 | ||||
Net income, per common share, diluted
|
$ | 0.56 | $ | 0.28 | ||||
Weighted average number of common shares outstanding,
basic
|
169,692 | 166,817 | ||||||
Weighted average number of common shares outstanding,
diluted
|
172,534 | 170,475 | ||||||
Comprehensive income, net of income taxes
|
||||||||
Foreign currency translation adjustment
|
$ | 74,751 | $ | 28,793 | ||||
Other
|
511 | (1,723 | ) | |||||
Other comprehensive income
|
75,262 | 27,070 | ||||||
Net income
|
96,758 | 48,462 | ||||||
Total comprehensive income
|
$ | 172,020 | $ | 75,532 | ||||
3
Accumulated |
||||||||||||||||||||||||
Other |
Total |
|||||||||||||||||||||||
Common Stock |
Paid-in |
Retained |
Comprehensive |
Stockholders |
||||||||||||||||||||
Shares | Amount | Capital | Earnings | (Loss) Income | Equity | |||||||||||||||||||
Balance, January 1, 2011
|
169,661 | $ | 169 | $ | 1,364,705 | $ | 2,015,950 | $ | (61,251 | ) | $ | 3,319,573 | ||||||||||||
Net income
|
| | | 96,758 | | 96,758 | ||||||||||||||||||
Other comprehensive income, net of taxes
|
| | | | 75,262 | 75,262 | ||||||||||||||||||
Exercise of stock options
|
78 | | 426 | | | 426 | ||||||||||||||||||
Share-based payment expense for equity-based awards
|
| | 14,880 | | | 14,880 | ||||||||||||||||||
Other
|
(10 | ) | | 3 | | | 3 | |||||||||||||||||
Balance, March 31, 2011
|
169,729 | $ | 169 | $ | 1,380,014 | $ | 2,112,708 | $ | 14,011 | $ | 3,506,902 | |||||||||||||
4
2011 | 2010 | |||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 96,758 | $ | 48,462 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||
Amortization of debt discount and financing costs
|
14,900 | 16,287 | ||||||
Depreciation and amortization
|
155,919 | 128,696 | ||||||
Provision for losses on accounts receivable
|
31,827 | 19,594 | ||||||
Foreign currency transaction (gains) losses, net
|
(8,494 | ) | 25,083 | |||||
Share-based payment expense
|
14,880 | 18,150 | ||||||
Other, net
|
1,363 | (11,645 | ) | |||||
Change in assets and liabilities:
|
||||||||
Accounts receivable, gross
|
(76,915 | ) | (39,639 | ) | ||||
Handset and accessory inventory
|
21,262 | 60,399 | ||||||
Prepaid expenses and other, net
|
7,209 | 21,512 | ||||||
Other long-term assets
|
(31,835 | ) | 35,174 | |||||
Accounts payable, accrued expenses and other
|
(22,911 | ) | (124,999 | ) | ||||
Net cash provided by operating activities
|
203,963 | 197,074 | ||||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(226,131 | ) | (156,289 | ) | ||||
Purchase of long-term and short-term investments
|
(696,517 | ) | (315,136 | ) | ||||
Proceeds from sales of short-term investments
|
624,541 | 396,838 | ||||||
Transfers from restricted cash
|
89,100 | | ||||||
Other, net
|
(6,773 | ) | (17,778 | ) | ||||
Net cash used in investing activities
|
(215,780 | ) | (92,365 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of senior notes
|
750,000 | | ||||||
Borrowings under syndicated loan facilities
|
| 60,000 | ||||||
Repayments under syndicated loan facilities and other
transactions
|
(61,693 | ) | (47,262 | ) | ||||
Other, net
|
(12,412 | ) | 16,918 | |||||
Net cash provided by financing activities
|
675,895 | 29,656 | ||||||
Effect of exchange rate changes on cash and cash
equivalents
|
(3,328 | ) | 12,306 | |||||
Net increase in cash and cash equivalents
|
660,750 | 146,671 | ||||||
Cash and cash equivalents, beginning of period
|
1,767,501 | 2,504,064 | ||||||
Cash and cash equivalents, end of period
|
$ | 2,428,251 | $ | 2,650,735 | ||||
5
Note 1. | Basis of Presentation |
March 31, |
December 31, |
|||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Cumulative foreign currency translation adjustment
|
$ | 18,417 | $ | (56,333 | ) | |||
Other
|
(4,406 | ) | (4,918 | ) | ||||
$ | 14,011 | $ | (61,251 | ) | ||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Capital expenditures
|
||||||||
Cash paid for capital expenditures, including capitalized
interest
|
$ | 226,131 | $ | 156,289 | ||||
Change in capital expenditures accrued and unpaid or financed,
including accreted interest capitalized
|
(8,227 | ) | (21,812 | ) | ||||
$ | 217,904 | $ | 134,477 | |||||
Interest costs
|
||||||||
Interest expense, net
|
$ | 81,159 | $ | 85,726 | ||||
Interest capitalized
|
5,180 | 2,238 | ||||||
$ | 86,339 | $ | 87,964 | |||||
6
7
Three Months Ended March 31, 2011 | Three Months Ended March 31, 2010 | |||||||||||||||||||||||
Income |
Shares |
Per Share |
Income |
Shares |
Per Share |
|||||||||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||
Basic net income per common share:
|
||||||||||||||||||||||||
Net income
|
$ | 96,758 | 169,692 | $ | 0.57 | $ | 48,462 | 166,817 | $ | 0.29 | ||||||||||||||
Effect of dilutive securities:
|
||||||||||||||||||||||||
Stock options
|
| 2,492 | | 3,167 | ||||||||||||||||||||
Restricted stock
|
| 350 | | 491 | ||||||||||||||||||||
Convertible notes, net of capitalized interest and taxes
|
| | | | ||||||||||||||||||||
Diluted net income per common share:
|
||||||||||||||||||||||||
Net income on which diluted earnings per share is calculated
|
$ | 96,758 | 172,534 | $ | 0.56 | $ | 48,462 | 170,475 | $ | 0.28 | ||||||||||||||
Note 2. | Fair Value Measurements |
Fair Value Measurements as of |
||||||||||||||||
March 31, 2011 |
Fair Value as of |
|||||||||||||||
Using the Fair Value Hierarchy |
March 31, |
|||||||||||||||
Financial Instruments | Level 1 | Level 2 | Level 3 | 2011 | ||||||||||||
Short-term investments:
|
||||||||||||||||
Available-for-sale
securities Nextel Brazil investments
|
$ | 90,426 | $ | | $ | | $ | 90,426 | ||||||||
8
Fair Value Measurements as of |
||||||||||||||||
December 31, 2010 |
Fair Value as of |
|||||||||||||||
Using the Fair Value Hierarchy |
December 31, |
|||||||||||||||
Financial Instruments | Level 1 | Level 2 | Level 3 | 2010 | ||||||||||||
Short-term investment:
|
||||||||||||||||
Available-for-sale
securities Nextel Brazil investments
|
$ | 50,778 | $ | | $ | | $ | 50,778 | ||||||||
March 31, 2011 | December 31, 2010 | |||||||||||||||
Carrying |
Estimated |
Carrying |
Estimated |
|||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Short-term investments:
|
||||||||||||||||
Held-to-maturity
securities U.S. Treasuries
|
$ | 200,293 | $ | 201,392 | $ | 421,653 | $ | 423,613 | ||||||||
Held-to-maturity
securities corporate bonds
|
65,011 | 65,251 | 65,108 | 65,392 | ||||||||||||
265,304 | 266,643 | 486,761 | 489,005 | |||||||||||||
Long-term investments:
|
||||||||||||||||
Held-to-maturity
securities U.S. Treasuries
|
254,484 | 236,540 | | | ||||||||||||
$ | 519,788 | $ | 503,183 | $ | 486,761 | $ | 489,005 | |||||||||
9
March 31, 2011 | December 31, 2010 | |||||||||||||||
Carrying |
Estimated |
Carrying |
Estimated |
|||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Senior notes
|
$ | 2,030,148 | $ | 2,227,400 | $ | 1,279,524 | $ | 1,428,000 | ||||||||
Convertible notes
|
1,052,909 | 1,101,375 | 1,043,236 | 1,078,000 | ||||||||||||
Syndicated loan facilities
|
432,625 | 430,902 | 458,964 | 457,187 | ||||||||||||
Other
|
255,208 | 256,531 | 193,460 | 195,620 | ||||||||||||
$ | 3,770,890 | $ | 4,016,208 | $ | 2,975,184 | $ | 3,158,807 | |||||||||
Note 3. | Debt |
March 31, |
December 31, |
|||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Senior notes, net
|
$ | 2,030,148 | $ | 1,279,524 | ||||
Convertible notes, net
|
1,052,909 | 1,043,236 | ||||||
Syndicated loan facilities
|
432,625 | 458,964 | ||||||
Tower financing obligations
|
178,742 | 175,932 | ||||||
Capital lease obligations
|
118,842 | 114,303 | ||||||
Brazil import financing
|
154,753 | 128,094 | ||||||
Other
|
100,455 | 65,365 | ||||||
Total debt
|
4,068,474 | 3,265,418 | ||||||
Less: current portion
|
(491,975 | ) | (446,995 | ) | ||||
$ | 3,576,499 | $ | 2,818,423 | |||||
10
Redemption |
||||
Year | Price | |||
2016
|
103.813 | % | ||
2017
|
102.541 | % | ||
2018
|
101.271 | % | ||
2019 and thereafter
|
100.000 | % |
| incur additional indebtedness and issue preferred stock; | |
| create liens or other encumbrances; | |
| place limitations on distributions from some of our subsidiaries; | |
| pay dividends, acquire shares of our capital stock or make investments; | |
| prepay subordinated indebtedness or make other restricted payments; | |
| issue or sell capital stock of some of our subsidiaries; | |
| issue guarantees; | |
| sell or exchange assets; |
11
| enter into transactions with affiliates; and | |
| merge or consolidate with another entity. |
March 31, 2011 | December 31, 2010 | |||||||
3.125% Notes |
3.125% Notes |
|||||||
due 2012 | due 2012 | |||||||
Principal amount of convertible notes
|
$ | 1,100,000 | $ | 1,100,000 | ||||
Unamortized discount on convertible notes
|
47,091 | 56,764 | ||||||
Net carrying amount of convertible notes
|
1,052,909 | 1,043,236 | ||||||
Carrying amount of equity component
|
193,941 | 193,941 |
Three Months Ended March 31, | ||||||||||||
2011 | 2010 | |||||||||||
3.125% Notes |
3.125% Notes |
2.75% Notes |
||||||||||
due 2012 | due 2012 | due 2025 | ||||||||||
Contractual coupon interest
|
$ | 8,594 | $ | 9,375 | $ | 2,406 | ||||||
Amortization of discount on convertible notes
|
9,674 | 9,849 | 3,013 | |||||||||
Interest expense, net
|
$ | 18,268 | $ | 19,224 | $ | 5,419 | ||||||
Effective interest rate on convertible notes
|
7.15 | % | 7.15 | % | 6.45 | % | ||||||
12
Note 4. | Commitments and Contingencies |
Note 5. | Income Taxes |
Unrecognized tax benefits December 31, 2010
|
$ | 102,880 | ||
Additions for current year tax positions
|
747 | |||
Additions for prior year tax positions
|
| |||
Reductions for current year tax positions
|
| |||
Reductions for prior year tax positions
|
(70,653 | ) | ||
Lapse of statute of limitations
|
(1,392 | ) | ||
Settlements with taxing authorities
|
| |||
Foreign currency translation adjustment
|
2,400 | |||
Unrecognized tax benefits March 31, 2011
|
$ | 33,982 | ||
13
14
Note 6. | Segment Reporting |
Corporate |
Intercompany |
|||||||||||||||||||||||||||
Brazil | Mexico | Argentina | Peru | and other | Eliminations | Consolidated | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2011
|
||||||||||||||||||||||||||||
Operating revenues
|
$ | 813,338 | $ | 567,006 | $ | 150,714 | $ | 85,657 | $ | 7,405 | $ | (1,283 | ) | $ | 1,622,837 | |||||||||||||
Segment earnings (losses)
|
$ | 283,001 | $ | 180,347 | $ | 43,951 | $ | 7,178 | $ | (84,697 | ) | $ | 1,120 | $ | 430,900 | |||||||||||||
Less:
|
||||||||||||||||||||||||||||
Depreciation and amortization
|
(155,919 | ) | ||||||||||||||||||||||||||
Foreign currency transaction gains, net
|
8,494 | |||||||||||||||||||||||||||
Interest expense and other, net
|
(79,315 | ) | ||||||||||||||||||||||||||
Income before income tax provision
|
$ | 204,160 | ||||||||||||||||||||||||||
Capital expenditures
|
$ | 97,588 | $ | 37,382 | $ | 12,171 | $ | 22,942 | $ | 47,821 | $ | | $ | 217,904 | ||||||||||||||
Three Months Ended March 31, 2010
|
||||||||||||||||||||||||||||
Operating revenues
|
$ | 563,827 | $ | 509,424 | $ | 132,757 | $ | 72,879 | $ | 4,604 | $ | (345 | ) | $ | 1,283,146 | |||||||||||||
Segment earnings (losses)
|
$ | 176,709 | $ | 184,384 | $ | 36,599 | $ | 4,223 | $ | (60,548 | ) | $ | | $ | 341,367 | |||||||||||||
Less:
|
||||||||||||||||||||||||||||
Depreciation and amortization
|
(128,696 | ) | ||||||||||||||||||||||||||
Foreign currency transaction losses, net
|
(25,083 | ) | ||||||||||||||||||||||||||
Interest expense and other, net
|
(84,485 | ) | ||||||||||||||||||||||||||
Income before income tax provision
|
$ | 103,103 | ||||||||||||||||||||||||||
Capital expenditures
|
$ | 85,092 | $ | 17,173 | $ | 8,815 | $ | 7,994 | $ | 15,403 | $ | | $ | 134,477 | ||||||||||||||
March 31, 2011
|
||||||||||||||||||||||||||||
Identifiable assets
|
$ | 3,151,657 | $ | 2,072,047 | $ | 420,603 | $ | 533,414 | $ | 2,889,814 | $ | (287 | ) | $ | 9,067,248 | |||||||||||||
December 31, 2010
|
||||||||||||||||||||||||||||
Identifiable assets
|
$ | 3,036,106 | $ | 2,019,550 | $ | 393,246 | $ | 556,752 | $ | 2,185,320 | $ | (287 | ) | $ | 8,190,687 | |||||||||||||
15
Note 7. | Condensed Consolidating Financial Statements |
16
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer)(1) | Subsidiaries(2) | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Current assets
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 1,274,659 | $ | 17 | $ | 8,588 | $ | 1,144,987 | $ | | $ | 2,428,251 | ||||||||||||
Short-term investments
|
265,304 | | | 90,426 | | 355,730 | ||||||||||||||||||
Accounts receivable, net
|
| | | 852,287 | (2,412 | ) | 849,875 | |||||||||||||||||
Handset and accessory inventory
|
| | | 227,137 | | 227,137 | ||||||||||||||||||
Deferred income taxes, net
|
| | 4,400 | 233,317 | (4,068 | ) | 233,649 | |||||||||||||||||
Prepaid expenses and other
|
3,889 | | 10,853 | 335,224 | (12 | ) | 349,954 | |||||||||||||||||
Total current assets
|
1,543,852 | 17 | 23,841 | 2,883,378 | (6,492 | ) | 4,444,596 | |||||||||||||||||
Property, plant and equipment, net
|
| | 134,526 | 2,958,211 | (287 | ) | 3,092,450 | |||||||||||||||||
Investments in and advances to affiliates
|
3,205,565 | 3,089,667 | 3,170,922 | | (9,466,154 | ) | | |||||||||||||||||
Intangible assets, net
|
| | | 449,389 | | 449,389 | ||||||||||||||||||
Deferred income taxes, net
|
4,216 | | | 455,049 | (4,216 | ) | 455,049 | |||||||||||||||||
Long-term investments
|
254,484 | | | | | 254,484 | ||||||||||||||||||
Other assets
|
2,387,766 | 3,050,734 | 687,934 | 505,006 | (6,260,160 | ) | 371,280 | |||||||||||||||||
Total assets
|
$ | 7,395,883 | $ | 6,140,418 | $ | 4,017,223 | $ | 7,251,033 | $ | (15,737,309 | ) | $ | 9,067,248 | |||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Current liabilities
|
||||||||||||||||||||||||
Accounts payable
|
$ | 5 | $ | | $ | 516 | $ | 179,275 | $ | | $ | 179,796 | ||||||||||||
Accrued expenses and other
|
646,536 | 142,770 | 1,577,943 | 1,109,318 | (2,656,740 | ) | 819,827 | |||||||||||||||||
Deferred revenues
|
| | | 167,650 | | 167,650 | ||||||||||||||||||
Current portion of long-term debt
|
| | 15,284 | 476,691 | | 491,975 | ||||||||||||||||||
Total current liabilities
|
646,541 | 142,770 | 1,593,743 | 1,932,934 | (2,656,740 | ) | 1,659,248 | |||||||||||||||||
Long-term debt
|
1,052,932 | 2,030,148 | 67,830 | 425,589 | | 3,576,499 | ||||||||||||||||||
Deferred revenues
|
| | | 20,419 | | 20,419 | ||||||||||||||||||
Deferred credits
|
| | 15,537 | 73,387 | (4,216 | ) | 84,708 | |||||||||||||||||
Other long-term liabilities
|
2,189,508 | | 9,922 | 1,627,782 | (3,607,740 | ) | 219,472 | |||||||||||||||||
Total liabilities
|
3,888,981 | 2,172,918 | 1,687,032 | 4,080,111 | (6,268,696 | ) | 5,560,346 | |||||||||||||||||
Total stockholders equity
|
3,506,902 | 3,967,500 | 2,330,191 | 3,170,922 | (9,468,613 | ) | 3,506,902 | |||||||||||||||||
Total liabilities and stockholders equity
|
$ | 7,395,883 | $ | 6,140,418 | $ | 4,017,223 | $ | 7,251,033 | $ | (15,737,309 | ) | $ | 9,067,248 | |||||||||||
(1) | NII Capital Corp. is the issuer of our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019. | |
(2) | Represents our subsidiaries that have provided guarantees of the obligations of NII Capital Corp. under our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% notes due 2019. |
17
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer) | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Current assets
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 548,197 | $ | 28 | $ | 122,186 | $ | 1,097,090 | $ | | $ | 1,767,501 | ||||||||||||
Short-term investments
|
486,761 | | | 50,778 | | 537,539 | ||||||||||||||||||
Accounts receivable, net
|
| | | 797,421 | (9,421 | ) | 788,000 | |||||||||||||||||
Handset and accessory inventory
|
| | | 227,191 | | 227,191 | ||||||||||||||||||
Deferred income taxes, net
|
| | 4,202 | 182,786 | | 186,988 | ||||||||||||||||||
Prepaid expenses and other
|
2,776 | | 5,439 | 385,477 | (34 | ) | 393,658 | |||||||||||||||||
Total current assets
|
1,037,734 | 28 | 131,827 | 2,740,743 | (9,455 | ) | 3,900,877 | |||||||||||||||||
Property, plant and equipment, net
|
| | 107,030 | 2,853,303 | (287 | ) | 2,960,046 | |||||||||||||||||
Investments in and advances to affiliates
|
2,962,830 | 2,905,655 | 2,925,907 | | (8,794,392 | ) | | |||||||||||||||||
Intangible assets, net
|
| | | 433,208 | | 433,208 | ||||||||||||||||||
Deferred income taxes, net
|
7,712 | | | 486,098 | (7,712 | ) | 486,098 | |||||||||||||||||
Other assets
|
2,414,774 | 2,256,448 | 667,301 | 588,572 | (5,516,637 | ) | 410,458 | |||||||||||||||||
Total assets
|
$ | 6,423,050 | $ | 5,162,131 | $ | 3,832,065 | $ | 7,101,924 | $ | (14,328,483 | ) | $ | 8,190,687 | |||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Current liabilities
|
||||||||||||||||||||||||
Accounts payable
|
$ | 1,295 | $ | | $ | 2,314 | $ | 296,421 | $ | | $ | 300,030 | ||||||||||||
Accrued expenses and other
|
637,597 | 173,263 | 1,599,378 | 1,117,481 | (2,700,466 | ) | 827,253 | |||||||||||||||||
Deferred revenues
|
| | | 158,690 | | 158,690 | ||||||||||||||||||
Current portion of long-term debt
|
| | 1,729 | 445,266 | | 446,995 | ||||||||||||||||||
Total current liabilities
|
638,892 | 173,263 | 1,603,421 | 2,017,858 | (2,700,466 | ) | 1,732,968 | |||||||||||||||||
Long-term debt
|
1,043,258 | 1,279,524 | 39,334 | 456,307 | | 2,818,423 | ||||||||||||||||||
Deferred revenues
|
| | | 20,476 | | 20,476 | ||||||||||||||||||
Deferred credits
|
| | 21,427 | 74,352 | (7,711 | ) | 88,068 | |||||||||||||||||
Other long-term liabilities
|
1,421,327 | | 9,773 | 1,607,024 | (2,826,945 | ) | 211,179 | |||||||||||||||||
Total liabilities
|
3,103,477 | 1,452,787 | 1,673,955 | 4,176,017 | (5,535,122 | ) | 4,871,114 | |||||||||||||||||
Total stockholders equity
|
3,319,573 | 3,709,344 | 2,158,110 | 2,925,907 | (8,793,361 | ) | 3,319,573 | |||||||||||||||||
Total liabilities and stockholders equity
|
$ | 6,423,050 | $ | 5,162,131 | $ | 3,832,065 | $ | 7,101,924 | $ | (14,328,483 | ) | $ | 8,190,687 | |||||||||||
18
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer) | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
Operating revenues
|
$ | | $ | | $ | 768 | $ | 1,622,837 | $ | (768 | ) | $ | 1,622,837 | |||||||||||
Operating expenses
|
||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization
included below)
|
| | 45 | 656,335 | | 656,380 | ||||||||||||||||||
Selling, general and administrative
|
912 | 162 | 63,793 | 472,578 | (1,888 | ) | 535,557 | |||||||||||||||||
Management fee, royalty fee and other
|
(20,503 | ) | | (29,475 | ) | 48,858 | 1,120 | | ||||||||||||||||
Depreciation and amortization
|
| | 2,084 | 153,835 | | 155,919 | ||||||||||||||||||
(19,591 | ) | 162 | 36,447 | 1,331,606 | (768 | ) | 1,347,856 | |||||||||||||||||
Operating income (loss)
|
19,591 | (162 | ) | (35,679 | ) | 291,231 | | 274,981 | ||||||||||||||||
Other income (expense)
|
||||||||||||||||||||||||
Interest expense, net
|
(48,678 | ) | (30,709 | ) | (660 | ) | (48,473 | ) | 47,361 | (81,159 | ) | |||||||||||||
Interest income
|
4,451 | 43,611 | 51 | 5,459 | (47,361 | ) | 6,211 | |||||||||||||||||
Foreign currency transaction gains, net
|
| | | 8,494 | | 8,494 | ||||||||||||||||||
Equity in income of affiliates
|
113,784 | 151,227 | 152,355 | | (417,366 | ) | | |||||||||||||||||
Other income (expense), net
|
40 | | | (4,407 | ) | | (4,367 | ) | ||||||||||||||||
69,597 | 164,129 | 151,746 | (38,927 | ) | (417,366 | ) | (70,821 | ) | ||||||||||||||||
Income before income tax benefit (provision)
|
89,188 | 163,967 | 116,067 | 252,304 | (417,366 | ) | 204,160 | |||||||||||||||||
Income tax benefit (provision)
|
7,570 | (4,346 | ) | (7,166 | ) | (99,949 | ) | (3,511 | ) | (107,402 | ) | |||||||||||||
Net income
|
$ | 96,758 | $ | 159,621 | $ | 108,901 | $ | 152,355 | $ | (420,877 | ) | $ | 96,758 | |||||||||||
19
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer) | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
Operating revenues
|
$ | | $ | | $ | | $ | 1,283,146 | $ | | $ | 1,283,146 | ||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization
included below)
|
| | 35 | 522,318 | | 522,353 | ||||||||||||||||||
Selling, general and administrative
|
460 | 4 | 46,061 | 372,901 | | 419,426 | ||||||||||||||||||
Management fee
|
(18,556 | ) | | (23,220 | ) | 41,776 | | | ||||||||||||||||
Depreciation and amortization
|
| | 1,681 | 127,015 | | 128,696 | ||||||||||||||||||
(18,096 | ) | 4 | 24,557 | 1,064,010 | | 1,070,475 | ||||||||||||||||||
Operating income (loss)
|
18,096 | (4 | ) | (24,557 | ) | 219,136 | | 212,671 | ||||||||||||||||
Other income (expense)
|
||||||||||||||||||||||||
Interest expense, net
|
(25,090 | ) | (31,758 | ) | (304 | ) | (31,983 | ) | 3,409 | (85,726 | ) | |||||||||||||
Interest income
|
2,917 | | 533 | 5,558 | (3,409 | ) | 5,599 | |||||||||||||||||
Foreign currency transaction losses, net
|
| | | (25,083 | ) | | (25,083 | ) | ||||||||||||||||
Equity in income of affiliates
|
35,176 | 96,975 | 117,171 | | (249,322 | ) | | |||||||||||||||||
Other income (expense), net
|
| | 115 | (4,469 | ) | (4 | ) | (4,358 | ) | |||||||||||||||
13,003 | 65,217 | 117,515 | (55,977 | ) | (249,326 | ) | (109,568 | ) | ||||||||||||||||
Income before income tax benefit (provision)
|
31,099 | 65,213 | 92,958 | 163,159 | (249,326 | ) | 103,103 | |||||||||||||||||
Income tax benefit (provision)
|
17,363 | | (17,675 | ) | (54,534 | ) | 205 | (54,641 | ) | |||||||||||||||
Net income
|
$ | 48,462 | $ | 65,213 | $ | 75,283 | $ | 108,625 | $ | (249,121 | ) | $ | 48,462 | |||||||||||
20
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer) | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
Cash flows from operating activities:
|
||||||||||||||||||||||||
Net income
|
$ | 96,758 | $ | 159,621 | $ | 108,901 | $ | 152,355 | $ | (420,877 | ) | $ | 96,758 | |||||||||||
Adjustments to reconcile net income to net cash provided by
operating activities
|
19,929 | (115,482 | ) | (100,932 | ) | 106,091 | 197,599 | 107,205 | ||||||||||||||||
Net cash provided by operating activities
|
116,687 | 44,139 | 7,969 | 258,446 | (223,278 | ) | 203,963 | |||||||||||||||||
Cash flows from investing activities:
|
||||||||||||||||||||||||
Capital expenditures
|
(26,092 | ) | | | (200,039 | ) | | (226,131 | ) | |||||||||||||||
Proceeds from sales of short-term investments
|
245,000 | | | 379,541 | | 624,541 | ||||||||||||||||||
Transfers from restricted cash
|
| | | 89,100 | | 89,100 | ||||||||||||||||||
Purchase of long-term and short-term investments
|
(279,962 | ) | | | (416,555 | ) | | (696,517 | ) | |||||||||||||||
Intercompany borrowings
|
(66,006 | ) | (736,860 | ) | | | 802,866 | | ||||||||||||||||
Other, net
|
(335 | ) | | | (6,438 | ) | | (6,773 | ) | |||||||||||||||
Net cash used in investing activities
|
(127,395 | ) | (736,860 | ) | | (154,391 | ) | 802,866 | (215,780 | ) | ||||||||||||||
Cash flows from financing activities:
|
||||||||||||||||||||||||
Proceeds from issuance of senior notes
|
| 750,000 | | | | 750,000 | ||||||||||||||||||
Proceeds from intercompany long-term loan
|
736,860 | | | 7,881 | (744,741 | ) | | |||||||||||||||||
Intercompany dividends
|
| (84,139 | ) | (139,139 | ) | | 223,278 | | ||||||||||||||||
Other, net
|
310 | 26,849 | 17,572 | (60,711 | ) | (58,125 | ) | (74,105 | ) | |||||||||||||||
Net cash provided by (used in) financing activities
|
737,170 | 692,710 | (121,567 | ) | (52,830 | ) | (579,588 | ) | 675,895 | |||||||||||||||
Effect of exchange rate changes on cash and cash
equivalents
|
| | | (3,328 | ) | | (3,328 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents
|
726,462 | (11 | ) | (113,598 | ) | 47,897 | | 660,750 | ||||||||||||||||
Cash and cash equivalents, beginning of period
|
548,197 | 28 | 122,186 | 1,097,090 | | 1,767,501 | ||||||||||||||||||
Cash and cash equivalents, end of period
|
$ | 1,274,659 | $ | 17 | $ | 8,588 | $ | 1,144,987 | $ | | $ | 2,428,251 | ||||||||||||
21
NII Holdings, |
NII Capital |
Guarantor |
Non-Guarantor |
Consolidating |
||||||||||||||||||||
Inc. (Parent) | Corp. (Issuer) | Subsidiaries | Subsidiaries | Adjustments | Consolidated | |||||||||||||||||||
Cash flows from operating activities:
|
||||||||||||||||||||||||
Net income
|
$ | 48,462 | $ | 65,213 | $ | 75,283 | $ | 108,625 | $ | (249,121 | ) | $ | 48,462 | |||||||||||
Adjustments to reconcile net income to net cash (used in)
provided by operating activities
|
(59,216 | ) | (65,213 | ) | (72,131 | ) | 163,141 | 182,031 | 148,612 | |||||||||||||||
Net cash (used in) provided by operating activities
|
(10,754 | ) | | 3,152 | 271,766 | (67,090 | ) | 197,074 | ||||||||||||||||
Cash flows from investing activities:
|
||||||||||||||||||||||||
Capital expenditures
|
(2,186 | ) | | | (154,103 | ) | | (156,289 | ) | |||||||||||||||
Proceeds from sales of short-term investments
|
| | | 396,838 | | 396,838 | ||||||||||||||||||
Purchase of short-term investments
|
| | | (315,136 | ) | | (315,136 | ) | ||||||||||||||||
Other, net
|
(35,942 | ) | | 64,355 | (17,778 | ) | (28,413 | ) | (17,778 | ) | ||||||||||||||
Net cash (used in) provided by investing activities
|
(38,128 | ) | | 64,355 | (90,179 | ) | (28,413 | ) | (92,365 | ) | ||||||||||||||
Net cash provided by (used in) financing activities
|
8,023 | | (67,507 | ) | (6,363 | ) | 95,503 | 29,656 | ||||||||||||||||
Effect of exchange rate changes on cash and cash
equivalents
|
| | | 12,306 | | 12,306 | ||||||||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(40,859 | ) | | | 187,530 | | 146,671 | |||||||||||||||||
Cash and cash equivalents, beginning of period
|
1,702,191 | 28 | | 801,845 | | 2,504,064 | ||||||||||||||||||
Cash and cash equivalents, end of period
|
$ | 1,661,332 | $ | 28 | $ | | $ | 989,375 | $ | | $ | 2,650,735 | ||||||||||||
22
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations. |
24 | ||||
24 | ||||
28 | ||||
28 | ||||
29 | ||||
30 | ||||
32 | ||||
34 | ||||
36 | ||||
37 | ||||
38 | ||||
38 | ||||
40 | ||||
43 | ||||
43 |
23
| our consolidated financial condition as of March 31, 2011 and December 31, 2010 and our consolidated results of operations for the three-month periods ended March 31, 2011 and 2010; and | |
| significant factors which we believe could affect our prospective financial condition and results of operations. |
| mobile telephone service; | |
| mobile broadband services in markets where we have deployed third generation networks; | |
| Nextel Direct Connect® service, which allows subscribers who use our iDEN network to talk to each other instantly, on a push-to-talk basis, for private one-to-one calls or group calls; | |
| International Direct Connect® service, which allows subscribers who use our iDEN network to communicate instantly across national borders with Sprint Nextel subscribers using compatible handsets in the United States and with TELUS Corporation subscribers using compatible handsets in Canada; |
24
| data services, including text messaging services, mobile internet services, e-mail services, an Android-based open operating system, location-based services, which include the use of Global Positioning System, or GPS, technologies, digital media services and advanced Javatm enabled business applications; and | |
| international roaming services. |
25
26
| Agreements we entered into with Motorola in September 2006 to extend our relationship with Motorola for the supply of iDEN handsets and iDEN network infrastructure through December 31, 2011. Under these agreements, Motorola agreed to maintain an adequate supply of the iDEN handsets and equipment used in our business for the term of the agreement and to continue to invest in the development of new iDEN devices and infrastructure features. In addition, we agreed to annually escalating handset volume purchase commitments and certain pricing parameters for handsets and infrastructure linked to the volume of our purchases. If we do not meet the specified handset volume commitments, we would be required to pay an additional amount based on any shortfall of actual purchased handsets compared to the related annual volume commitment. | |
| An agreement we signed with Motorola, Inc., now Motorola Solutions, Inc., in October 2010, which provided for the extension of the terms of the iDEN network infrastructure agreement with Motorola until December 31, 2014. The extension of this infrastructure agreement will not impact any handset pricing terms or commitments. | |
| An agreement we entered into with Motorola Mobility, Inc. in March 2011, which provided for the extension of the agreement under which Motorola will supply iDEN handsets to NII Holdings through 2014. In addition, we agreed to handset volume purchase commitments with respect to certain handset models and pricing parameters linked to the volume of our handset purchases. This agreement provided that Motorola Mobility, Inc. will continue to develop and deliver new handsets using the iDEN platform as we develop our third generation networks over coming years. |
27
Country | Spectrum Band | Amount/Coverage | ||
Brazil
|
1.9 GHz/2.1 GHz(1) |
20 MHz in 11 of 13 regions (includes all major metropolitan areas)(1) |
||
Mexico
|
1.7 GHz/2.1 GHz | 30 MHz nationwide | ||
Peru
|
1.9 GHz | 35 MHz nationwide | ||
Chile
|
1.7 GHz/2.1 GHz | 60 MHz nationwide |
(1) | Pending anticipated award of spectrum in 2011. |
Brazil | Mexico | Argentina | Peru | Chile | Total | |||||||||||||||||||
(handsets in thousands) | ||||||||||||||||||||||||
Handsets in commercial service December 31, 2010
|
3,319 | 3,361 | 1,154 | 1,128 | 65 | 9,027 | ||||||||||||||||||
Net subscriber additions
|
190 | 84 | 29 | 97 | 3 | 403 | ||||||||||||||||||
Handsets in commercial service March 31, 2011
|
3,509 | 3,445 | 1,183 | 1,225 | 68 | 9,430 | ||||||||||||||||||
| revenue recognition; | |
| allowance for doubtful accounts; | |
| depreciation of property, plant and equipment; | |
| amortization of intangible assets; |
28
| asset retirement obligations; | |
| foreign currency; | |
| loss contingencies; | |
| stock-based compensation; and | |
| income taxes. |
29
Three Months Ended March 31, | ||||||||||||
2011 | 2010 | Percent Change | ||||||||||
Brazilian real
|
1.67 | 1.80 | 7 | % | ||||||||
Mexican peso
|
12.08 | 12.80 | 6 | % | ||||||||
Argentine peso
|
4.01 | 3.84 | (4 | )% |
a. | Consolidated |
% of |
% of |
|||||||||||||||||||||||
Consolidated |
Consolidated |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 1,546,328 | 95 | % | $ | 1,217,670 | 95 | % | $ | 328,658 | 27 | % | ||||||||||||
Digital handset and accessory revenues
|
76,509 | 5 | % | 65,476 | 5 | % | 11,033 | 17 | % | |||||||||||||||
1,622,837 | 100 | % | 1,283,146 | 100 | % | 339,691 | 26 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization
included below)
|
(444,877 | ) | (27 | )% | (349,525 | ) | (27 | )% | (95,352 | ) | 27 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(211,503 | ) | (13 | )% | (172,828 | ) | (14 | )% | (38,675 | ) | 22 | % | ||||||||||||
(656,380 | ) | (40 | )% | (522,353 | ) | (41 | )% | (134,027 | ) | 26 | % | |||||||||||||
Selling and marketing expenses
|
(166,473 | ) | (10 | )% | (150,389 | ) | (12 | )% | (16,084 | ) | 11 | % | ||||||||||||
General and administrative expenses
|
(369,084 | ) | (23 | )% | (269,037 | ) | (21 | )% | (100,047 | ) | 37 | % | ||||||||||||
Depreciation and amortization
|
(155,919 | ) | (10 | )% | (128,696 | ) | (10 | )% | (27,223 | ) | 21 | % | ||||||||||||
Operating income
|
274,981 | 17 | % | 212,671 | 16 | % | 62,310 | 29 | % | |||||||||||||||
Interest expense, net
|
(81,159 | ) | (5 | )% | (85,726 | ) | (6 | )% | 4,567 | (5 | )% | |||||||||||||
Interest income
|
6,211 | | 5,599 | | 612 | 11 | % | |||||||||||||||||
Foreign currency transaction gains (losses), net
|
8,494 | 1 | % | (25,083 | ) | (2 | )% | 33,577 | (134 | )% | ||||||||||||||
Other expense, net
|
(4,367 | ) | | (4,358 | ) | | (9 | ) | | |||||||||||||||
Income before income tax provision
|
204,160 | 13 | % | 103,103 | 8 | % | 101,057 | 98 | % | |||||||||||||||
Income tax provision
|
(107,402 | ) | (7 | )% | (54,641 | ) | (4 | )% | (52,761 | ) | 97 | % | ||||||||||||
Net income
|
$ | 96,758 | 6 | % | $ | 48,462 | 4 | % | $ | 48,296 | 100 | % | ||||||||||||
30
1. | Operating revenues |
2. | Cost of revenues |
| a $64.4 million, or 38%, increase in consolidated interconnect costs, mostly in Brazil and Mexico, resulting from an increase in the relative amount of minutes of use for calls that terminate on other carriers networks and require the payment of call termination charges, partially offset by a reduction in mobile termination rates in Peru; and | |
| $22.8 million in consolidated managed service expenses recognized in the first quarter of 2011 related to certain engineering activities managed by a third-party vendor. |
3. | Selling and marketing expenses |
4. | General and administrative expenses |
| a $47.9 million, or 34%, increase in consolidated general corporate costs, mostly related to an increase in revenue-based taxes in Brazil and higher personnel and consulting costs in some of our markets, which are largely related to the continued development of our third generation initiatives; and | |
| a $20.3 million, or 28%, increase in consolidated customer care and billing operations expenses, primarily in Brazil, as a result of an increase in customer care personnel necessary to support larger customer bases in our markets. |
31
5. | Depreciation and amortization |
6. | Foreign currency transaction gains (losses), net |
7. | Income tax provision |
b. | Nextel Brazil |
% of |
% of |
|||||||||||||||||||||||
Nextel |
Nextel |
|||||||||||||||||||||||
Brazils |
Brazils |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 778,334 | 96 | % | $ | 538,050 | 95 | % | $ | 240,284 | 45 | % | ||||||||||||
Digital handset and accessory revenues
|
35,004 | 4 | % | 25,777 | 5 | % | 9,227 | 36 | % | |||||||||||||||
813,338 | 100 | % | 563,827 | 100 | % | 249,511 | 44 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization)
|
(240,647 | ) | (29 | )% | (190,570 | ) | (34 | )% | (50,077 | ) | 26 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(64,576 | ) | (8 | )% | (37,885 | ) | (7 | )% | (26,691 | ) | 70 | % | ||||||||||||
(305,223 | ) | (37 | )% | (228,455 | ) | (41 | )% | (76,768 | ) | 34 | % | |||||||||||||
Selling and marketing expenses
|
(63,692 | ) | (8 | )% | (55,369 | ) | (10 | )% | (8,323 | ) | 15 | % | ||||||||||||
General and administrative expenses
|
(161,422 | ) | (20 | )% | (103,294 | ) | (18 | )% | (58,128 | ) | 56 | % | ||||||||||||
Segment earnings
|
$ | 283,001 | 35 | % | $ | 176,709 | 31 | % | $ | 106,292 | 60 | % | ||||||||||||
32
1. | Operating revenues |
2. | Cost of revenues |
33
3. | General and administrative expenses |
| a $24.9 million, or 52%, increase in other general corporate costs due to an increase in revenue-based taxes and general and administrative personnel; and | |
| a $13.9 million, or 118%, increase in bad debt expense related to Nextel Brazils operating revenue growth and a decrease in collection rates resulting from the addition of some customers during the second half of 2010 whose credit histories were less established. |
c. | Nextel Mexico |
% of |
% of |
|||||||||||||||||||||||
Nextel |
Nextel |
|||||||||||||||||||||||
Mexicos |
Mexicos |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 545,577 | 96 | % | $ | 487,921 | 96 | % | $ | 57,656 | 12 | % | ||||||||||||
Digital handset and accessory revenues
|
21,429 | 4 | % | 21,503 | 4 | % | (74 | ) | (0 | )% | ||||||||||||||
567,006 | 100 | % | 509,424 | 100 | % | 57,582 | 11 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization)
|
(126,803 | ) | (22 | )% | (86,445 | ) | (17 | )% | (40,358 | ) | 47 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(107,086 | ) | (19 | )% | (100,749 | ) | (20 | )% | (6,337 | ) | 6 | % | ||||||||||||
(233,889 | ) | (41 | )% | (187,194 | ) | (37 | )% | (46,695 | ) | 25 | % | |||||||||||||
Selling and marketing expenses
|
(68,432 | ) | (12 | )% | (66,091 | ) | (13 | )% | (2,341 | ) | 4 | % | ||||||||||||
General and administrative expenses
|
(84,338 | ) | (15 | )% | (71,755 | ) | (14 | )% | (12,583 | ) | 18 | % | ||||||||||||
Segment earnings
|
$ | 180,347 | 32 | % | $ | 184,384 | 36 | % | $ | (4,037 | ) | (2 | )% | |||||||||||
34
1. | Operating revenues |
2. | Cost of revenues |
35
d. | Nextel Argentina |
% of |
% of |
|||||||||||||||||||||||
Nextel |
Nextel |
|||||||||||||||||||||||
Argentinas |
Argentinas |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 138,576 | 92 | % | $ | 121,879 | 92 | % | $ | 16,697 | 14 | % | ||||||||||||
Digital handset and accessory revenues
|
12,138 | 8 | % | 10,878 | 8 | % | 1,260 | 12 | % | |||||||||||||||
150,714 | 100 | % | 132,757 | 100 | % | 17,957 | 14 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization)
|
(44,877 | ) | (30 | )% | (44,320 | ) | (33 | )% | (557 | ) | 1 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(19,421 | ) | (13 | )% | (18,485 | ) | (14 | )% | (936 | ) | 5 | % | ||||||||||||
(64,298 | ) | (43 | )% | (62,805 | ) | (47 | )% | (1,493 | ) | 2 | % | |||||||||||||
Selling and marketing expenses
|
(11,700 | ) | (8 | )% | (10,682 | ) | (8 | )% | (1,018 | ) | 10 | % | ||||||||||||
General and administrative expenses
|
(30,765 | ) | (20 | )% | (22,671 | ) | (17 | )% | (8,094 | ) | 36 | % | ||||||||||||
Segment earnings
|
$ | 43,951 | 29 | % | $ | 36,599 | 28 | % | $ | 7,352 | 20 | % | ||||||||||||
36
e. | Nextel Peru |
% of |
% of |
|||||||||||||||||||||||
Nextel |
Nextel |
|||||||||||||||||||||||
Perus |
Perus |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 77,739 | 91 | % | $ | 65,600 | 90 | % | $ | 12,139 | 19 | % | ||||||||||||
Digital handset and accessory revenues
|
7,918 | 9 | % | 7,279 | 10 | % | 639 | 9 | % | |||||||||||||||
85,657 | 100 | % | 72,879 | 100 | % | 12,778 | 18 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization)
|
(26,000 | ) | (30 | )% | (25,657 | ) | (35 | )% | (343 | ) | 1 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(19,220 | ) | (23 | )% | (14,884 | ) | (21 | )% | (4,336 | ) | 29 | % | ||||||||||||
(45,220 | ) | (53 | )% | (40,541 | ) | (56 | )% | (4,679 | ) | 12 | % | |||||||||||||
Selling and marketing expenses
|
(15,399 | ) | (18 | )% | (12,565 | ) | (17 | )% | (2,834 | ) | 23 | % | ||||||||||||
General and administrative expenses
|
(17,860 | ) | (21 | )% | (15,550 | ) | (21 | )% | (2,310 | ) | 15 | % | ||||||||||||
Segment earnings
|
$ | 7,178 | 8 | % | $ | 4,223 | 6 | % | $ | 2,955 | 70 | % | ||||||||||||
37
f. | Corporate and other |
% of |
% of |
|||||||||||||||||||||||
Corporate |
Corporate |
|||||||||||||||||||||||
and other |
and other |
Change from |
||||||||||||||||||||||
March 31, |
Operating |
March 31, |
Operating |
Previous Year | ||||||||||||||||||||
2011 | Revenues | 2010 | Revenues | Dollars | Percent | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Operating revenues
|
||||||||||||||||||||||||
Service and other revenues
|
$ | 7,385 | 100 | % | $ | 4,565 | 99 | % | $ | 2,820 | 62 | % | ||||||||||||
Digital handset and accessory revenues
|
20 | | 39 | 1 | % | (19 | ) | (49 | )% | |||||||||||||||
7,405 | 100 | % | 4,604 | 100 | % | 2,801 | 61 | % | ||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of service (exclusive of depreciation and amortization)
|
(7,065 | ) | (96 | )% | (2,878 | ) | (62 | )% | (4,187 | ) | 145 | % | ||||||||||||
Cost of digital handset and accessory sales
|
(1,200 | ) | (16 | )% | (825 | ) | (18 | )% | (375 | ) | 45 | % | ||||||||||||
(8,265 | ) | (112 | )% | (3,703 | ) | (80 | )% | (4,562 | ) | 123 | % | |||||||||||||
Selling and marketing expenses
|
(7,250 | ) | (98 | )% | (5,682 | ) | (123 | )% | (1,568 | ) | 28 | % | ||||||||||||
General and administrative expenses
|
(76,587 | ) | NM | (55,767 | ) | NM | (20,820 | ) | 37 | % | ||||||||||||||
Segment losses
|
$ | (84,697 | ) | NM | $ | (60,548 | ) | NM | $ | (24,149 | ) | 40 | % | |||||||||||
38
Three Months Ended |
||||||||||||
March 31, | ||||||||||||
2011 | 2010 | Change | ||||||||||
(in thousands) | ||||||||||||
Cash and cash equivalents, beginning of period
|
$ | 1,767,501 | $ | 2,504,064 | $ | (736,563 | ) | |||||
Net cash provided by operating activities
|
203,963 | 197,074 | 6,889 | |||||||||
Net cash used in investing activities
|
(215,780 | ) | (92,365 | ) | (123,415 | ) | ||||||
Net cash provided by financing activities
|
675,895 | 29,656 | 646,239 | |||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(3,328 | ) | 12,306 | (15,634 | ) | |||||||
Cash and cash equivalents, end of period
|
$ | 2,428,251 | $ | 2,650,735 | $ | (222,484 | ) | |||||
39
| the amount of revenue we are able to generate and collect from our customers; | |
| the amount of operating expenses required to provide our services; | |
| the cost of acquiring and retaining customers, including the subsidies we incur to provide handsets to both our new and existing customers; | |
| our ability to continue to increase the size of our subscriber base; and | |
| fluctuations in foreign exchange rates. |
| operating expenses relating to our networks; | |
| capital expenditures to expand and enhance our networks, as discussed below under Capital Expenditures; | |
| operating expenses and capital expenditures related to the deployment of third generation networks in Brazil, Mexico, Peru and Chile and, if we are successful in acquiring spectrum, in Argentina; | |
| payments in connection with existing and future spectrum purchases; | |
| debt service requirements, including significant upcoming maturities in 2011 and 2012, and obligations relating to our tower financing and capital lease obligations; | |
| cash taxes; and | |
| other general corporate expenditures. |
40
| the extent to which we expand the coverage of our networks in new or existing market areas; | |
| the number of additional transmitter and receiver sites we build in order to increase system capacity and maintain system quality and the costs associated with the installation of related switching equipment in some of our existing market areas; | |
| the extent to which we must add capacity to our networks to meet the demand of our growing customer base; | |
| the amount we spend to deploy the third generation networks in Brazil, Mexico, Peru and Chile; | |
| the costs we incur in connection with future spectrum acquisitions and the development and deployment of any third generation networks in Argentina; and | |
| the costs we incur in connection with non-network related information technology projects. |
41
| cash and cash equivalents on hand and short- and long-term investments available to fund our operations; | |
| expected cash flows from operations; | |
| the cost and timing of spectrum payments, including the spectrum for which we were the successful bidder in the recently completed spectrum auctions in Brazil; | |
| the anticipated level of capital expenditures, including to meet minimum build-out requirements, relating to our planned deployment of the third generation networks in Brazil, Mexico, Peru and Chile; | |
| our assumption that there will not be significant fluctuations in values of the currencies in the countries in which we conduct business relative to the U.S. dollar; | |
| our scheduled debt service, which includes significant maturities in the next several years; and | |
| income taxes. |
| if our plans change; | |
| if we decide to expand into new markets or expand our geographic coverage or network capacity in our existing markets beyond our current plans, as a result of the construction of additional portions of our networks or the acquisition of competitors or others; | |
| if currency values in our markets depreciate relative to the U.S. dollar in a manner contrary to our expectations; | |
| if economic conditions in any of our markets change; | |
| if competitive practices in the mobile wireless telecommunications industry in certain of our markets change materially from those currently prevailing or from those now anticipated; or | |
| if other presently unexpected circumstances arise that have a material effect on the cash flow or profitability of our business. |
| the commercial success of our operations; | |
| the volatility and demand of the capital markets; and | |
| the future market prices of our securities. |
42
| our ability to attract and retain customers; | |
| our ability to meet the operating goals established by our business plan; | |
| general economic conditions in the United States or in Latin America and in the market segments that we are targeting for our services, including the impact of the current uncertainties in global economic conditions; | |
| the political and social conditions in the countries in which we operate, including political instability, which may affect the economies of our markets and the regulatory schemes in these countries; | |
| the impact of foreign currency exchange rate volatility in our markets when compared to the U.S. dollar and related currency depreciation in countries in which our operating companies conduct business; | |
| our ability to access sufficient debt or equity capital to meet any future operating and financial needs; | |
| reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon, including technology deployed in connection with the introduction of digital two-way mobile data or Internet connectivity services in our markets; | |
| the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our service deployment and marketing plans and customer demand; | |
| Motorolas ability and willingness to provide handsets and related equipment and software applications or to develop new technologies or features for us for use on our iDEN network, including the timely development and availability of new handsets with expanded applications and features; | |
| the risk of deploying new third generation networks, including the potential need for additional funding to support that deployment, the risk that new services supported by the new networks will not attract enough |
43
subscribers to support the related costs of deploying or operating the new networks, the need to significantly increase our employee base and the potential distraction of management; |
| our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth, increased system usage rates and growth or to successfully deploy new systems that support those functions; | |
| the success of efforts to improve and satisfactorily address any issues relating to our network performance; | |
| future legislation or regulatory actions relating to our SMR services, other wireless communications services or telecommunications generally and the costs and/or potential customer impacts of compliance with regulatory mandates; | |
| the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our network business; | |
| the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers of cellular services and personal communications services; | |
| market acceptance of our new service offerings; | |
| equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; and | |
| other risks and uncertainties described in this annual report on Form 10-K, including in Part I, Item 1A. Risk Factors, and in our other reports filed with the Securities and Exchange Commission, or the SEC. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
44
45
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 6. | Exhibits. |
Exhibit |
||||
Number | Exhibit Description | |||
4 | .1 | Indenture governing our 7.625% senior notes due 2021, dated as of March 29, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee (incorporated by reference to Exhibit 4.1 to NII Holdings Form 8-K, filed on March 29, 2011). | ||
10 | .1 | Underwriting Agreement governing our 7.625% senior notes due 2021, dated as of March 24, 2011, by and between NII Holdings and Goldman, Sachs & Co., as Underwriters Representative (incorporated by reference to Exhibit 10.1 to NII Holdings Form 8-K, filed on March 29, 2011). | ||
10 | .2* | Employment Letter Agreement, dated April 29, 2011, between NII Holdings and Peter A. Foyo. | ||
12 | .1* | Ratio of Earnings to Fixed Charges. | ||
31 | .1* | Statement of Chief Executive Officer Pursuant to Rule 13a-14(a). | ||
31 | .2* | Statement of Chief Financial Officer Pursuant to Rule 13a-14(a). | ||
32 | .1* | Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. | ||
32 | .2* | Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. | ||
101* | The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statement of Changes in Stockholders Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements. |
* | Submitted electronically herewith. |
46
By: |
/s/ TERESA
S. GENDRON
|
47
Exhibit |
||||
Number | Exhibit Description | |||
4 | .1 | Indenture governing our 7.625% senior notes due 2021, dated as of March 29, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee (incorporated by reference to Exhibit 4.1 to NII Holdings Form 8-K, filed on March 29, 2011). | ||
10 | .1 | Underwriting Agreement governing our 7.625% senior notes due 2021, dated as of March 24, 2011, by and between NII Holdings and Goldman, Sachs & Co., as Underwriters Representative (incorporated by reference to Exhibit 10.1 to NII Holdings Form 8-K, filed on March 29, 2011). | ||
10 | .2* | Employment Letter Agreement, dated April 29, 2011, between NII Holdings and Peter A. Foyo. | ||
12 | .1* | Ratio of Earnings to Fixed Charges. | ||
31 | .1* | Statement of Chief Executive Officer Pursuant to Rule 13a-14(a). | ||
31 | .2* | Statement of Chief Financial Officer Pursuant to Rule 13a-14(a). | ||
32 | .1* | Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. | ||
32 | .2* | Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. | ||
101* | The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statement of Changes in Stockholders Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements. |
* | Submitted electronically herewith. |
48
1. Title/Grade:
|
President, Nextel Mexico | |
2. Reporting To:
|
NII Chief Executive Officer | |
3. Effective Date:
|
Effective as of April 29, 2011, except as otherwise stated herein | |
4. Location
|
Mexico City, Mexico |
5. Term of Assignment
|
Your employment with the Company will be of indefinite duration, terminable at will by either party, without cause. This means that you may elect to terminate your employment with the Company at any time after such date, and the Company retains the same rights. This employment at-will paragraph operates notwithstanding any other provision of this letter, and no officer or employee of the Company is authorized to offer any employment relationship other than the at-will relationship provided for in this paragraph. If either party terminates this Agreement, except for COBRA benefits and repatriation, all rights and liabilities hereunder will cease. You and the Company agree that the terms of your employment will be governed by the laws of the State of Virginia, not the laws of any other state or foreign country. | |
6. Base Salary:
|
$510,313.20 per year, effective as of April 1, 2011, paid bi-monthly in the United States and subject to U.S taxes. You will be eligible for a base pay increase in 2012 subject to approval of the Companys Board of Directors. | |
7. Foreign
Assignment
Differential:
|
A foreign assignment differential will be paid to compensate you for the higher costs of goods and services in the assignment location as compared to the United States. The differential, affected by inflation in the assignment location and in the United States, and by exchange rates, will be reviewed periodically. Your foreign assignment differential will be $23,882.36 per year payable bi-monthly by Nextel Mexico net of taxes. | |
8. Hardship
Allowance:
|
A hardship allowance will be paid to compensate you in the assignment location. We have agreed to pay you 10% of your base salary, which will be paid bi-monthly by Nextel Mexico net of taxes. | |
9. Performance
Review:
|
Your performance and your position with the Company will be reviewed on an annual basis by the Chief Executive Officer who shall report the results of such review to the Board of Directors, at which time you will be eligible for a merit increase in your base annual compensation. Any such increase shall be based on a positive review of your performance and commensurate with your duties and responsibilities. Your next scheduled merit review will be conducted by April 1, 2012. | |
10. Incentive Bonus:
|
You will be eligible to receive an annual bonus of 60% of your annual base salary based upon the Companys bonus plan. The annual bonus is normally paid during the first quarter of the following year. |
11. Tax Equalization:
|
It is the Companys policy that personnel stationed abroad will not suffer financially from an excessive tax liability as consequence of having to pay more income taxes that they would not have paid in the United States. In order to implement this policy, an expatriate will be reimbursed for U.S. and foreign taxes incurred on the total compensation in excess of the U.S. tax that would have been incurred on the base salary had the expatriate remained in the United States. You agree to restructure the relationship with the Company in a manner that will minimize your overall tax liability so long as you are not adversely impacted. | |
In the event the Company overpays tax with respect to Company- earned income, a refund may be received payable to you. You agree to reimburse the Company the amount relating to Company-earned income and benefits. | ||
12. Tax Counseling:
|
To ensure that tax is paid as and when required, the Company has retained international tax consultants to assist in the preparation and filing of U.S. federal and state (if applicable) income tax returns. They will also provide assistance for your income tax return in your foreign assignment location. Only the consultants designated may be used. The extent of this tax consultant service to you is as follows: | |
Consultation with tax consultant service while in your foreign
assignment location to assist you in the preparation of annual returns; |
||
Up to two consultations upon final return, if appropriate. |
||
Penalties and interest owing or preparation of amended returns, together with incremental consultants fees that result from failure to comply with the established procedure, may result in the Company charging you with these amounts. | ||
Similarly, the Company will take measures as are required to ensure you do not suffer, if upon final return and through no fault of your own, you find you have been charged with double taxation on your Company-earned income and benefits while assigned to the foreign assignment location. | ||
13. Cash
Allowance:
|
The Company will pay $7,909.83 net of taxes on a monthly basis directly to you. This cash allowance will be paid by Nextel Mexico, and this cash allowance replaces all prior housing benefits. | |
14. Schooling
Allowance:
|
The Company will pay up to $500 per month cost for monthly tuition for each of your children. The schooling allowance will be paid by Nextel Mexico. | |
15. Company Car:
|
In your expatriate assignment, Nextel Mexico will provide you with use of a Company car and driver commensurate with your position. |
16. Home leave travel:
|
You and your partner are entitled to six home visits per year to be used during the duration of the assignment. Additionally, your children are entitled to three home visits per year during the duration of the assignment. In case of an emergency with your immediate family, you will be entitled to travel at the Companys expense as well. All home leave travel includes airfare and local transport to and from the airport only. In all cases, the class of service will be based on the current NII policy. | |
17. Vacation:
|
You are entitled to four weeks vacation per calendar year prorated for any partial years of employment in accordance with NIIs vacation policy. | |
18. Holidays:
|
The observation of holidays will be determined by local customs and traditions in your foreign assignment location. | |
19. Insurance &
Benefits:
|
You will be eligible for the NII standard insurance and benefit plans commensurate with your position. In addition, the Company will pay emergency medical transportation and lodging costs to offset costs that the medical insurance does not cover. | |
20. Security:
|
Nextel Mexico will coordinate, facilitate, and fund all ordinary security provisions to adequately provide you and your family with protection. | |
21. Expenses:
|
Any expenses that you incur on behalf of the Company, which are directly related to your work, will be reimbursed based on properly completed documentation and prior approvals. | |
22. Repatriation:
|
NII will provide repatriation relocation assistance at the end of your
expatriation assignment or upon termination of your employment by NII
(in the event of termination, NII will provide repatriation relocation
assistance only if the termination is a decision of the Company). The
Company will pay the cost of transporting you and your family from your
foreign assignment location to your place of residence in the United
States in compliance with the Companys current travel policy. NII will pay for costs of packing, transporting, insuring and unpacking those personal effects and household goods you have designated for relocation, provided such items can be shipped in one twenty foot by forty foot (20x40 foot) sea-going shipping container. |
|
23. Financial
Responsibilities:
|
Except as specifically provided in this Agreement, you will be responsible for all financial obligations incurred by you during the term of the assignment. | |
24. Non-competition and
Confidentiality:
|
The Non-Competition and Confidentiality Agreement signed on March 29, 2006 between you and the Company remains in full force and effect. |
Sincerely, |
||||
/s/ Alfonso Martinez | ||||
Alfonso Martinez | ||||
Executive Vice President Human Resources NII Holdings, Inc. |
||||
Peter Foyo: Date: |
/s/ Peter Foyo
|
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Income from continuing operations before income tax |
$ | 204,159 | $ | 103,103 | ||||
Add: |
||||||||
Fixed charges |
105,190 | 103,690 | ||||||
Amortization of capitalized interest |
2,589 | 2,589 | ||||||
Less: |
||||||||
Interest capitalized |
5,180 | 2,238 | ||||||
Equity in (losses) gains of unconsolidated affiliates |
| | ||||||
Losses attributable to minority interests |
| | ||||||
Earnings as adjusted |
$ | 306,758 | $ | 207,144 | ||||
Fixed charges: |
||||||||
Interest
expense on indebtedness (including amortization of debt expense and discount) |
$ | 81,159 | $ | 85,726 | ||||
Interest capitalized |
5,180 | 2,238 | ||||||
Portion of rent expense representative of interest (30%) |
18,851 | 15,726 | ||||||
Fixed charges |
$ | 105,190 | $ | 103,690 | ||||
Ratio of earnings to fixed charges |
2.92 | 2.00 | ||||||
Deficiency of earnings to cover fixed charges |
$ | | $ | | ||||
1. | I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2011 of NII Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ STEVEN P. DUSSEK
|
||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2011 of NII Holdings, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ GOKUL HEMMADY | ||||
Gokul Hemmady | ||||
Chief Financial Officer | ||||
1. | The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ STEVEN P. DUSSEK
|
||||
Chief Executive Officer |
1. | The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ GOKUL HEMMADY | ||||
Gokul Hemmady | ||||
Chief Financial Officer | ||||
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