UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 30, 2013
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NII HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation)
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000-32421
(Commission File Number)
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91-1671412
(IRS Employer
Identification No.)
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1875 Explorer Street, Suite 1000
Reston, Virginia
(Address of principal executive offices)
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20190
(Zip Code)
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Registrant's telephone number, including area code:
(703) 390-5100
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
First Quarter 2013 Results.
On May 2, 2013, NII Holdings, Inc. (the "Company") issued a press release announcing certain financial and operating results for the quarter ended March 31, 2013. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(c)
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Appointment of Steven M. Shindler as Chief Executive Officer.
Effective as of April 30, 2013, the Board of Directors (the “Board”) of the Company appointed Steven M. Shindler as Chief Executive Officer of the Company. Mr. Shindler has served as interim Chief Executive Officer of the Company since December 2012 and has been a director since 1997 and Chairman of the Board since 2002. Mr. Shindler, 50, previously served as the Company's Chief Executive Officer from 2000 until February 2008. Mr. Shindler also served as Executive Vice President and Chief Financial Officer of Nextel Communications from 1996 until 2000.
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In addition, in connection with Mr. Shindler's appointment, the Board is currently considering whether to separate the positions of Chairman of the Board and Chief Executive Officer of the Company. Although the Board believes many factors are relevant to this decision and continues to consider these factors, the Board currently expects to separate the positions of Chairman and Chief Executive Officer and to appoint a non-executive Chairman in the near future. If the Board decides to separate the positions of Chairman and Chief Executive Officer and to appoint a non-executive Chairman of the Board, the Company will make public announcement of that appointment.
The information in item 5.02(e) below is incorporated by reference into this item 5.02(c). The Company's press release announcing the appointment is attached hereto as Exhibit 99.2.
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(e)
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Compensatory Arrangements with Steven M. Shindler.
In connection with Mr. Shindler's appointment as Chief Executive Officer of the Company, the Company has entered into an Offer Letter (the “Offer Letter”) with Mr. Shindler, dated as of April 30, 2013. For his services as Chief Executive Officer of the Company, Mr. Shindler initially will be paid an annual base salary of $946,586 and will be eligible to earn an annual incentive bonus with an initial target amount of 130% of his annual base salary. In accordance with the Company's annual incentive plan, the actual bonus payment can range from a minimum of zero up to a maximum of 200% of the target bonus amount based upon the Company's performance relative to the performance targets, terms and objectives established by the Compensation Committee of the Board. Pursuant to the Offer Letter, Mr. Shindler will also be allowed to use the Company's corporate aircraft, when it is not otherwise in use for business purposes, to commute to his home up to two times per month. The Offer Letter supersedes and replaces the terms of the offer letter dated December 18, 2012 that currently governs Mr. Shindler's employment with the Company. A copy of the Offer Letter is filed as Exhibit 10.1 hereto and incorporated herein by reference.
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In addition, in connection with its annual review of the equity compensation of the executive officers of the Company, on April 30, 2013 the Compensation Committee of the Board granted Mr. Shindler an award of performance-based restricted stock units (the “Performance Units”) under the Company's 2012 Incentive Compensation Plan (the “2012 Plan”) as described below.
Grant of Performance Units to Executive Officers.
As described in the Company's definitive proxy statement for the Company's 2013 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on April 9, 2013, the Compensation Committee of the Board determined that a substantial portion of the Company's executive officers' 2013 long-term incentives will be in the form of Performance Units in order to provide an incentive to build stockholder value and provide the executive officers with significant award potential for achieving outstanding Company performance.
In connection with the Company's regularly scheduled grants of long-term incentive awards to our employees, on April 30, 2013, the Compensation Committee approved the following target grants of Performance Units under the terms of the Company's 2012 Plan to its named executive officers:
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Named Executive Officer
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Performance Units
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Steven M. Shindler, Chief Executive Officer
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114,942
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Juan R. Figuereo, Executive Vice President, Chief Financial Officer
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53,640
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Gokul V. Hemmady, Executive Vice President, Chief Operations Officer
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74,904
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Peter Foyo, President, Nextel Mexico
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30,648
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Gary D. Begeman, Executive Vice President, General Counsel and Secretary
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33,365
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The number of target Performance Units granted is equal to the award value divided by the closing price of the Company's common stock on April 30, 2013. The Performance Units will vest at the end of the three-year performance period. The number of Performance Units that are earned at the time of vesting will range from 0% to 200% of the target number of Performance Units as determined by the Compensation Committee based on the Company's cumulative performance relative to specified performance measures established by the Compensation Committee at the time the Performance Units were granted. At the time of vesting, the Performance Units will be settled in cash or shares of the Company's common stock.
The description of the Performance Units contained herein is a summary and is qualified in its entirety by reference to the form of performance share unit agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No.
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Description
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10.1
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Offer Letter dated April 30, 2013 from NII Holdings, Inc. to Steven M. Shindler
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10.2
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Form of Performance Share Unit Agreement
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99.1
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Earnings Release for the period ended March 31, 2013 dated May 2, 2013
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99.2
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Press Release regarding Appointment of Steven M. Shindler dated May 2, 2013
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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NII HOLDINGS, INC.
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(Registrant)
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Dated: May 2, 2013
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By:
/s/ SHANA C. SMITH
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Shana C. Smith
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Vice President and Assistant Secretary
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EXHIBIT INDEX
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Exhibit No.
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Description
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10.1
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Offer Letter dated April 30, 2013 from NII Holdings, Inc. to Steven M. Shindler
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10.2
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Form of Performance Share Unit Agreement
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99.1
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Earnings Release for the period ended March 31, 2013 dated May 2, 2013
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99.2
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Press Release regarding Appointment of Steven M. Shindler dated May 2, 2013
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April 30, 2013
Steven M. Shindler
VIA EMAIL AND HAND DELIVERY
Re: Employment Offer
Dear Steve:
We appreciate your consideration of our offer for the position of Chief Executive Officer with NII Holdings, Inc. (referred to herein as the “Company,” “we” or “our”). As Chief Executive Officer, you will serve at the pleasure of our Board of Directors (the “Board”), and your duties and responsibilities will be consistent with your status as the Company's Chief Executive Officer, as may be determined from time to time by the Board, including reviewing, signing and certifying reports filed by the Company with the Securities and Exchange Commission. In this position, you will report directly to the Board and will devote such time as is necessary to the business of the Company and its subsidiaries and affiliates in order to fulfill the expectations of the Board.
During the term of your service as Chief Executive Officer of the Company, the Board currently expects that you will continue to serve as a director of the Company. The Board also expects that at least initially, you will continue to serve as a member of the Finance Committee of the Board and a member of the Risk Committee of the Board. As you are aware, the Board is currently reviewing the structure and responsibilities of the role of Chairman of the Board, and the Board currently expects to appoint a non-executive Chairman in the near future. The Board currently intends that you will continue to serve as Chairman of the Board until a non-executive Chairman of the Board is elected and takes office.
A summary of the key terms of our offer are detailed below:
Compensation and Benefits
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As Chief Executive Officer, you will initially receive an annual base salary of $946,586, which will be payable in accordance with the Company's normal payroll practices and subject to future adjustment by the Board. You also will be eligible to earn an annual bonus based upon the performance targets, terms and objectives to be established by the Compensation Committee of the Board. Initially, your target bonus amount will be 130% of your annual base salary. In accordance with the Company's annual incentive plan, your actual bonus payment can range from a minimum of zero up to a maximum of 200% of your target bonus amount.
In addition, as Chief Executive Officer, you will be permitted to use the Company's aircraft, when it is not otherwise in use for business purposes, for up to two trips to your permanent residence per month. You have agreed to be responsible for the applicable taxes associated with the flights.
This benefit will be reviewed by the Board on an annual basis in conjunction with its annual review of executive officer compensation.
As a full time employee, you will be entitled to participate in all the Company's employee benefit plans for which you are eligible, which include, but are not limited to, life, disability and health insurance plans and programs
and savings plans and programs, subject to applicable rules and regulations as in effect from time to time. For the avoidance of doubt, as Chief Executive Officer, you will be eligible to receive
Mr. Steven M. Shindler
April 30, 2013
Page 2 of 4
severance pay under the Company's Severance Plan and will be eligible to receive benefits as a “Covered Employee” as defined in the Company's Change of Control Severance Plan, both as may be amended, restated, superseded or suspended from time to time. In addition, you will be reimbursed for reasonable out-of-pocket expenses, including expenses associated with travel and entertainment.
Pursuant to the Company's compensation policy for non-employee directors, during the period of your service as Chief Executive Officer, as a full-time employee, you will not be entitled to any compensation other than the compensation described in this letter, including grants of equity compensation to non-employee directors, if any, for service as a director or as a member of any committee of the Board.
Equity Compensation
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As Chief Executive Officer, you will be eligible to participate in the Company's 2012 Incentive Compensation Plan (the “2012 Plan”), subject to the terms and conditions as in effect from time to time. Pursuant to the terms of the Nonqualified Stock Option Agreement and the Restricted Stock Award Agreement, each dated December 18, 2012, the shares of restricted stock and stock options awarded to you on December 18, 2012 in connection with your appointment as interim Chief Executive Officer of the Company will continue to vest or become exercisable, respectively, during your continuing service as Chief Executive Officer. For the avoidance of doubt, as this letter replaces and supersedes the terms of the offer letter between you and the Company dated December 18, 2012 (the “2012 Letter”), upon your acceptance and agreement to this letter, the waiver in the 2012 Letter of any acceleration of vesting of the aforementioned shares of restricted stock and stock options that may occur upon a “Change in Control” as defined in the 2012 Plan shall have no effect.
In addition, in connection with its annual review of the equity compensation of the executive officers of the Company, the Compensation Committee of the Board currently expects to grant you an award of performance share units under the 2012 Plan valued at $1,000,000 effective April 30, 2013. These performance share units will be granted on the same terms and subject to the same conditions as any contemporaneous performance share grants to the other executive officers of the Company. Further, the performance share units will be subject to the terms and conditions of an agreement or agreements governing those shares, and this description is qualified wholly by reference to the final agreed form and terms of that agreement or those agreements.
Term
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Your service as Chief Executive Officer under the terms of this offer letter will be effective as of April 30, 2013, and your employment with the Company will continue thereafter until either you or the Company decides to terminate the relationship. The Board may suspend your service as Chief Executive Officer of the Company at any time for any reason or no reason. Other than any compensation or benefits you may be eligible to receive under the Company's Severance Plan and the Company's Change of Control Severance Plan, both as may be amended, restated, superseded or suspended from time to time, you and the Company hereby agree that you will receive no termination, severance or similar payments or benefits upon the termination of your employment or the suspension of your service as Chief Executive Officer.
Additional Matters
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Our offer is contingent on your agreement to execute a Non-Competition and Confidentiality Agreement in form satisfactory to the Company, and additional terms that are to be determined. In addition, the expected grant of performance share units under the 2012 plan that is described above is contingent on
Mr. Steven M. Shindler
April 30, 2013
Page 3 of 4
your agreement to execute an agreement or agreements governing those units in form satisfactory to the Company. Further, our offer is subject to your representation that you are not violating any current covenants not to compete or other similar type of arrangement to which you may be subject by negotiating or entering into an arrangement of employment with the Company.
Upon your acceptance and agreement hereto, this letter replaces and supersedes the terms of the 2012 Letter, and the 2012 Letter shall be deemed to be terminated.
Until they may be publicly announced by the Company, the existence and terms of this offer are considered confidential information of the Company, and we trust that you will treat them as such.
[The remainder of this page is intentionally left blank.]
Mr. Steven M. Shindler
April 30, 2013
Page 4 of 4
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Sincerely,
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NII HOLDINGS, INC.
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By:
/s/ Gary D. Begeman
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Gary D. Begeman
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Executive Vice President and General Counsel
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Accepted and agreed,
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/s/ Steven M. Shindler
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Steven M. Shindler
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Exhibit 10.2
NII HOLDINGS, INC.
Performance Share Unit Agreement
THIS AGREEMENT, dated as of the [Day] day of [Month], [Year], between NII Holdings, Inc., a Delaware corporation (the “Company”), and «First_Name» «Last_Name» (“Participant”), is made pursuant to and subject to the provisions of the NII Holdings, Inc. 2012 Incentive Compensation Plan and any successor plan (the “Plan”). All terms that are used herein that are defined in the Plan shall have the same meaning given them in the Plan.
1.
Award of Stock Units
. Pursuant to the Plan, the Company, on April 30, 2013 (the “Award Date”), awarded Participant a target award (the “Target Award”) of «Actual Grant» performance-based restricted stock units (“Performance Share Units”). Each Performance Share Unit represents the right to receive shares of Common Stock or a cash payment as set forth in paragraph 5 below, subject to the terms and conditions of this Agreement and the Plan.
2.
Restrictions
. Except as provided in this Agreement, the Performance Share Units are nontransferable and are subject to a substantial risk of forfeiture.
3.
Determination of Award
. The number of Performance Share Units earned by Participant (the “Award”) shall range from 0% to 200% of the Target Award based on the Company's performance as of the end of a three-year performance period that runs from January 1, 2013 until December 31, 2015 (the “Performance Period”). At the end of the Performance Period, the Compensation Committee will determine the Award pursuant to Schedule A to this Agreement, provided that the Participant has at all times been an employee of the Company since the Award Date.
4.
Vesting
. Subject to paragraphs 6, 7 and 8 below, Participant's interest in the Award shall become nonforfeitable (“Vest”) on the third anniversary of the Award Date (the “Vesting Date”).
5.
Settlement of Performance Share Units
. Promptly following the Vesting Date, which is the payment date, and in any event no later than two and one-half months following the calendar year in which such Vesting Date occurs, the Company shall at the discretion of the Compensation Committee of the Company (the “Committee”) either (a) pay to the Participant a cash payment equal to the Award multiplied by the closing price of the Company's Common Stock on the Nasdaq Stock Market on the Vesting Date
(“Fair Market Value”) or (b) issue and deliver to the Participant the number of shares of Common Stock equal to the Award and enter the Participant's name on the books of the Company as the stockholder of record with respect to the shares of Common Stock delivered to the Participant.
6.
Death, Disability or Retirement
. Paragraph 4 to the contrary notwithstanding, if Participant (i) dies or becomes permanently and totally disabled within the meaning of section 22(e)(3) of the Internal Revenue Code (“Disabled”), (ii) retires from employment with the Company or an Affiliate at or after the age of 65 with at least 10 years of service prior to the Vesting Date or any forfeiture of the Performance Share Units under paragraph 8, or (iii) is terminated by the Company or an Affiliate without cause, then in each case a prorated amount of the Target Award shall Vest based on Participant's period of service during the Performance Period.
7.
Change in Control
. Upon a Change in Control, as defined in the Plan, the Target Award shall Vest if (a) the Performance Share Units are not assumed, replaced or converted to an equivalent award by the surviving entity (or affiliate thereof) for securities tradable on an established securities market, or (b) the Performance Share Units are amended, replaced or converted to an equivalent award by the surviving entity (or an affiliate thereof) for securities tradable on an established securities market and the Participant's employment is terminated within twenty-four (24) months following the Change in Control under circumstances that entitle the Participant to severance pursuant to the NII Holdings, Inc. Change of Control Severance Plan or the NII Holdings, Inc. Severance Plan or any substitutes or successors to such plans or policies in effect immediately preceding the Change in Control.
8.
Forfeiture
. All Performance Share Units that are not then Vested shall be forfeited if Participant's employment with the Company or an Affiliate terminates prior to the Vesting Date of such Performance Share Units in accordance with paragraph 4 above or in the event the Administrator makes a final determination that Participant has breached the provisions of paragraph 14.
9.
Stockholder Rights
. Participant will have no rights as a stockholder with respect to the shares of Common Stock underlying the Performance Share Units unless and until the Performance Share Units Vest and are settled by the issuance of such shares of Common Stock.
10.
Fractional Shares
. Fractional shares of Common Stock shall not be issuable hereunder, and when any provision hereof or the Plan may entitle Participant to a fractional share, such fraction shall be settled in cash.
11.
Withholding Taxes
. If the Company shall be required to withhold any United States federal, state, local or foreign income, employment or other tax in connection with the Vesting or settlement of the Award, Participant shall pay the tax or make provisions that are satisfactory to the Company for the payment thereof. The Participant may elect to have the Company retain from payment on settlement of the Award the number of shares of Common Stock (based on Fair Market Value) or cash, as applicable, equal to the amount of any required withholding.
12.
No Right to Continued Employment
. This Agreement does not confer upon Participant any right with respect to continuance of employment by the Company, nor shall it interfere in any way with the right of the Company to terminate Participant's employment at any time.
13.
Change in Capital Structure
. The terms of this award shall be adjusted as the Committee determines is equitably required in the event (a) the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares, or engages in a transaction to which Code Section 422 applies, or (b) there occurs any other event which, in the judgment of the Committee necessitates such action.
14.
Confidentiality.
Participant agrees that, as a condition of receiving the Performance Share Units, Participant shall not, unless otherwise required by law, discuss or otherwise disclose to any person or entity any information contained in this Award, including but not limited to the fact that Participant received the Award and the number of Performance Share Units awarded herein.
15.
Governing Law, Personal Jurisdiction and Service
. This Agreement shall be governed by, and interpreted in accordance with the internal substantive laws of the State of Delaware, without giving effect to the principles of conflicts of law. Each party hereto irrevocably submits itself to the
exclusive
personal jurisdiction of the Federal and State courts sitting in the State of Delaware, and hereby waives any claims it may have as to inconvenient forum. Each party hereto also agrees that service of process may be achieved by any form of mail addressed to the party to be served and requiring a signed receipt, at the address provided in Section 15 of this Agreement or to the address provided to the Company or its subsidiary.
16.
Notice
. Any notice or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:
If to the Company: NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA 20190
Attn: Gary D. Begeman, Executive Vice President,
General Counsel and Secretary
If to Participant: The personal address on file with UBS.
Any such notice shall be deemed to have been given (a) on the date of postmark, in the case of notice by mail, or (b) on the date of delivery, if delivered in person.
17.
Conflicts
. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern.
18.
Code Section 409A
. This Award is intended to satisfy the short-term deferral rule under Code Section 409A, and thus be exempt from rules applicable to deferred compensation under that Section. This Award shall be administered and this Agreement interpreted accordingly.
19.
Participant Bound by Plan
. Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
20.
Binding Effect
. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on its behalf as of the [Day] day of [Month], [Year], and the Participant has affixed his signature hereto.
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NII HOLDINGS, INC.
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Gary D. Begeman
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Executive Vice President, General Counsel and Secretary
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PARTICIPANT
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_____________________________
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Dated:
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Exhibit 99.1
NII HOLDINGS ANNOUNCES FIRST QUARTER 2013 RESULTS
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Net subscriber additions of 152,000
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Consolidated operating revenues of $1.41 billion
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•
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Consolidated adjusted operating income before depreciation and amortization (adjusted OIBDA) of $230 million
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RESTON, Va. - May 2, 2013 -
NII Holdings
, Inc. [NASDAQ: NIHD] today announced its consolidated financial results for the first quarter of 2013. During the quarter, the Company added 152,000 net subscribers to its network, bringing its ending subscriber base to over 11.5 million, a 5 percent increase from March 31, 2012. Financial results for the quarter included consolidated operating revenues of $1.41 billion, down 13 percent from the level reported in the first quarter of 2012, and consolidated adjusted OIBDA, which excludes the impact of non-cash asset impairment and restructuring charges, of $230 million, a 35 percent decline compared to the same period last year. The decrease in consolidated adjusted OIBDA was primarily driven by incremental expenses related to the Company's deployment of its planned next generation networks, lower average revenue per subscriber (ARPU) on a local currency basis and weaker average foreign currency exchange rates. For the first quarter of 2013, the Company generated a consolidated operating loss of $102 million and a consolidated net loss of $208 million, or $1.21 per basic share. Capital expenditures were $156 million for the quarter.
“During the quarter, we took actions to execute against our key priorities, and we are tracking well on our goals for the year,” said Steve Shindler, NII Holdings' chairman and chief executive officer. “We continue to focus on completing our next generation networks in Mexico and Brazil, improving our operational performance and realigning our business operations to provide the best return on investment. We have taken steps to achieve these goals, including adding more discipline to our processes and improving our focus on execution, which has positively impacted our network deployments and operational performance. Our recently announced sale of Nextel Peru to Entel is one step in this process to realign our business. We are excited about the progress that we have made to date, and there is a lot more to come.”
NII Holdings' consolidated ARPU was $35 for the first quarter of 2013, down almost $7 compared to the same period last year. This decline resulted from lower priced rate plans the Company offered in response to more aggressive competition in recent quarters, particularly in Brazil, and from the year-over-year weakening in local foreign currency exchange rates. The Company reported churn of 2.59 percent for the first quarter, up about 50 basis points from the level reported for the same period last year. Consolidated cost per gross add (CPGA) was $240 for the first quarter, a $36 decrease compared to the first quarter of 2012.
The Company ended the quarter with $5.7 billion in total debt and $1.9 billion in consolidated cash and investments, resulting in net debt of $3.8 billion. In the first quarter, the Company completed a senior note financing that generated $750 million in gross proceeds and in April, the Company completed a follow-on financing that generated an additional $161 million in gross proceeds, further enhancing its liquidity position.
“The high level of demand for our senior note offering in February allowed us to complete a follow-on transaction, which generated additional liquidity at a lower cost of capital than the original offering," said Juan Figuereo, NII Holdings' executive vice president and chief financial officer. “These financings combined with the proposed sale of Nextel Peru and our planned tower sale will improve our already strong liquidity position, and will enable us to complete the deployment of our next generation networks as quickly as possible in our largest markets of Mexico and Brazil, improving our competitive position in these markets.”
Additional information relating to NII Holdings' first quarter 2013 results will be provided on the Company's earnings call on Thursday, May 2, 2013 from 8:30 AM to 9:15 AM EDT. The call will be available via webcast, online
www.nii.com
on the
Investor Relations
page or by phone at the numbers provided below.
Phone:
Domestic
1.877.280.4961 pass-code: NIIHOLDINGS
International
1.857.244.7318 pass-code: NIIHOLDINGS
Please click
here
for additional
Global Access Numbers
All participants are asked to dial in 10-15 minutes prior to the start of the conference call. The call will also be available via webcast, and online at
www.nii.com
on the
Investor Relations
page. If you are unable to participate, a rebroadcast of the conference call will be available for two weeks following the call.
For a replay of this call, please use the following:
Conference Call Replay:
Domestic
1.888.286.8010 pass-code: 21339350
International
1.617.801.6888 pass-code: 21339350
The financial results provided throughout this press release are prepared in accordance with accounting principles generally accepted in the United States, or GAAP. NII has presented consolidated adjusted OIBDA, ARPU, CPGA and net debt. These measures are non-GAAP financial measures and should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial tables. To view these and other reconciliations of non-GAAP financial measures that the Company uses and information about how to access the conference call discussing NII's first quarter 2013 results, visit the investor relations link at
www.nii.com.
About NII Holdings, Inc.
NII Holdings, Inc., a publicly held company based in Reston, Va., is a provider of differentiated mobile communication services for businesses and high value consumers in Latin America. NII, operating under the Nextel brand in Brazil, Mexico, Argentina, Peru and Chile, offers fully integrated wireless communications tools with digital cellular voice services, data services, wireless Internet access and Nextel Direct Connect
®
and International Direct Connect
SM
, a digital two-way radio. NII is a Fortune 500 and Barron's 500 company, and has also been named one of the best places to work among multinationals in Latin America by the Great Place to Work
®
Institute. The company trades on the NASDAQ market under the symbol NIHD. Visit the company's website at
www.nii.com.
Nextel, the Nextel logo and Nextel Direct Connect and International Direct Connect are trademarks and/or service marks of Nextel Communications, Inc., and are used by NII's subsidiaries under license in Latin America.
Visit NII's news room for news and to access our markets' news centers:
www.nii.com/newsroom.
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding the business outlook, future performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, network usage, customer growth and retention, pricing, operating costs, the timing of various events, the economic and regulatory environment and the foreign exchange rates that will prevail during 2013. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to the impact of more intense competitive conditions and changes in economic conditions in the markets we serve; the impact on our financial results, and potential reductions in the recorded value of our assets, that may result from fluctuations in foreign currency exchange rates and, in particular, fluctuations in the relative values of the currencies of the countries in which we operate compared to the U.S. dollar; the risk that our network technologies will not perform properly or support the services our customers want or need, including the risk that technology developments to support our services will not be timely delivered; the risk that customers in the markets we serve will not find our services attractive; unexpected results of litigation; and the additional risks and uncertainties that are described in NII Holdings' Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. This press release speaks only as of its date, and NII Holdings disclaims any duty to update the information herein.
Media Contacts:
NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA. 20190
(703) 390-5100
www.nii.com
Investor Relations:
Tim Perrott
(703) 390-5113
tim.perrott@nii.com
Media Relations:
Claudia Restrepo
(786) 251-7020
claudia.restrepo@nii.com
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Operating revenues
Service and other revenues
|
$
|
1,359.9
|
|
|
$
|
1,543.7
|
|
|
Handset and accessory revenues
|
53.5
|
|
|
89.4
|
|
|
|
1,413.4
|
|
|
1,633.1
|
|
|
Operating expenses
Cost of service (exclusive of depreciation and amortization
included below)
|
425.8
|
|
|
443.0
|
|
|
Cost of handset and accessory sales
|
222.4
|
|
|
228.7
|
|
|
Selling, general and administrative
|
517.2
|
|
|
561.0
|
|
|
Provision for doubtful accounts
|
18.0
|
|
|
45.5
|
|
|
Impairment and restructuring charges
|
128.0
|
|
|
—
|
|
|
Depreciation
|
187.8
|
|
|
160.6
|
|
|
Amortization
|
16.1
|
|
|
9.7
|
|
|
|
1,515.3
|
|
|
1,448.5
|
|
|
Operating (loss) income
|
(101.9
|
)
|
|
184.6
|
|
|
Other income (expense)
Interest expense
|
(109.8
|
)
|
|
(88.6
|
)
|
|
Interest income
|
6.5
|
|
|
6.2
|
|
|
Foreign currency transaction gains (losses), net
|
23.2
|
|
|
(14.3
|
)
|
|
Other expense, net
|
(4.6
|
)
|
|
(9.0
|
)
|
|
|
(84.7
|
)
|
|
(105.7
|
)
|
|
(Loss) income before income tax provision
|
(186.6
|
)
|
|
78.9
|
|
|
Income tax provision
|
(20.9
|
)
|
|
(65.3
|
)
|
|
Net (loss) income
|
$
|
(207.5
|
)
|
|
$
|
13.6
|
|
|
|
|
|
|
|
Net (loss) income per common share, basic
|
$
|
(1.21
|
)
|
|
$
|
0.08
|
|
|
Net (loss) income per common share, diluted
|
$
|
(1.21
|
)
|
|
$
|
0.08
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding,
basic
|
171.7
|
|
|
171.2
|
|
|
Weighted average number of common shares outstanding,
diluted
|
171.7
|
|
|
172.0
|
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
|
|
Cash and cash equivalents
|
$
|
1,884.5
|
|
|
$
|
1,383.5
|
|
|
Short-term investments
|
43.9
|
|
|
204.8
|
|
|
Accounts receivable, less allowance for
doubtful accounts of $94.0 and $112.9
|
879.1
|
|
|
705.7
|
|
|
Property, plant and equipment, net
|
3,859.6
|
|
|
3,884.9
|
|
|
Intangible assets, net
|
1,185.6
|
|
|
1,164.7
|
|
|
Total assets
|
9,685.1
|
|
|
9,223.1
|
|
|
Total debt
|
5,702.2
|
|
|
4,866.2
|
|
|
Total liabilities
|
7,494.7
|
|
|
6,906.6
|
|
|
Stockholders' equity
|
2,190.4
|
|
|
2,316.5
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 and 2012
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
(subscribers in thousands)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Total subscribers* (as of March 31)
|
11,513.1
|
|
|
10,972.1
|
|
|
Net subscriber additions
|
151.6
|
|
|
260.1
|
|
|
Churn (%)
|
2.59
|
%
|
|
2.07
|
%
|
|
|
|
|
|
|
Average monthly revenue per subscriber unit in
service (ARPU) (1)
|
$
|
35
|
|
|
$
|
42
|
|
|
|
|
|
|
|
Cost per gross add (CPGA) (1)
|
$
|
240
|
|
|
$
|
276
|
|
* Each subscriber, which we also refer to as a subscriber unit, represents an active subscriber identity module, or SIM, which is the level at which we have tracked and will continue to track subscribers.
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Brazil
|
|
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Operating revenues
Service and other revenues
|
$
|
616.6
|
|
|
$
|
776.9
|
|
|
Handset and accessory revenues
|
19.3
|
|
|
47.4
|
|
|
|
635.9
|
|
|
824.3
|
|
|
Operating expenses
Cost of service (exclusive of depreciation and amortization included
below)
|
217.4
|
|
|
250.7
|
|
|
Cost of handset and accessory sales
|
50.6
|
|
|
59.0
|
|
|
Selling, general and administrative
|
202.6
|
|
|
239.6
|
|
|
Provision for doubtful accounts
|
7.7
|
|
|
37.0
|
|
|
Segment earnings
|
157.6
|
|
|
238.0
|
|
|
Impairment and restructuring charges
|
23.8
|
|
|
—
|
|
|
Management fee and other
|
12.8
|
|
|
13.5
|
|
|
Depreciation and amortization
|
97.6
|
|
|
78.9
|
|
|
Operating income
|
$
|
23.4
|
|
|
$
|
145.6
|
|
|
|
|
|
|
|
Total subscribers (as of March 31)
|
3,884.7
|
|
|
4,226.9
|
|
|
Net subscriber additions
|
38.4
|
|
|
111.6
|
|
|
Churn (%)
|
2.34
|
%
|
|
2.02
|
%
|
|
|
|
|
|
|
ARPU (1)
|
$
|
47
|
|
|
$
|
55
|
|
|
|
|
|
|
|
CPGA (1)
|
$
|
204
|
|
|
$
|
223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Mexico
|
|
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Operating revenues
Service and other revenues
|
$
|
501.0
|
|
|
$
|
522.5
|
|
|
Handset and accessory revenues
|
13.0
|
|
|
22.0
|
|
|
|
514.0
|
|
|
544.5
|
|
|
Operating expenses
Cost of service (exclusive of depreciation and amortization included
below)
|
123.1
|
|
|
103.1
|
|
|
Cost of handset and accessory sales
|
128.5
|
|
|
128.7
|
|
|
Selling, general and administrative
|
157.0
|
|
|
140.2
|
|
|
Provision for doubtful accounts
|
4.1
|
|
|
3.8
|
|
|
Segment earnings
|
101.3
|
|
|
168.7
|
|
|
Impairment and restructuring charges
|
19.7
|
|
|
—
|
|
|
Management fee and other
|
18.3
|
|
|
31.8
|
|
|
Depreciation and amortization
|
62.7
|
|
|
46.7
|
|
|
Operating income
|
$
|
0.6
|
|
|
$
|
90.2
|
|
|
|
|
|
|
|
Total subscribers (as of March 31)
|
3,917.6
|
|
|
3,758.9
|
|
|
Net subscriber additions
|
15.8
|
|
|
63.5
|
|
|
Churn (%)
|
2.08
|
%
|
|
2.02
|
%
|
|
|
|
|
|
|
ARPU (1)
|
$
|
38
|
|
|
$
|
42
|
|
|
|
|
|
|
|
CPGA (1)
|
$
|
487
|
|
|
$
|
392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Argentina
|
|
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Operating revenues
Service and other revenues
|
$
|
153.1
|
|
|
$
|
156.3
|
|
|
Handset and accessory revenues
|
13.9
|
|
|
12.2
|
|
|
|
167.0
|
|
|
168.5
|
|
|
Operating expenses
Cost of service (exclusive of depreciation and amortization included
below)
|
40.1
|
|
|
49.4
|
|
|
Cost of handset and accessory sales
|
21.2
|
|
|
20.3
|
|
|
Selling, general and administrative
|
50.3
|
|
|
48.6
|
|
|
Provision for doubtful accounts
|
3.1
|
|
|
3.5
|
|
|
Segment earnings
|
52.3
|
|
|
46.7
|
|
|
Impairment and restructuring charges
|
3.7
|
|
|
—
|
|
|
Management fee and other
|
7.4
|
|
|
5.0
|
|
|
Depreciation and amortization
|
11.3
|
|
|
10.9
|
|
|
Operating income
|
$
|
29.9
|
|
|
$
|
30.8
|
|
|
|
|
|
|
|
Total subscribers (as of March 31)
|
1,819.2
|
|
|
1,447.2
|
|
|
Net subscriber additions
|
63.6
|
|
|
59.0
|
|
|
Churn (%)
|
2.93
|
%
|
|
1.46
|
%
|
|
|
|
|
|
|
ARPU (1)
|
$
|
25
|
|
|
$
|
31
|
|
|
|
|
|
|
|
CPGA (1)
|
$
|
94
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Peru
|
|
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Operating revenues
Service and other revenues
|
$
|
76.8
|
|
|
$
|
81.3
|
|
|
Handset and accessory revenues
|
5.8
|
|
|
7.5
|
|
|
|
82.6
|
|
|
88.8
|
|
|
Operating expenses
Cost of service (exclusive of depreciation and amortization included
below)
|
26.7
|
|
|
28.2
|
|
|
Cost of handset and accessory sales
|
16.1
|
|
|
18.0
|
|
|
Selling, general and administrative
|
35.4
|
|
|
33.6
|
|
|
Provision for doubtful accounts
|
1.5
|
|
|
0.6
|
|
|
Segment earnings
|
2.9
|
|
|
8.4
|
|
|
Impairment and restructuring charges
|
3.4
|
|
|
—
|
|
|
Management fee and other
|
(0.2
|
)
|
|
4.4
|
|
|
Depreciation and amortization
|
21.1
|
|
|
19.3
|
|
|
Operating loss
|
$
|
(21.4
|
)
|
|
$
|
(15.3
|
)
|
|
|
|
|
|
|
Total subscribers (as of March 31)
|
1,699.3
|
|
|
1,449.3
|
|
|
Net subscriber additions
|
39.8
|
|
|
14.6
|
|
|
Churn (%)
|
3.53
|
%
|
|
2.90
|
%
|
|
|
|
|
|
|
ARPU (1)
|
$
|
14
|
|
|
$
|
17
|
|
|
|
|
|
|
|
CPGA (1)
|
$
|
101
|
|
|
$
|
160
|
|
(1) For information regarding ARPU and CPGA, see “Non-GAAP Reconciliations for the Three Months Ended March 31, 2013 and 2012” included in this release.
NON-GAAP RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(UNAUDITED)
Consolidated OIBDA and Consolidated Adjusted OIBDA
Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated adjusted operating income before depreciation and amortization, or adjusted OIBDA, represents consolidated operating income before depreciation expense, amortization expense, material non-cash asset impairments, severance costs associated with publicly announced restructuring plans and other material non-recurring charges. During the fourth quarter of 2012, we converted our consolidated OIBDA metric to a consolidated adjusted OIBDA metric to better align this metric with our business objectives. Consolidated OIBDA and consolidated adjusted OIBDA are not measurements under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA and consolidated adjusted OIBDA measures of other companies and should be considered in addition to, but not as substitutes for, the information contained in our statements of operations. We believe that consolidated OIBDA and consolidated adjusted OIBDA provide useful information to investors because they are indicators of our operating performance, especially in a capital intensive industry such as ours, since they exclude items that are not directly attributable to ongoing business operations. Consolidated OIBDA and consolidated adjusted OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
Consolidated operating (loss) income
|
$
|
(101.9
|
)
|
|
$
|
184.6
|
|
|
Consolidated depreciation
|
187.8
|
|
|
160.6
|
|
|
Consolidated amortization
|
16.1
|
|
|
9.7
|
|
|
Consolidated operating income before
depreciation and amortization
|
102.0
|
|
|
354.9
|
|
|
Non-cash asset impairment charges
|
85.3
|
|
|
—
|
|
|
Restructuring charges
|
42.7
|
|
|
—
|
|
|
Consolidated adjusted operating income
before depreciation and amortization
|
$
|
230.0
|
|
|
$
|
354.9
|
|
|
|
|
|
|
Average Monthly Revenue Per Handset/Unit in Service (ARPU)
Average monthly revenue per subscriber unit in service, or ARPU, is an industry term that measures service revenues, which we refer to as subscriber revenues, per period from our customers divided by the weighted average number of subscriber units in commercial service during that period. ARPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to ARPU measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. Other revenue includes revenues for such services as roaming, handset maintenance, cancellation fees, analog and other. ARPU can be calculated and reconciled to our consolidated statement of operations as follows (in millions, except ARPU):
|
|
|
|
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Consolidated service and other revenues
|
$
|
1,359.9
|
|
|
$
|
1,543.7
|
|
|
Less: consolidated other revenues
|
(154.5
|
)
|
|
(178.2
|
)
|
|
Total consolidated subscriber revenues
|
$
|
1,205.4
|
|
|
$
|
1,365.5
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
calculated with subscriber revenues
|
$
|
35
|
|
|
$
|
42
|
|
|
|
|
|
|
|
ARPU
calculated with service and other revenues
|
$
|
40
|
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Brazil
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Service and other revenues
|
$
|
616.6
|
|
|
$
|
776.9
|
|
|
Less: other revenues
|
(73.5
|
)
|
|
(92.8
|
)
|
|
Total subscriber revenues
|
$
|
543.1
|
|
|
$
|
684.1
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
calculated with subscriber revenues
|
$
|
47
|
|
|
$
|
55
|
|
|
|
|
|
|
|
ARPU
calculated with service and other revenues
|
$
|
53
|
|
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Mexico
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Service and other revenues
|
$
|
501.0
|
|
|
$
|
522.5
|
|
|
Less: other revenues
|
(53.4
|
)
|
|
(58.0
|
)
|
|
Total subscriber revenues
|
$
|
447.6
|
|
|
$
|
464.5
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
calculated with subscriber revenues
|
$
|
38
|
|
|
$
|
42
|
|
|
|
|
|
|
|
ARPU
calculated with service and other revenues
|
$
|
43
|
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Argentina
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Service and other revenues
|
$
|
153.1
|
|
|
$
|
156.3
|
|
|
Less: other revenues
|
(19.8
|
)
|
|
(20.6
|
)
|
|
Total subscriber revenues
|
$
|
133.3
|
|
|
$
|
135.7
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
calculated with subscriber revenues
|
$
|
25
|
|
|
$
|
31
|
|
|
|
|
|
|
|
ARPU
calculated with service and other revenues
|
$
|
29
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Peru
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Service and other revenues
|
$
|
76.8
|
|
|
$
|
81.3
|
|
|
Less: other revenues
|
(7.0
|
)
|
|
(6.1
|
)
|
|
Total subscriber revenues
|
$
|
69.8
|
|
|
$
|
75.2
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
calculated with subscriber revenues
|
$
|
14
|
|
|
$
|
17
|
|
|
|
|
|
|
|
ARPU
calculated with service and other revenues
|
$
|
15
|
|
|
$
|
19
|
|
|
|
|
|
|
Cost per Gross Add (CPGA)
Cost per gross add, or CPGA, is an industry term that is calculated by dividing our selling, marketing and handset and accessory subsidy costs, excluding costs unrelated to initial customer acquisition, by our new subscribers during the period, or gross adds. CPGA is not a measurement under accounting principles generally accepted in the United States, may not be similar to CPGA measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe CPGA is a measure of the relative cost of customer acquisition. CPGA can be calculated and reconciled to our consolidated statements of operations as follows (in millions, except CPGA):
|
|
|
|
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Consolidated handset and accessory revenues
|
$
|
53.5
|
|
|
$
|
89.4
|
|
|
Less: consolidated uninsured replacement revenues
|
(4.2
|
)
|
|
(5.0
|
)
|
|
Consolidated handset and accessory revenues, net
|
49.3
|
|
|
84.4
|
|
|
Less: consolidated cost of handset and accessory sales
|
222.4
|
|
|
228.7
|
|
|
Consolidated handset subsidy costs
|
173.1
|
|
|
144.3
|
|
|
Consolidated selling and marketing
|
158.3
|
|
|
189.5
|
|
|
Costs per statement of operations
|
331.4
|
|
|
333.8
|
|
|
Less: consolidated costs unrelated to initial customer acquisition
|
(81.6
|
)
|
|
(75.3
|
)
|
|
Customer acquisition costs
|
$
|
249.8
|
|
|
$
|
258.5
|
|
|
|
|
|
|
|
Cost per Gross Add
|
$
|
240
|
|
|
$
|
276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Brazil
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Handset and accessory revenues
|
$
|
19.3
|
|
|
$
|
47.4
|
|
|
Less: uninsured replacement revenues
|
(1.9
|
)
|
|
(1.9
|
)
|
|
Handset and accessory revenues, net
|
17.4
|
|
|
45.5
|
|
|
Less: cost of handset and accessory sales
|
50.6
|
|
|
59.0
|
|
|
Handset subsidy costs
|
33.2
|
|
|
13.5
|
|
|
Selling and marketing
|
44.9
|
|
|
76.5
|
|
|
Costs per statement of operations
|
78.1
|
|
|
90.0
|
|
|
Less: costs unrelated to initial customer acquisition
|
(15.1
|
)
|
|
(8.8
|
)
|
|
Customer acquisition costs
|
$
|
63.0
|
|
|
$
|
81.2
|
|
|
|
|
|
|
|
Cost per Gross Add
|
$
|
204
|
|
|
$
|
223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Mexico
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Handset and accessory revenues
|
$
|
13.0
|
|
|
$
|
22.0
|
|
|
Less: uninsured replacement revenues
|
(2.3
|
)
|
|
(3.1
|
)
|
|
Handset and accessory revenues, net
|
10.7
|
|
|
18.9
|
|
|
Less: cost of handset and accessory sales
|
128.5
|
|
|
128.7
|
|
|
Handset subsidy costs
|
117.8
|
|
|
109.8
|
|
|
Selling and marketing
|
71.7
|
|
|
65.8
|
|
|
Costs per statement of operations
|
189.5
|
|
|
175.6
|
|
|
Less: costs unrelated to initial customer acquisition
|
(62.8
|
)
|
|
(62.3
|
)
|
|
Customer acquisition costs
|
$
|
126.7
|
|
|
$
|
113.3
|
|
|
|
|
|
|
|
Cost per Gross Add
|
$
|
487
|
|
|
$
|
392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Argentina
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Handset and accessory revenues
|
$
|
13.9
|
|
|
$
|
12.2
|
|
|
Less: cost of handset and accessory sales
|
21.2
|
|
|
20.3
|
|
|
Handset subsidy costs
|
7.3
|
|
|
8.1
|
|
|
Selling and marketing
|
14.3
|
|
|
14.8
|
|
|
Costs per statement of operations
|
21.6
|
|
|
22.9
|
|
|
Less: costs unrelated to initial customer acquisition
|
(0.9
|
)
|
|
(1.9
|
)
|
|
Customer acquisition costs
|
$
|
20.7
|
|
|
$
|
21.0
|
|
|
|
|
|
|
|
Cost per Gross Add
|
$
|
94
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nextel Peru
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
Handset and accessory revenues
|
$
|
5.8
|
|
|
$
|
7.5
|
|
|
Less: cost of handset and accessory sales
|
16.1
|
|
|
18.0
|
|
|
Handset subsidy costs
|
10.3
|
|
|
10.5
|
|
|
Selling and marketing
|
14.2
|
|
|
14.5
|
|
|
Costs per statement of operations
|
24.5
|
|
|
25.0
|
|
|
Less: costs unrelated to initial customer acquisition
|
(2.5
|
)
|
|
(2.5
|
)
|
|
Customer acquisition costs
|
$
|
22.0
|
|
|
$
|
22.5
|
|
|
|
|
|
|
|
Cost per Gross Add
|
$
|
101
|
|
|
$
|
160
|
|
|
|
|
|
|
Net Debt
Net debt represents total debt less cash, cash equivalents, short-term and long-term investments. Net debt is not a measurement under accounting principles generally accepted in the United States, may not be similar to net debt measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our balance sheets. We believe that net debt provides useful information concerning our liquidity and leverage. Net debt as of March 31, 2013 can be calculated as follows (in millions):
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
Total debt
|
$
|
5,702.2
|
|
|
Add: debt discounts
|
23.7
|
|
|
Less: cash and cash equivalents
|
1,884.5
|
|
|
Less: short-term investments
|
43.9
|
|
|
Net debt
|
$
|
3,797.5
|
|
|
|
|
Impact of Foreign Currency Fluctuations
The following table shows the impact of changes in foreign currency exchange rates on certain financial measures for the three months ended March 31, 2012 compared to the same period in 2013 by (i) adjusting the relevant measures for the three months ended March 31, 2012 to levels that would have resulted if the average foreign currency exchange rates for the three months ended March 31, 2012 were the same as the average foreign currency exchange rates that were in effect for the three months ended March 31, 2013; and (ii) comparing the actual and adjusted financial measures for the three months ended March 31, 2012 to the similar financial measures for the three months ended March 31, 2013 to show the percentage change in those measures before and after taking those adjustments into account. The amounts reflected in the following table for operating income before depreciation and amortization on a consolidated basis and segment earnings for Nextel Brazil, Nextel Mexico and Nextel Argentina, before the adjustments for changes in foreign currency exchange rates, are based on the calculations contained elsewhere in these non-GAAP reconciliations for the three months ended March 31, 2013 and 2012. The average foreign currency exchange rates for each of the relevant currencies during each of the three months ended March 31, 2013 and 2012 are included in the notes to the table below. The information reflected in the following table is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that these calculations provide useful information concerning our relative performance for the three months ended March 31, 2013 compared to the same period in 2012 by removing the impact of the significant difference in the average foreign currency exchange rates in effect for those periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NII Holdings, Inc.
|
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
1Q 2012 Actual
|
1Q 2012 Adjustment (1)
|
1Q 2012 Normalized (1)
|
1Q 2013 Actual
|
1Q 2012
to 1Q 2013
Actual Growth
Rate (2)
|
1Q 2012
to 1Q 2013
Normalized
Growth Rate (3)
|
|
Consolidated:
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
1,633,148
|
|
$
|
(101,369
|
)
|
$
|
1,531,779
|
|
$
|
1,413,396
|
|
(13)%
|
(8)%
|
|
Adjusted operating income before
depreciation and amortization
|
354,936
|
|
(40,675
|
)
|
314,261
|
|
229,990
|
|
(35)%
|
(27)%
|
|
Nextel Brazil:
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
824,300
|
|
$
|
(94,062
|
)
|
$
|
730,238
|
|
$
|
635,872
|
|
(23)%
|
(13)%
|
|
Segment earnings
|
237,995
|
|
(34,150
|
)
|
203,845
|
|
157,643
|
|
(34)%
|
(23)%
|
|
Nextel Mexico:
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
544,462
|
|
$
|
15,056
|
|
$
|
559,518
|
|
$
|
514,014
|
|
(6)%
|
(8)%
|
|
Segment earnings
|
168,710
|
|
5,956
|
|
174,666
|
|
101,229
|
|
(40)%
|
(42)%
|
|
Nextel Argentina:
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
168,517
|
|
$
|
(22,619
|
)
|
$
|
145,898
|
|
$
|
167,024
|
|
(1)%
|
14%
|
|
Segment earnings
|
46,748
|
|
(11,584
|
)
|
35,164
|
|
52,341
|
|
12%
|
49%
|
|
|
|
|
(1)
|
The "1Q 2012 Normalized" amounts reflect the impact of applying the average foreign currency exchange rates for the three months ended March 31, 2013 to the operating revenues earned in foreign currencies and to the other components of each of the actual financial measures shown above for the three months ended March 31, 2012, other than certain components of those measures consisting of U.S. dollar-based operating expenses, which were not adjusted. The amounts included under the column "1Q 2012 Adjustment" reflect the amount determined by subtracting the "1Q 2012 Normalized" amounts calculated as described in the preceding sentence from the "1Q 2012 Actual" amounts and reflect the impact of the year-over-year change in the average foreign currency exchange rates on each of the financial measures for the three months ended March 31, 2012. The average foreign currency exchange rates for each of the relevant currencies during the three months ended March 31, 2013 and 2012 for purposes of these calculations were as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2013
|
|
2012
|
|
Brazilian real
|
2.00
|
|
1.77
|
|
Mexican peso
|
12.66
|
|
13.02
|
|
Argentine peso
|
5.02
|
|
4.34
|
|
|
|
|
(2)
|
The percentage amounts in this column reflect the growth rate for each of the financial measures comparing the amounts in the "1Q 2013 Actual" column with those in the "1Q 2012 Actual" column.
|
|
|
|
|
(3)
|
The percentage amounts in this column reflect the growth rate for each of the financial measures comparing the amounts in the "1Q 2013 Actual" column with those in the "1Q 2012 Normalized" column.
|
Exhibit 99.2
NII Holdings Names Steve Shindler
Chief Executive Officer
RESTON, Va. - May 2, 2013 -
NII Holdings
, Inc. [NASDAQ: NIHD], a provider of differentiated mobile communications services operating under the Nextel brand in Latin America, announced today that its Board of Directors has appointed Steven M. Shindler to the permanent position of chief executive officer, effective immediately. Mr. Shindler had been holding the dual role of chairman of the Board and interim chief executive officer while the Board conducted an extensive search for a chief executive.
“Having been in the role on an interim basis for several months, I am excited to serve as NII's CEO permanently and I am fully committed to the continued success of NII Holdings,” Mr. Shindler said. “I will continue to focus my attention on the build-out of our 3G networks, high-quality subscriber growth, key financial metrics and providing a quality product and superior customer experience, all with the goal of driving success for our customers, our employees and our shareholders. We have a strong brand, a tremendous group of fully engaged employees and a loyal customer base that expects the best possible service from us. I am excited to lead this company once again, working together with our Board and our strong and committed team, to accomplish many great things.”
Mr. Shindler has served as chairman of NII Holdings since 2000 and was the company's CEO from 2000 to 2008. He served as chief financial officer of Nextel Communications from 1996 to 2000. Earlier, from 1987 to 1996, Mr. Shindler was managing director of Toronto-Dominion Bank, where he raised capital for wireless companies.
“The Board is very pleased that Steve Shindler has agreed to return to the CEO position on a permanent basis. Upon completing an extensive search for a permanent chief executive, the Board concluded that Steve had the right combination of experience, drive and commitment that is necessary for success in this role,” said Carolyn F. Katz, Lead Independent Director on the company's Board. “During his previous tenure as CEO, Steve oversaw a restructuring of the company that was followed by a sustained period of profitable growth. Steve is known for clear decision-making, sound strategic direction and effective engagement with employees. We appreciate his willingness to take on this important role and fully support his vision for the company.”
In connection with Mr. Shindler's appointment on a permanent basis, the Board of Directors is considering whether to separate the positions of chairman of the Board and chief executive officer. Although the Board believes many factors are relevant to this decision and continues to consider these factors, the Board currently expects to separate the positions of chairman and chief executive officer and to appoint a non-executive chairman in the near future.
About NII Holdings, Inc.
NII Holdings, Inc., a publicly held company based in Reston, Va., is a provider of differentiated mobile communication services for businesses and high value consumers in Latin America. NII, operating under the Nextel brand in Brazil, Mexico, Argentina, Peru and Chile, offers fully integrated wireless communications tools with digital cellular voice services, data services, wireless Internet access and Nextel Direct Connect
®
and International Direct Connect
SM
, a digital two-way radio. NII is a Fortune 500 and Barron's 500 company, and has also been named one of the best places to work among multinationals in Latin America by the Great Place to Work
®
Institute. The company trades on the NASDAQ market under the symbol NIHD. Visit the company's website at
www.nii.com.
Nextel, the Nextel logo and Nextel Direct Connect and International Direct Connect are trademarks and/or service marks of Nextel Communications, Inc., and are used by NII's subsidiaries under license in Latin America.
Visit NII's news room for news and to access our markets' news centers:
www.nii.com/newsroom.
Media Contacts:
NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA. 20190
(703) 390-5100
www.nii.com
Investor Relations:
Tim Perrott
(703) 390-5113
tim.perrott@nii.com
Media Relations:
Claudia Restrepo
(786) 251-7020
claudia.restrepo@nii.com
