þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2018
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission file number 001-37488
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Delaware
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91-1671412
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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12110 Sunset Hills Road, Suite 600
Reston, Virginia
(Address of principal executive offices)
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20190
(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.001 per share
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Nasdaq Global Select Market
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Number of Shares Outstanding
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Title of Class
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on March 11, 2019
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Common Stock, $0.001 par value per share
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101,377,968
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Item
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Description
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Page
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Item 1.
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Business
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|
•
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mobile telephone voice and wireless data services;
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•
|
international voice and data roaming services; and
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•
|
value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and international WiFi hotspot networks.
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•
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offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;
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•
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continuing to implement cost reduction strategies and reconfiguring our network architecture in order to lower cash costs per user, or CCPU, gain scale advantages, create an agile organization and improve overall profitability;
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•
|
offering simple and valuable service plans that generate higher average revenue per user, or ARPU, and result in lower subscriber turnover; and
|
•
|
building on the strength of the unique positioning of the Nextel brand.
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•
|
offering flexible rate plans in order to meet our customers' individualized needs, including various unlimited voice rate plans at competitive prices;
|
•
|
taking advantage of our smaller company size and flexibility to aggressively market to certain customer segments;
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•
|
providing a superior customer-centric experience that cultivates a long-term relationship with our customers;
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•
|
continuing to implement cost reduction strategies and reconfiguring our network architecture to reduce CCPU;
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•
|
streamlining distribution channels, including closing unprofitable retail stores; and
|
•
|
reviewing commission and subsidy strategies.
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Item 1A.
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Risk Factors
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1.
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Completion of the sale of Nextel Brazil is subject to certain conditions and if these conditions are not satisfied or waived, the sale will not be completed, and our business will be materially and adversely impacted.
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•
|
we may experience negative reactions from the financial markets, including negative impacts on our stock price;
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•
|
we may experience negative reactions from our customers, vendors and employees;
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•
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we have incurred and will continue to incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the stock purchase agreement, and we would have to recognize these expenses without realizing the expected benefits of the sale of Nextel Brazil;
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•
|
the purchase agreement places certain restrictions on the conduct of our business prior to completion of the sale, which restrictions may prevent us from taking other potentially advantageous actions during the pendency of the transaction; and
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•
|
matters relating to the proposed sale will require substantial commitments of time and resources by our management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.
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2.
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We are subject to business uncertainties and contractual restrictions while the sale of Nextel Brazil is pending.
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3.
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The proposed sale of Nextel Brazil may distract management of the Company from its other responsibilities.
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4.
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Our executive officers and directors have interests in the sale of Nextel Brazil that may be different from your interests as a stockholder of the Company.
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5.
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We may be subject to litigation, which is costly and could divert our attention.
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6.
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We cannot assure you of the exact timing and amount of any distribution to our stockholders under a plan of liquidation and dissolution.
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7.
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Because our free cash flow was negative, and is expected to continue to be negative, we will likely need to meet our obligations and fund our working capital with cash on hand and through the recovery of amounts held in escrow.
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8.
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If we are not able to compete effectively in the highly competitive wireless communications industry, our future growth and operating results will suffer.
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a.
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The wireless industry in Brazil is highly competitive, which could make it difficult for us to attract and retain customers. If we are unable to attract and retain customers, our financial performance will be impaired.
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b.
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Competition and technological changes in the market for wireless services, including competition driven by our competitors' deployment of LTE or other advanced technologies, could negatively affect our average revenue per subscriber, customer turnover, operating costs and our ability to attract new subscribers, resulting in adverse effects on our revenues, future cash flows, growth and profitability. If we do not keep pace with rapid technological changes or if we fail to offer new services in a manner that delivers a quality customer experience, we may not be able to attract and retain customers.
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c.
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Most of our competitors are financially stronger than we are, which limits our ability to compete based on price.
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d.
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We are dependent on our competitors for support services that are critical to our operations.
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e.
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If there is a substantial increase in our customer turnover rate, our business could be negatively affected.
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f.
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If our networks do not perform in a manner that meets subscriber expectations, we will be unable to attract and retain customers.
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g.
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Customer concerns about our financial condition and ability to implement our business plan, including our network development and deployment efforts, may have an additional adverse effect on our ability to attract and retain customers.
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9.
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We operate exclusively in Brazil, and our assets, subscribers and cash flows are concentrated in Brazil, which presents risks to our operating plans.
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a.
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A decline in the foreign exchange rate of the Brazilian real may adversely affect our growth and our operating results.
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b.
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We face economic and political risks operating in Brazil, which may limit our ability to implement our strategy and could negatively impact our financial flexibility, including our ability to repatriate and redeploy profits, and may disrupt our operations or hurt our performance.
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c.
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Our operating company is subject to local laws and government regulations, and we are subject to U.S. laws and regulations, which could limit our growth and strategic plans and negatively impact our financial results.
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•
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affect the terms of interconnection arrangements that allow our subscribers to complete calls to our competitors’ subscribers, including the charges imposed for the completion of those calls;
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•
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establish restrictions that limit or otherwise affect the deployment of transmitter and receiver sites needed to support the coverage and capacity of our networks;
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•
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establish minimum network construction, coverage or quality of service obligations that can result in increased capital investments or require other changes to our business;
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•
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establish prices Nextel Brazil is required to charge for its services or impose other terms of service that can affect our revenues or costs; or
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•
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impose foreign ownership limitations on telecommunications providers that may affect our ability to own and operate our business.
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d.
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We are subject to taxes, which may reduce the revenues of our operating subsidiary in Brazil, reduce the amounts we receive from Nextel Brazil, increase our tax costs and impact our cash flows.
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e.
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We have entered into a number of agreements that are subject to enforcement in foreign countries, which may limit efficient dispute resolution.
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f.
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We are subject to significant import duties on our network equipment and handsets, and any increases could impact our financial results.
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10.
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The costs we incur to connect our networks with those of other carriers are subject to local laws and may increase, which could adversely impact our financial results.
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11.
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We own Nextel Brazil through a joint venture, and our interests and the interests of our stockholders may not align with the interests of our joint venture partner.
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•
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we may incur liabilities as a result of an action taken by AI Brazil Holdings;
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•
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disputes between us and AI Brazil Holdings, including those relating to the investment of funds currently held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico, could arise which could distract management from focusing time and efforts on our business, result in an impasse or ultimately in litigation or arbitration or otherwise have a negative influence on our partnership and our ability to successfully operate Nextel Brazil; and
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•
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in the event the proposed sale of Nextel Brazil is not completed, the transfer restrictions, rights of first refusal, and “tag along” and “drag along” rights contained in our agreements with AI Brazil Holdings could restrict our or AI Brazil Holdings' ability to exit the joint venture if desired or discourage a third party transaction that might be in the best interests of stockholders.
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12.
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Our failure to maintain effective internal controls over financial reporting may adversely affect the accuracy and timeliness of our financial reporting.
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13.
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Our business could be negatively impacted by our reliance on indirect distribution channels for a significant portion of our sales.
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14.
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If our licenses to provide mobile services are not renewed, or are modified or revoked, our business may be restricted.
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15.
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If we are not able to manage changes to our business, our operating results will suffer.
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a.
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We may be limited in our ability to grow unless we successfully expand network capacity and launch competitive services.
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•
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secure sufficient transmitter and receiver sites at appropriate locations to meet planned system coverage and capacity targets;
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b.
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Failure to successfully implement core information technology and operating systems may adversely affect our business operations.
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16.
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Any modification or termination of our trademark license with Nextel Communications could increase our costs.
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17.
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Our reputation and business could be negatively impacted by cyber security threats and other material disruptions of our wireless networks.
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18.
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There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of other stockholders.
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19.
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The price of our common stock has historically been and may continue to be volatile.
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•
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unpredictability surrounding the market's reaction to the announcement and/or completion of the proposed sale of Nextel Brazil;
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•
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concentration of our business operations in Brazil;
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•
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low trading volumes for our common stock and the inability to sustain an active trading marketing for our common stock;
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•
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actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;
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•
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industry cycles and trends;
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•
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mergers and strategic alliances in the telecommunications industry;
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•
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changes in government regulation;
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•
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potential or actual military conflicts or acts of terrorism;
|
•
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the failure of securities analysts to publish research about us, or shortfalls in our operating results from levels forecast by securities analysts;
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•
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future sales of our common stock by our stockholders, including in particular, those stockholders whose shares were included in our Registration Statement on Form S-3;
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•
|
announcements concerning us or our competitors; and
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•
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the general state of the securities market.
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20.
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Certain provisions of our certificate of incorporation and our bylaws may make it difficult for stockholders to change the composition of our Board and may discourage, delay or prevent a merger or acquisition that some stockholders may consider beneficial.
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•
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authorize our Board to issue preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval;
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•
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establish advance notice procedures for nominating directors or presenting matters at stockholder meetings; and
|
•
|
limit the persons who may call special meetings of stockholders.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
1.
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Market for Common Stock
|
2.
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Number of Stockholders of Record
|
3.
|
Dividends
|
4.
|
Issuer Purchases of Equity Securities
|
I
ndex
|
7/6/2015
|
|
9/30/2015
|
|
12/31/2015
|
|
3/31/2016
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
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||||||||||||||
NII Holdings
|
$
|
100.00
|
|
|
$
|
38.57
|
|
|
$
|
29.92
|
|
|
$
|
32.76
|
|
|
$
|
18.84
|
|
|
$
|
19.73
|
|
|
$
|
12.74
|
|
Nasdaq 100
|
$
|
100.00
|
|
|
$
|
94.73
|
|
|
$
|
104.42
|
|
|
$
|
102.25
|
|
|
$
|
100.44
|
|
|
$
|
111.63
|
|
|
$
|
110.28
|
|
Oi S.A.
|
$
|
100.00
|
|
|
$
|
42.39
|
|
|
$
|
28.80
|
|
|
$
|
18.64
|
|
|
$
|
23.72
|
|
|
$
|
51.17
|
|
|
$
|
39.81
|
|
Telefônica Brasil S.A.
|
$
|
100.00
|
|
|
$
|
65.39
|
|
|
$
|
65.22
|
|
|
$
|
90.33
|
|
|
$
|
99.32
|
|
|
$
|
106.84
|
|
|
$
|
96.03
|
|
Index
|
3/31/2017
|
|
6/30/2017
|
|
9/30/2017
|
|
12/31/2017
|
|
3/31/2018
|
|
6/30/2018
|
|
9/30/2018
|
|
12/31/2018
|
||||||||||||||||
NII Holdings
|
$
|
7.70
|
|
|
$
|
4.74
|
|
|
$
|
2.73
|
|
|
$
|
2.49
|
|
|
$
|
12.50
|
|
|
$
|
23.10
|
|
|
$
|
34.72
|
|
|
$
|
26.13
|
|
Nasdaq 100
|
$
|
124.56
|
|
|
$
|
129.80
|
|
|
$
|
137.35
|
|
|
$
|
146.92
|
|
|
$
|
151.23
|
|
|
$
|
162.28
|
|
|
$
|
175.72
|
|
|
$
|
146.83
|
|
Oi S.A.
|
$
|
71.35
|
|
|
$
|
59.62
|
|
|
$
|
65.17
|
|
|
$
|
60.50
|
|
|
$
|
46.67
|
|
|
$
|
33.06
|
|
|
$
|
22.18
|
|
|
$
|
18.75
|
|
Telefônica Brasil S.A.
|
$
|
111.43
|
|
|
$
|
104.93
|
|
|
$
|
121.73
|
|
|
$
|
114.98
|
|
|
$
|
118.74
|
|
|
$
|
96.41
|
|
|
$
|
84.63
|
|
|
$
|
101.76
|
|
Item 6.
|
Selected Financial Data
|
|
Successor Company
|
|
|
Predecessor Company
|
||||||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Six Months Ended December 31,
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|
2015
|
|
2014
|
||||||||||||
|
|
|
|
|
(in thousands, except per share data)
|
|||||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
$
|
620,697
|
|
|
$
|
870,694
|
|
|
$
|
985,046
|
|
|
$
|
529,434
|
|
|
|
$
|
683,711
|
|
|
$
|
1,848,954
|
|
Impairment, restructuring and other charges, net
|
$
|
18,949
|
|
|
$
|
175,358
|
|
|
$
|
1,384,811
|
|
|
$
|
32,308
|
|
|
|
$
|
36,792
|
|
|
$
|
105,664
|
|
Foreign currency transaction (losses) gains, net
|
$
|
(49,008
|
)
|
|
$
|
(1,271
|
)
|
|
$
|
76,615
|
|
|
$
|
(99,737
|
)
|
|
|
$
|
(63,948
|
)
|
|
$
|
(51,149
|
)
|
Net (loss) income from continuing operations
|
$
|
(186,246
|
)
|
|
$
|
(340,427
|
)
|
|
$
|
(1,533,879
|
)
|
|
$
|
(292,491
|
)
|
|
|
$
|
1,519,401
|
|
|
$
|
(1,224,671
|
)
|
Net (loss) income from continuing operations per common share, basic
|
$
|
(1.86
|
)
|
|
$
|
(3.40
|
)
|
|
$
|
(15.32
|
)
|
|
$
|
(2.93
|
)
|
|
|
$
|
8.73
|
|
|
$
|
(7.11
|
)
|
Net (loss) income from continuing operations per common share, diluted
|
$
|
(1.86
|
)
|
|
$
|
(3.40
|
)
|
|
$
|
(15.32
|
)
|
|
$
|
(2.93
|
)
|
|
|
$
|
8.71
|
|
|
$
|
(7.11
|
)
|
|
Successor Company
|
|
|
Predecessor Company
|
||||||||||||||||
|
December 31,
|
|
|
December 31,
|
||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|
2014
|
||||||||||
|
|
|
(in thousands)
|
|||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total assets
|
$
|
1,059,830
|
|
|
$
|
1,113,522
|
|
|
$
|
1,418,509
|
|
|
$
|
2,729,908
|
|
|
|
$
|
5,374,034
|
|
Long-term debt, including current portion
|
$
|
654,207
|
|
|
$
|
655,707
|
|
|
$
|
756,316
|
|
|
$
|
665,067
|
|
|
|
$
|
925,271
|
|
Liabilities subject to compromise
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
4,593,493
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
•
|
our ability to attract and retain customers;
|
•
|
our ability to satisfy the requirements of our debt obligations;
|
•
|
our ability to access sufficient debt or equity capital to meet any future operating and financial needs;
|
•
|
our ability to meet established operating goals and generate cash flow;
|
•
|
the availability of other funding sources, including the timely resolution of claims and receipt of proceeds from the sale of Nextel Mexico held in escrow;
|
•
|
risks associated with our arrangement with AI Brazil Holdings;
|
•
|
general economic conditions in Brazil, including political instability, which may affect Brazil's economy and the regulatory environment there;
|
•
|
the impact of foreign currency exchange rate volatility in the local currency in Brazil when compared to the U.S. dollar and the impact of related currency depreciation in Brazil;
|
•
|
our having reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon;
|
•
|
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;
|
•
|
risks related to the operation and expansion of our network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that we will not attract enough subscribers to support the related costs of deploying or operating the network;
|
•
|
our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth as necessary, increased system usage rates and growth or to successfully deploy new systems that support those functions;
|
•
|
future legislation or regulatory actions relating to our 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 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;
|
•
|
potential cash outlays related to certain reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, some of which would be covered by judicial deposits of cash;
|
•
|
a requirement to provide material judicial deposits of cash that will not be released until the pending matter is resolved in order for litigation involving tax and other matters to be heard by the courts in Brazil;
|
•
|
equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security;
|
•
|
the possibility that our significant indebtedness, or the incurrence of additional indebtedness, could affect our financial condition; and
|
•
|
other risks and uncertainties described in Part I, Item 1A. “Risk Factors,” in this annual report on Form 10-K, as well as in Part II, Item 1A. "Risk Factors," in our quarterly report on Form 10-Q for the three months ended June 30, 2018 and, from time to time, in our other reports filed with the SEC.
|
•
|
the satisfaction of the conditions to consummate the sale of Nextel Brazil, including regulatory approvals and approval by our stockholders;
|
•
|
the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreement;
|
•
|
the amount of the costs, fees, expenses and charges related to the sale of Nextel Brazil may be higher than we expect;
|
•
|
the effect the pending sale of Nextel Brazil will have on our management team, customer relationships, operating results and business generally, including the ability to retain key employees;
|
•
|
the cost and outcome of any legal proceedings that may be initiated against us and others following the announcement of the sale of Nextel Brazil; and
|
•
|
the timing and amount of cash and other assets available for distribution to our stockholders upon our ultimate windup and dissolution.
|
•
|
our consolidated financial condition as of December 31, 2018 and 2017 and our consolidated results of operations for the years ended December 31, 2018, 2017 and 2016; and
|
•
|
significant factors which we believe could affect our prospective financial condition and results of operations.
|
A.
|
Executive Overview
|
•
|
mobile telephone voice and wireless data services;
|
•
|
international voice and data roaming services; and
|
•
|
value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and international WiFi hotspot networks.
|
•
|
offering a unique and superior customer-centric experience, including a reliable and high quality wireless network and rate plan flexibility;
|
•
|
continuing to implement cost reduction strategies and reconfiguring our network architecture in order to lower CCPU, gain scale advantages, create an agile organization and improve overall profitability;
|
•
|
offering simple and valuable service plans that generate higher ARPU and result in lower subscriber turnover; and
|
•
|
building on the strength of the unique positioning of the Nextel brand.
|
B.
|
Results of Operations
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
2017 to 2018
Percent Change
|
|
2016 to 2017
Percent Change
|
|||||
Brazilian real
|
3.66
|
|
|
3.19
|
|
|
3.49
|
|
|
(14.7
|
)%
|
|
8.6
|
%
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|||||||||
Brazilian real
|
3.87
|
|
|
4.00
|
|
|
3.86
|
|
|
3.32
|
|
|
3.31
|
|
|
3.17
|
|
|
3.31
|
|
|
3.13
|
|
|
3.26
|
|
1.
|
Year Ended December 31, 2018 vs. Year Ended December 31, 2017
|
a.
|
Consolidated
|
|
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||
Brazil segment earnings (losses)
|
$
|
23,004
|
|
|
$
|
(25,942
|
)
|
|
$
|
48,946
|
|
|
189
|
%
|
|
202
|
%
|
Corporate segment losses and eliminations
|
(17,304
|
)
|
|
(24,174
|
)
|
|
6,870
|
|
|
28
|
%
|
|
28
|
%
|
|||
Consolidated segment earnings (losses)
|
5,700
|
|
|
(50,116
|
)
|
|
55,816
|
|
|
111
|
%
|
|
112
|
%
|
|||
Impairment, restructuring and other charges, net
|
(18,949
|
)
|
|
(175,358
|
)
|
|
156,409
|
|
|
89
|
%
|
|
88
|
%
|
|||
Depreciation and amortization
|
(28,616
|
)
|
|
(35,446
|
)
|
|
6,830
|
|
|
19
|
%
|
|
7
|
%
|
|||
Operating loss
|
(41,865
|
)
|
|
(260,920
|
)
|
|
219,055
|
|
|
84
|
%
|
|
82
|
%
|
|||
Interest expense, net
|
(100,513
|
)
|
|
(118,605
|
)
|
|
18,092
|
|
|
15
|
%
|
|
(7
|
)%
|
|||
Interest income
|
12,357
|
|
|
41,507
|
|
|
(29,150
|
)
|
|
(70
|
)%
|
|
(62
|
)%
|
|||
Foreign currency transaction losses, net
|
(49,008
|
)
|
|
(1,271
|
)
|
|
(47,737
|
)
|
|
NM
|
|
|
NM
|
|
|||
Other expense, net
|
(7,217
|
)
|
|
(7,485
|
)
|
|
268
|
|
|
4
|
%
|
|
(12
|
)%
|
|||
Loss from continuing operations before income tax benefit
|
(186,246
|
)
|
|
(346,774
|
)
|
|
160,528
|
|
|
46
|
%
|
|
39
|
%
|
|||
Income tax benefit
|
—
|
|
|
6,347
|
|
|
(6,347
|
)
|
|
(100
|
)%
|
|
(100
|
)%
|
|||
Net loss from continuing operations
|
(186,246
|
)
|
|
(340,427
|
)
|
|
154,181
|
|
|
45
|
%
|
|
38
|
%
|
|||
(Loss) income from discontinued operations, net of income taxes
|
(8,414
|
)
|
|
1,005
|
|
|
(9,419
|
)
|
|
NM
|
|
|
NM
|
|
|||
Net loss
|
(194,660
|
)
|
|
(339,422
|
)
|
|
144,762
|
|
|
43
|
%
|
|
35
|
%
|
|||
Net loss attributable to noncontrolling interest
|
(51,580
|
)
|
|
(46,275
|
)
|
|
(5,305
|
)
|
|
(11
|
)%
|
|
(11
|
)%
|
|||
Net loss attributable to NII Holdings
|
$
|
(143,080
|
)
|
|
$
|
(293,147
|
)
|
|
$
|
150,067
|
|
|
51
|
%
|
|
43
|
%
|
1.
|
Impairment, restructuring and other charges, net
|
•
|
$40.0 million in restructuring charges, the majority of which related to future lease costs for certain transmitter and receiver sites that we ceased using; and
|
•
|
$2.7 million in non-cash asset impairment charges primarily related to certain transmitter and receiver sites that are no longer required in Nextel Brazil's business; partially offset by
|
•
|
the reversal of $15.6 million in previously accrued restructuring charges related to certain transmitter and receiver sites that Nextel Brazil now plans to exchange for other sites; and
|
•
|
the reversal of $9.4 million in previously accrued restructuring charges in connection with the determination that, based on revised plans in 2018, certain transmitter and receiver sites related to Nextel Brazil's RAN sharing project will continue to be utilized.
|
•
|
$70.5 million in restructuring charges, the majority of which related to future lease costs for certain transmitter and receiver sites that we ceased using;
|
•
|
a $57.9 million non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values;
|
•
|
$29.9 million in restructuring charges related to a change in the scope of Nextel Brazil's RAN sharing implementation;
|
•
|
$9.3 million in other non-cash asset impairment charges primarily related to certain transmitter and receiver sites that are no longer required in Nextel Brazil's business; and
|
•
|
$6.5 million in severance and other related costs resulting from the separation of certain executive level employees in Brazil.
|
2.
|
Interest expense, net
|
3.
|
Interest income
|
4.
|
Foreign currency transaction losses, net
|
b.
|
Nextel Brazil
|
|
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||||||||
|
Year Ended December 31, 2018
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Year Ended December 31, 2017
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||
Service and other revenues
|
$
|
605,470
|
|
|
98
|
%
|
|
$
|
848,700
|
|
|
97
|
%
|
|
$
|
(243,230
|
)
|
|
(29
|
)%
|
|
(18
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Handset and accessory revenues
|
15,205
|
|
|
2
|
%
|
|
21,888
|
|
|
3
|
%
|
|
(6,683
|
)
|
|
(31
|
)
|
|
(20
|
)%
|
|||
Cost of handsets and accessories
|
(18,571
|
)
|
|
(3
|
)%
|
|
(40,207
|
)
|
|
(5
|
)%
|
|
21,636
|
|
|
54
|
%
|
|
47
|
%
|
|||
Handset and accessory net subsidy
|
(3,366
|
)
|
|
(1
|
)%
|
|
(18,319
|
)
|
|
(2
|
)%
|
|
14,953
|
|
|
82
|
%
|
|
79
|
%
|
|||
Cost of service (exclusive of depreciation and amortization)
|
(287,598
|
)
|
|
(46
|
)%
|
|
(370,435
|
)
|
|
(43
|
)%
|
|
82,837
|
|
|
22
|
%
|
|
11
|
%
|
|||
Selling and marketing expenses
|
(75,325
|
)
|
|
(12
|
)%
|
|
(108,490
|
)
|
|
(12
|
)%
|
|
33,165
|
|
|
31
|
%
|
|
20
|
%
|
|||
General and administrative expenses
|
(216,177
|
)
|
|
(35
|
)%
|
|
(377,398
|
)
|
|
(43
|
)%
|
|
161,221
|
|
|
43
|
%
|
|
34
|
%
|
|||
Segment earnings (losses)
|
$
|
23,004
|
|
|
4
|
%
|
|
$
|
(25,942
|
)
|
|
(3
|
)%
|
|
$
|
48,946
|
|
|
189
|
%
|
|
202
|
%
|
|
Three Months Ended
|
|
Year Ended
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||||||||
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
|
December 31, 2017
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
December 31, 2018
|
||||||||||
|
(subscribers in thousands)
|
|
|
||||||||||||||||||||||||||
WCDMA subscriber units
|
2,815.2
|
|
|
2,874.6
|
|
|
2,864.8
|
|
|
2,845.8
|
|
|
2,815.2
|
|
|
2,896.1
|
|
|
3,023.8
|
|
|
3,121.0
|
|
|
3,206.7
|
|
|
2,896.1
|
|
iDEN subscriber units
|
822.7
|
|
|
686.3
|
|
|
563.3
|
|
|
449.7
|
|
|
822.7
|
|
|
349.6
|
|
|
230.4
|
|
|
—
|
|
|
—
|
|
|
349.6
|
|
Total subscriber units in commercial service — beginning of period
|
3,637.9
|
|
|
3,560.9
|
|
|
3,428.1
|
|
|
3,295.5
|
|
|
3,637.9
|
|
|
3,245.7
|
|
|
3,254.2
|
|
|
3,121.0
|
|
|
3,206.7
|
|
|
3,245.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
WCDMA net subscriber additions (losses)
|
38.4
|
|
|
(29.3
|
)
|
|
(32.3
|
)
|
|
26.8
|
|
|
3.6
|
|
|
92.9
|
|
|
65.7
|
|
|
85.7
|
|
|
99.3
|
|
|
343.6
|
|
iDEN net subscriber losses
|
(115.4
|
)
|
|
(103.5
|
)
|
|
(100.3
|
)
|
|
(76.6
|
)
|
|
(395.8
|
)
|
|
(84.4
|
)
|
|
(198.9
|
)
|
|
—
|
|
|
—
|
|
|
(283.3
|
)
|
Total net subscriber (losses) additions
|
(77.0
|
)
|
|
(132.8
|
)
|
|
(132.6
|
)
|
|
(49.8
|
)
|
|
(392.2
|
)
|
|
8.5
|
|
|
(133.2
|
)
|
|
85.7
|
|
|
99.3
|
|
|
60.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Migrations from iDEN to WCDMA
|
21.0
|
|
|
19.5
|
|
|
13.3
|
|
|
23.5
|
|
|
77.3
|
|
|
34.8
|
|
|
31.5
|
|
|
—
|
|
|
—
|
|
|
66.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
WCDMA subscriber units
|
2,874.6
|
|
|
2,864.8
|
|
|
2,845.8
|
|
|
2,896.1
|
|
|
2,896.1
|
|
|
3,023.8
|
|
|
3,121.0
|
|
|
3,206.7
|
|
|
3,306.0
|
|
|
3,306.0
|
|
iDEN subscriber units
|
686.3
|
|
|
563.3
|
|
|
449.7
|
|
|
349.6
|
|
|
349.6
|
|
|
230.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total subscriber units in commercial service — end of period
|
3,560.9
|
|
|
3,428.1
|
|
|
3,295.5
|
|
|
3,245.7
|
|
|
3,245.7
|
|
|
3,254.2
|
|
|
3,121.0
|
|
|
3,206.7
|
|
|
3,306.0
|
|
|
3,306.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
WCDMA subscriber turnover
|
3.23
|
%
|
|
3.53
|
%
|
|
4.04
|
%
|
|
3.47
|
%
|
|
3.57
|
%
|
|
2.37
|
%
|
|
2.75
|
%
|
|
2.68
|
%
|
|
2.62
|
%
|
|
2.61
|
%
|
iDEN subscriber turnover
|
5.52
|
%
|
|
5.88
|
%
|
|
6.89
|
%
|
|
6.36
|
%
|
|
6.07
|
%
|
|
9.67
|
%
|
|
NM
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
Total subscriber turnover
|
3.71
|
%
|
|
3.95
|
%
|
|
4.47
|
%
|
|
3.83
|
%
|
|
3.98
|
%
|
|
3.02
|
%
|
|
4.68
|
%
|
|
2.68
|
%
|
|
2.62
|
%
|
|
3.25
|
%
|
|
Three Months Ended
|
|
Year Ended
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||||||||
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
|
December 31, 2017
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
December 31, 2018
|
||||||||||
Total service ARPU (US$)
|
21
|
|
|
19
|
|
|
19
|
|
|
18
|
|
|
19
|
|
|
17
|
|
|
15
|
|
|
14
|
|
|
14
|
|
|
15
|
|
WCDMA service ARPU (US$)
|
22
|
|
|
20
|
|
|
19
|
|
|
18
|
|
|
20
|
|
|
18
|
|
|
15
|
|
|
14
|
|
|
14
|
|
|
15
|
|
iDEN service ARPU (US$)
|
17
|
|
|
15
|
|
|
15
|
|
|
14
|
|
|
16
|
|
|
12
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total service ARPU (BRL)
|
65
|
|
|
62
|
|
|
59
|
|
|
57
|
|
|
61
|
|
|
56
|
|
|
54
|
|
|
56
|
|
|
53
|
|
|
55
|
|
WCDMA service ARPU (BRL)
|
68
|
|
|
65
|
|
|
61
|
|
|
58
|
|
|
63
|
|
|
58
|
|
|
55
|
|
|
56
|
|
|
53
|
|
|
56
|
|
iDEN service ARPU (BRL)
|
54
|
|
|
49
|
|
|
47
|
|
|
47
|
|
|
50
|
|
|
38
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
34
|
|
1.
|
Service and other revenues
|
2.
|
Handset and accessory net subsidy
|
3.
|
Cost of service
|
4.
|
Selling and marketing expenses
|
5.
|
General and administrative expenses
|
c.
|
Corporate
|
|
|
|
Actual Change from
Previous Year
|
|||||||||||
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
Dollars
|
|
B(W) Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Other revenues
|
$
|
22
|
|
|
$
|
106
|
|
|
$
|
(84
|
)
|
|
(79
|
)%
|
General and administrative expenses
|
(17,326
|
)
|
|
(24,280
|
)
|
|
6,954
|
|
|
29
|
%
|
|||
Segment losses
|
$
|
(17,304
|
)
|
|
$
|
(24,174
|
)
|
|
$
|
6,870
|
|
|
28
|
%
|
2.
|
Year Ended December 31, 2017 vs. Year Ended December 31, 2016
|
a.
|
Consolidated
|
|
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||
Brazil segment (losses) earnings
|
$
|
(25,942
|
)
|
|
$
|
67,186
|
|
|
$
|
(93,128
|
)
|
|
(139
|
)%
|
|
(135
|
)%
|
Corporate segment losses and eliminations
|
(24,174
|
)
|
|
(36,821
|
)
|
|
12,647
|
|
|
34
|
%
|
|
34
|
%
|
|||
Consolidated segment (losses) earnings
|
(50,116
|
)
|
|
30,365
|
|
|
(80,481
|
)
|
|
(265
|
)%
|
|
(237
|
)%
|
|||
Impairment, restructuring and other charges, net
|
(175,358
|
)
|
|
(1,384,811
|
)
|
|
1,209,453
|
|
|
87
|
%
|
|
88
|
%
|
|||
Depreciation and amortization
|
(35,446
|
)
|
|
(172,383
|
)
|
|
136,937
|
|
|
79
|
%
|
|
81
|
%
|
|||
Operating loss
|
(260,920
|
)
|
|
(1,526,829
|
)
|
|
1,265,909
|
|
|
83
|
%
|
|
84
|
%
|
|||
Interest expense, net
|
(118,605
|
)
|
|
(113,732
|
)
|
|
(4,873
|
)
|
|
(4
|
)%
|
|
9
|
%
|
|||
Interest income
|
41,507
|
|
|
37,689
|
|
|
3,818
|
|
|
10
|
%
|
|
1
|
%
|
|||
Foreign currency transaction (losses) gains, net
|
(1,271
|
)
|
|
76,615
|
|
|
(77,886
|
)
|
|
(102
|
)%
|
|
(102
|
)%
|
|||
Other expense, net
|
(7,485
|
)
|
|
(10,514
|
)
|
|
3,029
|
|
|
29
|
%
|
|
29
|
%
|
|||
Loss from continuing operations before reorganization items and income tax benefit
|
(346,774
|
)
|
|
(1,536,771
|
)
|
|
1,189,997
|
|
|
77
|
%
|
|
79
|
%
|
|||
Income tax benefit
|
6,347
|
|
|
2,892
|
|
|
3,455
|
|
|
119
|
%
|
|
119
|
%
|
|||
Net loss from continuing operations
|
(340,427
|
)
|
|
(1,533,879
|
)
|
|
1,193,452
|
|
|
78
|
%
|
|
80
|
%
|
|||
Income (loss) from discontinued operations, net of income taxes
|
1,005
|
|
|
(19,994
|
)
|
|
20,999
|
|
|
105
|
%
|
|
105
|
%
|
|||
Net loss
|
(339,422
|
)
|
|
(1,553,873
|
)
|
|
1,214,451
|
|
|
78
|
%
|
|
80
|
%
|
|||
Net loss attributable to noncontrolling interest
|
(46,275
|
)
|
|
—
|
|
|
(46,275
|
)
|
|
NM
|
|
|
NM
|
|
|||
Net loss attributable to NII Holdings
|
$
|
(293,147
|
)
|
|
$
|
(1,553,873
|
)
|
|
$
|
1,260,726
|
|
|
81
|
%
|
|
83
|
%
|
1.
|
Impairment, restructuring and other charges, net
|
•
|
$70.5 million in restructuring charges, most of which related to future lease costs for certain transmitter and receiver sites that are no longer required in Nextel Brazil's business;
|
•
|
a $57.9 million non-cash asset impairment charge to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values;
|
•
|
$29.9 million in restructuring charges related to a change in the scope of Nextel Brazil's RAN sharing implementation;
|
•
|
$9.3 million in other non-cash asset impairment charges primarily related to certain transmitter and receiver sites that were no longer required in Nextel Brazil's business; and
|
•
|
$6.5 million in severance and other related costs resulting from the separation of certain executive level employees in Brazil.
|
•
|
$21.4 million in restructuring charges related to the early termination of leases for approximately 600 transmitter and receiver sites in connection with the RAN sharing agreement Nextel Brazil entered into with Telefonica Brazil, S.A., or Telefonica, in May 2016;
|
•
|
$11.0 million in non-cash asset impairment charges primarily related to transmitter and receiver sites in Brazil;
|
•
|
$10.8 million in restructuring charges primarily related to future lease costs for certain transmitter and receiver sites that are no longer required in Nextel Brazil's business and office closures; and
|
•
|
$3.2 million in severance and other related costs at the corporate level as a result of the separation of employees in an effort to further streamline our organizational structure and reduce general and administrative expenses.
|
2.
|
Depreciation and amortization
|
3.
|
Interest expense, net
|
4.
|
Foreign currency transaction (losses) gains, net
|
|
|
|
Actual Change from
Previous Year
|
|
Constant Currency Change from Previous Year
|
||||||||||||||||||
|
Year Ended December 31, 2017
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Year Ended December 31, 2016
|
|
% of
Nextel Brazil’s
Operating Revenues
|
|
Dollars
|
|
B(W) Change
|
|
B(W) Change
|
||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||
Service and other revenues
|
$
|
848,700
|
|
|
97
|
%
|
|
$
|
963,041
|
|
|
98
|
%
|
|
$
|
(114,341
|
)
|
|
(12
|
)%
|
|
(19
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Handset and accessory revenues
|
21,888
|
|
|
3
|
%
|
|
21,837
|
|
|
2
|
%
|
|
51
|
|
|
—
|
|
|
(8
|
)%
|
|||
Cost of handsets and accessories
|
(40,207
|
)
|
|
(5
|
)%
|
|
(29,273
|
)
|
|
(3
|
)%
|
|
(10,934
|
)
|
|
(37
|
)%
|
|
(26
|
)%
|
|||
Handset and accessory net subsidy
|
(18,319
|
)
|
|
(2
|
)%
|
|
(7,436
|
)
|
|
(1
|
)%
|
|
(10,883
|
)
|
|
(146
|
)%
|
|
(125
|
)%
|
|||
Cost of service (exclusive of depreciation and amortization)
|
(370,435
|
)
|
|
(43
|
)%
|
|
(364,648
|
)
|
|
(37
|
)%
|
|
(5,787
|
)
|
|
(2
|
)%
|
|
7
|
%
|
|||
Selling and marketing expenses
|
(108,490
|
)
|
|
(12
|
)%
|
|
(116,538
|
)
|
|
(12
|
)%
|
|
8,048
|
|
|
7
|
%
|
|
15
|
%
|
|||
General and administrative expenses
|
(377,398
|
)
|
|
(43
|
)%
|
|
(407,233
|
)
|
|
(41
|
)%
|
|
29,835
|
|
|
7
|
%
|
|
15
|
%
|
|||
Segment (losses) earnings
|
$
|
(25,942
|
)
|
|
(3
|
)%
|
|
$
|
67,186
|
|
|
7
|
%
|
|
$
|
(93,128
|
)
|
|
(139
|
)%
|
|
(135
|
)%
|
1.
|
Service and other revenues
|
2.
|
Handset and accessory net subsidy
|
3.
|
Cost of service
|
4.
|
Selling and marketing expenses
|
5.
|
General and administrative expenses
|
c.
|
Corporate
|
|
|
|
Actual Change from
Previous Year
|
|||||||||||
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
Dollars
|
|
B(W) Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Other revenues
|
$
|
106
|
|
|
$
|
168
|
|
|
$
|
(62
|
)
|
|
(37
|
)%
|
General and administrative expenses
|
(24,280
|
)
|
|
(36,989
|
)
|
|
12,709
|
|
|
34
|
%
|
|||
Segment losses
|
$
|
(24,174
|
)
|
|
$
|
(36,821
|
)
|
|
$
|
12,647
|
|
|
34
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of year
|
$
|
305,778
|
|
|
$
|
422,232
|
|
|
$
|
570,075
|
|
Net cash used in operating activities
|
(125,627
|
)
|
|
(87,138
|
)
|
|
(45,205
|
)
|
|||
Net cash (used in) provided by investing activities
|
(44,236
|
)
|
|
18,833
|
|
|
(8,589
|
)
|
|||
Net cash provided by (used in) financing activities
|
116,497
|
|
|
(48,690
|
)
|
|
(93,004
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1,673
|
)
|
|
541
|
|
|
(1,045
|
)
|
|||
Cash, cash equivalents and restricted cash, end of year
|
$
|
250,739
|
|
|
$
|
305,778
|
|
|
$
|
422,232
|
|
D.
|
Future Capital Needs and Resources
|
•
|
the amount of revenue we are able to generate and collect from our subscribers, including our ability to increase the size of our subscriber base;
|
•
|
the amount of operating expenses required to provide our services;
|
•
|
the cost of acquiring and retaining subscribers, including the subsidies we incur to provide handsets to both our new and existing subscribers; and
|
•
|
changes in foreign currency exchange rates.
|
•
|
operating expenses and capital expenditures relating to our network and the continued deployment of LTE;
|
•
|
payments in connection with previous spectrum purchases and ongoing spectrum license fees;
|
•
|
debt service requirements;
|
•
|
obligations relating to our tower financing arrangements and capital lease obligations;
|
•
|
cash taxes; and
|
•
|
other general corporate expenditures.
|
|
Payments due by Period
|
||||||||||||||||||
|
Less than
|
|
|
|
|
|
More than
|
|
|
||||||||||
C
ontractual Obligations
|
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
5 Years
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Capital leases and tower financing obligations (1)
|
$
|
34,400
|
|
|
$
|
67,253
|
|
|
$
|
62,233
|
|
|
$
|
453,634
|
|
|
$
|
617,520
|
|
Operating leases (2)
|
106,922
|
|
|
197,947
|
|
|
158,928
|
|
|
628,449
|
|
|
1,092,246
|
|
|||||
Equipment financing (3)
|
12,753
|
|
|
24,459
|
|
|
132,220
|
|
|
131,504
|
|
|
300,936
|
|
|||||
Bank loans (4)
|
14,743
|
|
|
29,319
|
|
|
103,232
|
|
|
95,508
|
|
|
242,802
|
|
|||||
Spectrum financing (5)
|
25,818
|
|
|
58,695
|
|
|
68,106
|
|
|
37,582
|
|
|
190,201
|
|
|||||
Convertible senior notes (6)
|
4,901
|
|
|
9,775
|
|
|
124,775
|
|
|
—
|
|
|
139,451
|
|
|||||
Purchase obligations (7)
|
48,852
|
|
|
40,496
|
|
|
—
|
|
|
—
|
|
|
89,348
|
|
|||||
Other long-term obligations (8)
|
567
|
|
|
—
|
|
|
4,369
|
|
|
111,325
|
|
|
116,261
|
|
|||||
Total contractual commitments
|
$
|
248,956
|
|
|
$
|
427,944
|
|
|
$
|
653,863
|
|
|
$
|
1,458,002
|
|
|
$
|
2,788,765
|
|
(1)
|
These amounts represent future lease payments due under our co-location agreements, our tower financing arrangements and our sale-leaseback of towers in Brazil in 2013, which are guaranteed by NIIT.
|
(2)
|
These amounts principally include future lease costs related to our transmitter and receiver sites and switches, as well as our office facilities.
|
(3)
|
These amounts represent principal and interest payments associated with a U.S. dollar-denominated loan agreement with the China Development Bank in Brazil to finance infrastructure equipment, which is guaranteed by Nextel Holdings.
|
(4)
|
These amounts represent principal and interest payments associated with Nextel Brazil's bank loans denominated in Brazilian reais.
|
(5)
|
These amounts represent principal and interest payments in connection with the amount Nextel Brazil borrowed to acquire 30MHz of spectrum in the 1.8 GHz band in July 2016.
|
(6)
|
These amounts represent principal and interest payments over the full term of the convertible senior notes NII Holdings issued in August 2018, assuming the current payment schedule.
|
(7)
|
These amounts include maximum contractual purchase obligations under various agreements with our vendors, including the roaming and RAN sharing agreements that Nextel Brazil entered into with Telefonica in May 2016. See Note 9 to our consolidated financial statements for more information regarding these agreements.
|
(8)
|
These amounts include our current estimates of asset retirement obligations based on our expectations as to future retirement costs, inflation rates and timing of retirements, as well as amounts related to our uncertain income tax positions.
|
•
|
the amount we spend to enhance our network and deploy LTE;
|
•
|
the extent to which we expand the coverage of our network in new or existing market areas;
|
•
|
the number of additional transmitter and receiver sites we build in order to increase system capacity, maintain system quality and meet our regulatory requirements, as well as the costs associated with the installation of network infrastructure and switching equipment; and
|
•
|
the costs we incur in connection with non-network related information technology projects.
|
•
|
cash and cash equivalents on hand and short-term investments available to fund our operations;
|
•
|
restricted cash currently held in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico;
|
•
|
expected cash flows from our operations in Brazil and expected cash expenditures at our corporate headquarters;
|
•
|
the timing of spectrum payments, including ongoing fees for spectrum use;
|
•
|
our anticipated level of capital expenditures;
|
•
|
our scheduled debt service obligations;
|
•
|
our other contractual obligations;
|
•
|
potential incremental investments by AI Brazil Holdings; and
|
•
|
cash income and other taxes.
|
•
|
based on the continued development of our business plans and strategy;
|
•
|
if currency values in Brazil depreciate or appreciate relative to the U.S. dollar in a manner that is more significant than we currently expect and assume as part of our plans;
|
•
|
if economic conditions in Brazil do not improve or worsen;
|
•
|
if we are subject to litigation involving tax and other matters requiring material judicial deposits of cash that will not be released until the pending matter is resolved;
|
•
|
if competitive practices in the mobile wireless telecommunications industry in Brazil 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, such as contingencies.
|
E.
|
Effect of Inflation and Foreign Currency Exchange
|
F.
|
Effect of New Accounting Standards
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Year of Maturity
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||||||
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
4 Years
|
|
5 Years
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
|
Total
|
|
Fair Value
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||
Fixed Rate (US$)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,000
|
|
|
$
|
—
|
|
|
$
|
115,000
|
|
|
$
|
114,281
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Average Interest Rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.3
|
%
|
|
—
|
|
|
4.3
|
%
|
|
|
|
|
|
|
|||||||||||||
Fixed Rate (BRL)
|
$
|
19,974
|
|
|
$
|
20,684
|
|
|
$
|
20,767
|
|
|
$
|
19,995
|
|
|
$
|
20,550
|
|
|
$
|
84,945
|
|
|
$
|
186,915
|
|
|
$
|
192,804
|
|
|
$
|
228,023
|
|
|
$
|
218,449
|
|
Average Interest Rate
|
19.4
|
%
|
|
21.0
|
%
|
|
21.3
|
%
|
|
18.5
|
%
|
|
20.8
|
%
|
|
57.2
|
%
|
|
37.0
|
%
|
|
|
|
39.3
|
%
|
|
|
||||||||||||
Variable Rate (US$)
|
$
|
1,200
|
|
|
$
|
1,200
|
|
|
$
|
1,200
|
|
|
$
|
57,558
|
|
|
$
|
57,558
|
|
|
$
|
124,709
|
|
|
$
|
243,425
|
|
|
$
|
233,581
|
|
|
$
|
244,625
|
|
|
$
|
237,958
|
|
Average Interest Rate
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
|
|
3.7
|
%
|
|
|
||||||||||||
Variable Rate (BRL)
|
$
|
833
|
|
|
$
|
833
|
|
|
$
|
833
|
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
|
$
|
86,669
|
|
|
$
|
169,168
|
|
|
$
|
119,218
|
|
|
$
|
199,131
|
|
|
$
|
144,301
|
|
Average Interest Rate
|
8.1
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
|
|
|
9.6
|
%
|
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
continue to drive accountability for effective internal control over financial reporting through a top-down, company-wide performance management process;
|
•
|
improve our processes for identifying, managing and appropriately accounting for non-routine transactions;
|
•
|
complete automation projects related to lease accounting and balance sheet account reconciliations; and
|
•
|
design and implement new business process controls and general information technology controls to address known deficiencies.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers of the Registrant and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules.
|
|
Page
|
(2)
|
Financial Statement Schedules. The following financial statement schedules are filed as part of this report. Schedules other than the schedules listed below are omitted because they are either not required or not applicable.
|
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Incorporated by
Reference Filing Date |
|
Filed Herewith
|
2.1
|
|
|
8-K
|
|
2.1
|
|
06/22/15
|
|
|
|
3.1
|
|
|
S-8
|
|
3.1
|
|
06/26/15
|
|
|
|
3.2
|
|
|
S-8
|
|
3.2
|
|
06/26/15
|
|
|
|
4.2
|
|
|
8-K
|
|
4.1
|
|
08/14/18
|
|
|
|
4.3
|
|
|
8-K
|
|
4.2
|
|
08/14/18
|
|
|
|
10.1
|
|
|
10-Q
|
|
10.1
|
|
11/08/11
|
|
|
|
10.2
|
|
|
10-K
|
|
10.2
|
|
03/03/16
|
|
|
|
10.3
|
|
|
8-K
|
|
10.1
|
|
01/26/15
|
|
|
|
10.4
|
|
|
8-K
|
|
10.1
|
|
11/01/17
|
|
|
|
10.5
|
|
|
8-K
|
|
10.2
|
|
11/01/17
|
|
|
|
10.6
|
|
|
8-K
|
|
10.4
|
|
11/01/17
|
|
|
|
10.7 (+)
|
|
|
8-K
|
|
10.1
|
|
02/01/19
|
|
|
|
10.8
|
|
|
8-K
|
|
10.8
|
|
11/01/17
|
|
|
|
10.9
|
|
|
8-K
|
|
10.6
|
|
11/01/17
|
|
|
|
10.10
|
|
|
8-K
|
|
10.1
|
|
06/06/17
|
|
|
|
10.11
|
|
|
8-K
|
|
10.2
|
|
06/06/17
|
|
|
|
10.12
|
|
|
10-K
|
|
10.16
|
|
02/28/13
|
|
|
|
10.13(+)
|
|
|
8-K
|
|
10.2
|
|
12/22/15
|
|
|
|
10.14(+)
|
|
|
S-8
|
|
4.1
|
|
06/26/15
|
|
|
|
10.15(+)
|
|
|
8-K
|
|
10.3
|
|
06/30/15
|
|
|
|
10.16(+)
|
|
|
8-K
|
|
10.4
|
|
06/30/15
|
|
|
10.17(+)
|
|
|
10-K
|
|
10.32
|
|
03/03/16
|
|
|
|
10.18(+)
|
|
|
10-K
|
|
10.18
|
|
03/15/18
|
|
|
|
10.19(+)
|
|
|
8-K
|
|
10.1
|
|
05/02/13
|
|
|
|
10.20(+)
|
|
|
8-K
|
|
10.1
|
|
07/27/17
|
|
|
|
10.21(+)
|
|
|
8-K
|
|
10.2
|
|
07/27/17
|
|
|
|
10.22(+)
|
|
|
10-K
|
|
10.22
|
|
03/15/18
|
|
|
|
10.23(+)
|
|
|
8-K
|
|
10.3
|
|
07/27/17
|
|
|
|
10.24(+)
|
|
|
8-K
|
|
10.4
|
|
07/27/17
|
|
|
|
10.25(+)
|
|
|
8-K
|
|
10.1
|
|
08/01/18
|
|
|
|
10.26(+)
|
|
|
10-Q
|
|
10.1
|
|
08/07/18
|
|
|
|
10.27(+)
|
|
|
10-Q
|
|
10.2
|
|
08/07/18
|
|
|
|
10.28(+)
|
|
|
10-Q
|
|
10.3
|
|
08/07/18
|
|
|
|
10.29
|
|
|
8-K
|
|
10.1
|
|
03/18/19
|
|
|
|
10.30
|
|
|
8-K
|
|
10.2
|
|
03/18/19
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
*
|
|
23.1
|
|
|
|
|
|
|
|
|
*
|
|
31.1
|
|
|
|
|
|
|
|
|
*
|
|
31.2
|
|
|
|
|
|
|
|
|
*
|
|
32.1
|
|
|
|
|
|
|
|
|
*
|
|
32.2
|
|
|
|
|
|
|
|
|
*
|
|
101
|
|
The following materials from the NII Holdings Annual Report on Form 10-K for the year ended December 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Consolidated Statements of Changes in Stockholders’ Equity (Deficit), (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
*
|
+
|
Indicates Management Compensatory Plan, Contract or Arrangement.
|
Item 16.
|
Form 10-K Summary.
|
|
By:
|
/s/ TIMOTHY M. MULIERI
|
|
|
Timothy M. Mulieri
Vice President, Corporate Controller
(on behalf of the registrant and as
Principal Accounting Officer)
|
S
ignature
|
|
T
itle
|
|
|
|
|
|
|
/s/ ROBERTO RITTES
|
|
Chief Executive Officer, Nextel Brazil (Principal Executive Officer)
|
Roberto Rittes
|
|
|
|
|
|
/s/ DANIEL E. FREIMAN
|
|
Chief Financial Officer (Principal Financial Officer)
|
Daniel E. Freiman
|
|
|
|
|
|
/s/ KEVIN L. BEEBE
|
|
Chairman of the Board of Directors
|
Kevin L. Beebe
|
|
|
|
|
|
/s/ JAMES V. CONTINENZA
|
|
Director
|
James V. Continenza
|
|
|
|
|
|
/s/ HOWARD S. HOFFMANN
|
|
Director
|
Howard S. Hoffmann
|
|
|
|
|
|
/s/ RICARDO KNOEPFELMACHER
|
|
Director
|
Ricardo Knoepfelmacher
|
|
|
|
|
|
/s/ CHRISTOPHER T. ROGERS
|
|
Director
|
Christopher T. Rogers
|
|
|
|
|
|
/s/ ROBERT A. SCHRIESHEIM
|
|
Director
|
Robert A. Schriesheim
|
|
|
|
|
|
/s/ STEVEN M. SHINDLER
|
|
Director
|
Steven M. Shindler
|
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
FINANCIAL STATEMENT SCHEDULES
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
|
|||||||
|
December 31,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
142,486
|
|
|
$
|
193,888
|
|
Short-term investments
|
32,329
|
|
|
16,711
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $19,637 and $42,011
|
99,885
|
|
|
106,715
|
|
||
Handset and accessory inventory
|
1,949
|
|
|
3,163
|
|
||
Prepaid expenses and other
|
245,916
|
|
|
264,017
|
|
||
Total current assets
|
522,565
|
|
|
584,494
|
|
||
Property, plant and equipment, net
|
143,930
|
|
|
117,262
|
|
||
Intangible assets, net
|
162,156
|
|
|
191,757
|
|
||
Other assets
|
231,179
|
|
|
220,009
|
|
||
Total assets
|
$
|
1,059,830
|
|
|
$
|
1,113,522
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|||||||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
39,147
|
|
|
$
|
42,284
|
|
Accrued expenses and other
|
298,990
|
|
|
308,129
|
|
||
Current portion of long-term debt
|
21,350
|
|
|
7,990
|
|
||
Total current liabilities
|
359,487
|
|
|
358,403
|
|
||
Long-term debt
|
632,857
|
|
|
647,717
|
|
||
Other long-term liabilities
|
249,055
|
|
|
218,590
|
|
||
Total liabilities
|
1,241,399
|
|
|
1,224,710
|
|
||
Commitments and contingencies (Notes 1 and 9)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
|
|
||
Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001, 140,000 shares authorized, 101,323 shares issued and outstanding — 2018, 100,384 shares issued and outstanding — 2017
|
101
|
|
|
100
|
|
||
Paid-in capital
|
2,143,240
|
|
|
2,139,299
|
|
||
Accumulated deficit
|
(2,236,883
|
)
|
|
(2,127,903
|
)
|
||
Accumulated other comprehensive loss
|
(8,435
|
)
|
|
(47,239
|
)
|
||
Total NII Holdings stockholders’ deficit
|
(101,977
|
)
|
|
(35,743
|
)
|
||
Noncontrolling interest
|
(79,592
|
)
|
|
(75,445
|
)
|
||
Total deficit
|
(181,569
|
)
|
|
(111,188
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
1,059,830
|
|
|
$
|
1,113,522
|
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating revenues
|
|
|
|
|
|
|
|||||
Service and other revenues
|
$
|
605,492
|
|
|
$
|
848,806
|
|
|
$
|
963,209
|
|
Handset and accessory revenues
|
15,205
|
|
|
21,888
|
|
|
21,837
|
|
|||
|
620,697
|
|
|
870,694
|
|
|
985,046
|
|
|||
Operating expenses
|
|
|
|
|
|
|
|
||||
Cost of service (exclusive of depreciation and amortization
included below)
|
287,598
|
|
|
370,435
|
|
|
364,648
|
|
|||
Cost of handsets and accessories
|
18,571
|
|
|
40,207
|
|
|
29,273
|
|
|||
Selling, general and administrative
|
308,828
|
|
|
510,168
|
|
|
560,760
|
|
|||
Impairment, restructuring and other charges, net
|
18,949
|
|
|
175,358
|
|
|
1,384,811
|
|
|||
Depreciation
|
15,119
|
|
|
20,451
|
|
|
135,429
|
|
|||
Amortization
|
13,497
|
|
|
14,995
|
|
|
36,954
|
|
|||
|
662,562
|
|
|
1,131,614
|
|
|
2,511,875
|
|
|||
Operating loss
|
(41,865
|
)
|
|
(260,920
|
)
|
|
(1,526,829
|
)
|
|||
Other (expense) income
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
(100,513
|
)
|
|
(118,605
|
)
|
|
(113,732
|
)
|
|||
Interest income
|
12,357
|
|
|
41,507
|
|
|
37,689
|
|
|||
Foreign currency transaction (losses) gains, net
|
(49,008
|
)
|
|
(1,271
|
)
|
|
76,615
|
|
|||
Other expense, net
|
(7,217
|
)
|
|
(7,485
|
)
|
|
(10,514
|
)
|
|||
|
(144,381
|
)
|
|
(85,854
|
)
|
|
(9,942
|
)
|
|||
Loss from continuing operations before income taxes
|
(186,246
|
)
|
|
(346,774
|
)
|
|
(1,536,771
|
)
|
|||
Income tax benefit (Note 10)
|
—
|
|
|
6,347
|
|
|
2,892
|
|
|||
Loss from continuing operations
|
(186,246
|
)
|
|
(340,427
|
)
|
|
(1,533,879
|
)
|
|||
(Loss) income from discontinued operations, net of income taxes
(Note 6)
|
(8,414
|
)
|
|
1,005
|
|
|
(19,994
|
)
|
|||
Net loss
|
(194,660
|
)
|
|
(339,422
|
)
|
|
(1,553,873
|
)
|
|||
Net loss attributable to noncontrolling interest
|
(51,580
|
)
|
|
(46,275
|
)
|
|
—
|
|
|||
Net loss attributable to NII Holdings
|
$
|
(143,080
|
)
|
|
$
|
(293,147
|
)
|
|
$
|
(1,553,873
|
)
|
|
|
|
|
|
|
||||||
Net loss from continuing operations per common share, basic and diluted
|
$
|
(1.86
|
)
|
|
$
|
(3.40
|
)
|
|
$
|
(15.32
|
)
|
Net (loss) income from discontinued operations per common share, basic and diluted
|
(0.08
|
)
|
|
0.01
|
|
|
(0.20
|
)
|
|||
Net loss attributable to NII Holdings per common share, basic and diluted
|
$
|
(1.94
|
)
|
|
$
|
(3.39
|
)
|
|
$
|
(15.52
|
)
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding, basic and diluted
|
100,675
|
|
|
100,332
|
|
|
100,098
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive loss, net of income taxes
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
$
|
38,804
|
|
|
$
|
7,360
|
|
|
$
|
169,785
|
|
Other comprehensive income
|
38,804
|
|
|
7,360
|
|
|
169,785
|
|
|||
Net loss attributable to NII Holdings
|
(143,080
|
)
|
|
(293,147
|
)
|
|
(1,553,873
|
)
|
|||
Total comprehensive loss attributable to NII Holdings
|
$
|
(104,276
|
)
|
|
$
|
(285,787
|
)
|
|
$
|
(1,384,088
|
)
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
|
||||||||||||||||||||||||||||||
|
Common Stock
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total NII Holdings Stockholders’ Equity (Deficit)
|
|
Noncontrolling Interest
|
|
Total Equity (Deficit)
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2015
|
100,001
|
|
|
100
|
|
|
2,070,497
|
|
|
(280,883
|
)
|
|
(245,719
|
)
|
|
1,543,995
|
|
|
—
|
|
|
1,543,995
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,553,873
|
)
|
|
—
|
|
|
(1,553,873
|
)
|
|
—
|
|
|
(1,553,873
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169,785
|
|
|
169,785
|
|
|
—
|
|
|
169,785
|
|
|||||||
Share-based compensation activity
|
257
|
|
|
—
|
|
|
6,115
|
|
|
—
|
|
|
—
|
|
|
6,115
|
|
|
—
|
|
|
6,115
|
|
|||||||
Balance, December 31, 2016
|
100,258
|
|
|
100
|
|
|
2,076,612
|
|
|
(1,834,756
|
)
|
|
(75,934
|
)
|
|
166,022
|
|
|
—
|
|
|
166,022
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(293,147
|
)
|
|
—
|
|
|
(293,147
|
)
|
|
(46,275
|
)
|
|
(339,422
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,360
|
|
|
7,360
|
|
|
1,460
|
|
|
8,820
|
|
|||||||
Share-based compensation activity
|
126
|
|
|
—
|
|
|
4,797
|
|
|
—
|
|
|
—
|
|
|
4,797
|
|
|
170
|
|
|
4,967
|
|
|||||||
Sale of noncontrolling interest
|
—
|
|
|
—
|
|
|
57,890
|
|
|
—
|
|
|
21,335
|
|
|
79,225
|
|
|
(30,800
|
)
|
|
48,425
|
|
|||||||
Balance, December 31, 2017
|
100,384
|
|
|
100
|
|
|
2,139,299
|
|
|
(2,127,903
|
)
|
|
(47,239
|
)
|
|
(35,743
|
)
|
|
(75,445
|
)
|
|
(111,188
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(143,080
|
)
|
|
—
|
|
|
(143,080
|
)
|
|
(51,580
|
)
|
|
(194,660
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,804
|
|
|
38,804
|
|
|
16,642
|
|
|
55,446
|
|
|||||||
Share-based compensation activity
|
939
|
|
|
1
|
|
|
3,941
|
|
|
—
|
|
|
—
|
|
|
3,942
|
|
|
288
|
|
|
4,230
|
|
|||||||
Noncontrolling interest investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,900
|
|
|
15,900
|
|
|||||||
Implementation of revenue recognition accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
34,100
|
|
|
—
|
|
|
34,100
|
|
|
14,603
|
|
|
48,703
|
|
|||||||
Balance, December 31, 2018
|
101,323
|
|
|
$
|
101
|
|
|
$
|
2,143,240
|
|
|
$
|
(2,236,883
|
)
|
|
$
|
(8,435
|
)
|
|
$
|
(101,977
|
)
|
|
$
|
(79,592
|
)
|
|
$
|
(181,569
|
)
|
NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|||||
Net loss
|
$
|
(194,660
|
)
|
|
$
|
(339,422
|
)
|
|
$
|
(1,553,873
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Loss (income) from discontinued operations
|
8,414
|
|
|
(1,005
|
)
|
|
19,994
|
|
|||
Amortization of debt discounts (premiums) and financing costs
|
3,791
|
|
|
(3,297
|
)
|
|
(4,570
|
)
|
|||
Depreciation and amortization
|
28,616
|
|
|
35,446
|
|
|
172,383
|
|
|||
Provision for losses on accounts receivable
|
36,042
|
|
|
76,518
|
|
|
77,883
|
|
|||
Provision for inventory obsolescence
|
—
|
|
|
1,033
|
|
|
1,731
|
|
|||
Foreign currency transaction losses (gains), net
|
49,008
|
|
|
1,271
|
|
|
(76,615
|
)
|
|||
Impairment charges and (gains) losses on disposal of fixed assets
|
(1,315
|
)
|
|
68,529
|
|
|
1,352,667
|
|
|||
Deferred income tax benefit
|
—
|
|
|
(568
|
)
|
|
(3,183
|
)
|
|||
Share-based compensation expense
|
3,990
|
|
|
4,967
|
|
|
6,076
|
|
|||
(Gain) loss on derivative instruments
|
(8,187
|
)
|
|
—
|
|
|
3,478
|
|
|||
Other, net
|
(1,338
|
)
|
|
2,636
|
|
|
(1,580
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(45,475
|
)
|
|
(30,534
|
)
|
|
(58,951
|
)
|
|||
Prepaid value-added taxes
|
(10,358
|
)
|
|
8,749
|
|
|
15,894
|
|
|||
Handset and accessory inventory
|
460
|
|
|
4,139
|
|
|
17,273
|
|
|||
Prepaid expenses and other
|
(24,555
|
)
|
|
(13,358
|
)
|
|
8,903
|
|
|||
Other long-term assets
|
(21,095
|
)
|
|
(7,244
|
)
|
|
(41,447
|
)
|
|||
Accrued value-added taxes
|
14,297
|
|
|
19,211
|
|
|
(7,565
|
)
|
|||
Other long-term liabilities
|
23,279
|
|
|
85,995
|
|
|
41,851
|
|
|||
Accounts payable, accrued expenses and other
|
13,459
|
|
|
(204
|
)
|
|
(15,554
|
)
|
|||
Net cash used in operating activities
|
(125,627
|
)
|
|
(87,138
|
)
|
|
(45,205
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(60,942
|
)
|
|
(66,536
|
)
|
|
(61,291
|
)
|
|||
Purchases of investments
|
(817,507
|
)
|
|
(629,364
|
)
|
|
(1,075,119
|
)
|
|||
Proceeds from sales of investments
|
799,106
|
|
|
688,714
|
|
|
1,102,492
|
|
|||
Purchase of licenses
|
(4,615
|
)
|
|
(2,289
|
)
|
|
(16,936
|
)
|
|||
Change in deposits, net
|
43,644
|
|
|
27,965
|
|
|
68,366
|
|
|||
Other, net
|
31
|
|
|
275
|
|
|
(2,243
|
)
|
|||
Total investing cash (used in) provided by continuing operations
|
(40,283
|
)
|
|
18,765
|
|
|
15,269
|
|
|||
Total investing cash (used in) provided by discontinued operations
|
(3,953
|
)
|
|
68
|
|
|
(23,858
|
)
|
|||
Net cash (used in) provided by investing activities
|
(44,236
|
)
|
|
18,833
|
|
|
(8,589
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Gross proceeds from issuance of convertible notes
|
115,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from noncontrolling interest investment
|
15,900
|
|
|
50,000
|
|
|
—
|
|
|||
Repayments under equipment financing and local bank loans
|
(2,028
|
)
|
|
(85,949
|
)
|
|
(90,843
|
)
|
|||
Repayments under capital leases and other
|
(5,282
|
)
|
|
(9,522
|
)
|
|
(2,161
|
)
|
|||
Payments of debt financing costs
|
(9,299
|
)
|
|
(2,026
|
)
|
|
—
|
|
|||
Other, net
|
2,206
|
|
|
(1,193
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
116,497
|
|
|
(48,690
|
)
|
|
(93,004
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1,673
|
)
|
|
541
|
|
|
(1,045
|
)
|
|||
Net decrease in cash, cash equivalents and restricted cash
|
(55,039
|
)
|
|
(116,454
|
)
|
|
(147,843
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of year
|
305,778
|
|
|
422,232
|
|
|
570,075
|
|
|||
Cash, cash equivalents and restricted cash, end of year
|
$
|
250,739
|
|
|
$
|
305,778
|
|
|
$
|
422,232
|
|
•
|
mobile telephone voice and wireless data services;
|
•
|
international voice and data roaming services; and
|
•
|
value-added services, including sports, music and entertainment streaming capabilities; online education; and access to national and international WiFi hotspot networks.
|
Balance, January 1, 2017
|
|
$
|
27,606
|
|
New asset retirement obligations
|
|
486
|
|
|
Change in assumptions
|
|
(9,181
|
)
|
|
Accretion
|
|
1,677
|
|
|
Settlement of asset retirement obligations
|
|
(9,375
|
)
|
|
Foreign currency translation and other
|
|
112
|
|
|
Balance, December 31, 2017
|
|
11,325
|
|
|
New asset retirement obligations
|
|
282
|
|
|
Change in assumptions
|
|
753
|
|
|
Accretion
|
|
492
|
|
|
Settlement of asset retirement obligations
|
|
(1,319
|
)
|
|
Foreign currency translation and other
|
|
(2,038
|
)
|
|
Balance, December 31, 2018
|
|
$
|
9,495
|
|
Note 3.
|
Revenue Recognition
|
|
Year Ended December 31, 2018
|
||||||||||
|
As Reported With ASC 606
|
|
Without ASC 606
|
|
Impact
|
||||||
Operating revenues
|
|
|
|
|
|
|
|||||
Service and other revenues
|
$
|
605,492
|
|
|
$
|
623,993
|
|
|
$
|
(18,501
|
)
|
Handset and accessory revenues
|
15,205
|
|
|
13,977
|
|
|
1,228
|
|
|||
|
620,697
|
|
|
637,970
|
|
|
(17,273
|
)
|
|||
Operating expenses
|
|
|
|
|
|
|
|
||||
Cost of service (exclusive of depreciation and amortization included below)
|
287,598
|
|
|
287,598
|
|
|
—
|
|
|||
Cost of handsets and accessories
|
18,571
|
|
|
18,571
|
|
|
—
|
|
|||
Selling, general and administrative
|
308,828
|
|
|
326,530
|
|
|
(17,702
|
)
|
|||
Impairment, restructuring and other benefits, net
|
18,949
|
|
|
18,949
|
|
|
—
|
|
|||
Depreciation
|
15,119
|
|
|
15,119
|
|
|
—
|
|
|||
Amortization
|
13,497
|
|
|
13,497
|
|
|
—
|
|
|||
|
662,562
|
|
|
680,264
|
|
|
(17,702
|
)
|
|||
Operating loss
|
$
|
(41,865
|
)
|
|
$
|
(42,294
|
)
|
|
$
|
429
|
|
Net loss
|
$
|
(194,660
|
)
|
|
$
|
(195,089
|
)
|
|
$
|
429
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Brazil:
|
|
|
|
|
|
||||||
Transmitter and receiver site lease restructuring costs (1)
|
$
|
40,004
|
|
|
$
|
70,500
|
|
|
$
|
10,804
|
|
Reversal of previously accrued restructuring charges - site swaps (2)
|
(15,570
|
)
|
|
—
|
|
|
—
|
|
|||
Radio access network, or RAN, sharing-related restructuring (reversals) charges, net (3)
|
(9,434
|
)
|
|
29,873
|
|
|
21,362
|
|
|||
Severance
|
879
|
|
|
6,507
|
|
|
—
|
|
|||
Long-lived asset impairments (4)
|
—
|
|
|
57,902
|
|
|
1,297,479
|
|
|||
Other asset impairments (5)
|
2,718
|
|
|
9,316
|
|
|
10,965
|
|
|||
|
$
|
18,597
|
|
|
$
|
174,098
|
|
|
$
|
1,340,610
|
|
Corporate:
|
|
|
|
|
|
|
|
|
|||
Long-lived asset impairments (4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,040
|
|
Severance
|
352
|
|
|
1,148
|
|
|
2,792
|
|
|||
Other restructuring charges
|
—
|
|
|
112
|
|
|
369
|
|
|||
|
$
|
352
|
|
|
$
|
1,260
|
|
|
$
|
44,201
|
|
Total impairment, restructuring and other charges, net
|
$
|
18,949
|
|
|
$
|
175,358
|
|
|
$
|
1,384,811
|
|
(1)
|
These amounts primarily represented future lease costs for certain transmitter and receiver sites that were no longer required in Nextel Brazil's business.
|
(2)
|
In an effort to further reduce costs, in the first quarter of 2018, Nextel Brazil entered into arrangements with certain of its tower lessors for the right to exchange approximately
600
unused transmitter and receiver sites for other sites. During 2018, Nextel Brazil identified approximately
360
transmitter and receiver sites that it plans to exchange pursuant to these arrangements, approximately
300
of which were completed in 2018. As a result, in 2018, we reversed
$15.6 million
of previously accrued restructuring charges related to these site exchanges.
|
(3)
|
The amount for 2018 represents the reversal of previously accrued restructuring charges in connection with the determination that, based on revised plans in 2018, approximately
400
transmitter and receiver sites related to Nextel Brazil's RAN sharing project will continue to be utilized. The amounts for 2017 and 2016 represent restructuring costs related to the determination that RAN sharing would no longer be utilized for approximately
700
and
600
transmitter and receiver sites, respectively.
|
(4)
|
During 2016, we reviewed our Nextel Brazil segment for potential impairment and compared the carrying value of Nextel Brazil's long-lived assets to our estimate of undiscounted future cash flows. Our estimate of undiscounted future cash flows was probability weighted and took into consideration our ability to obtain capital necessary to fund our business plan. In addition, we assumed that the proceeds from any potential sale of Nextel Brazil would be significantly less than its carrying value. Based on our estimates, we determined that the carrying value of our Nextel Brazil segment was not fully recoverable. As a result, we recorded a non-cash asset impairment charge of
$1.34 billion
to reduce the carrying values of Nextel Brazil's long-lived assets to their respective fair values. We estimated the fair value of our Nextel Brazil segment using a market approach based on our market capitalization and combined it with the fair value of our outstanding debt obligations to determine the impairment charge. See Note 8 for more information on our estimate of the fair value of our debt obligations. We allocated the non-cash asset impairment charge first to reduce the
$36.8 million
carrying value of our trademark intangible asset to zero, and the remainder between property, plant and equipment and spectrum licenses on a pro rata basis. In addition, during 2017, we reviewed our Nextel Brazil segment for potential impairment and determined that, as a result of the continued decline in share price, the carrying value of this segment was not fully recoverable. As a result, we recorded non-cash asset impairment charges of
$57.9 million
in 2017 to reduce the carrying
|
(5)
|
These amounts primarily represent charges we recorded in connection with the abandonment of certain transmitter and receiver sites that are no longer required in Nextel Brazil's business.
|
Balance, January 1, 2018
|
$
|
107,306
|
|
Restructuring charges, net
|
16,231
|
|
|
Cash payments and other
|
(32,455
|
)
|
|
Foreign currency translation adjustment
|
(16,450
|
)
|
|
Balance, December 31, 2018
|
$
|
74,632
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
142,486
|
|
|
$
|
193,888
|
|
Cash in escrow (included in prepaid expenses and other)
|
106,089
|
|
|
110,024
|
|
||
Other (included in other assets)
|
2,164
|
|
|
1,866
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
250,739
|
|
|
$
|
305,778
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Cash in escrow
|
$
|
106,089
|
|
|
$
|
110,024
|
|
Judicial deposits
|
57,175
|
|
|
43,648
|
|
||
Value-added taxes
|
43,803
|
|
|
37,191
|
|
||
Deferred commissions (see Note 3)
|
21,460
|
|
|
—
|
|
||
Cash collateral related to performance bonds
|
618
|
|
|
50,340
|
|
||
Other prepaid assets
|
9,381
|
|
|
14,231
|
|
||
Other current assets
|
7,390
|
|
|
8,583
|
|
||
|
$
|
245,916
|
|
|
$
|
264,017
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Land
|
$
|
417
|
|
|
$
|
489
|
|
Building and leasehold improvements
|
650
|
|
|
935
|
|
||
Network equipment, communication towers and network software
|
108,876
|
|
|
82,493
|
|
||
Software, office equipment, furniture and fixtures and other
|
31,482
|
|
|
22,498
|
|
||
Less: Accumulated depreciation and amortization
|
(26,858
|
)
|
|
(11,461
|
)
|
||
|
114,567
|
|
|
94,954
|
|
||
Construction in progress
|
29,363
|
|
|
22,308
|
|
||
|
$
|
143,930
|
|
|
$
|
117,262
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Average Useful Life (Years)
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
||||||||||||
|
|
|
(in thousands)
|
||||||||||||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Licenses
|
26
|
|
$
|
170,640
|
|
|
$
|
(11,387
|
)
|
|
$
|
159,253
|
|
|
$
|
186,983
|
|
|
$
|
(5,426
|
)
|
|
$
|
181,557
|
|
Customer relationships
|
4
|
|
13,062
|
|
|
(10,159
|
)
|
|
2,903
|
|
|
15,300
|
|
|
(5,100
|
)
|
|
10,200
|
|
||||||
|
|
|
$
|
183,702
|
|
|
$
|
(21,546
|
)
|
|
$
|
162,156
|
|
|
$
|
202,283
|
|
|
$
|
(10,526
|
)
|
|
$
|
191,757
|
|
Y
ears
|
Estimated Amortization Expense
|
||
2019
|
$
|
9,814
|
|
2020
|
6,911
|
|
|
2021
|
6,911
|
|
|
2022
|
6,911
|
|
|
2023
|
6,911
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Judicial deposits
|
$
|
116,220
|
|
|
$
|
110,758
|
|
Cash collateral related to contingencies
|
47,899
|
|
|
55,027
|
|
||
Deferred commissions (see Note 3)
|
16,037
|
|
|
—
|
|
||
Other
|
51,023
|
|
|
54,224
|
|
||
|
$
|
231,179
|
|
|
$
|
220,009
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Contingencies
|
$
|
74,111
|
|
|
$
|
78,006
|
|
Network system and information technology
|
52,207
|
|
|
48,702
|
|
||
Non-income based taxes
|
37,817
|
|
|
30,044
|
|
||
Payroll related items and commissions
|
27,100
|
|
|
32,613
|
|
||
License fees
|
20,706
|
|
|
17,501
|
|
||
Other
|
87,049
|
|
|
101,263
|
|
||
|
$
|
298,990
|
|
|
$
|
308,129
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Non-current withholding taxes
|
$
|
78,440
|
|
|
$
|
67,356
|
|
Accrued lease termination and other restructuring charges
|
67,125
|
|
|
90,128
|
|
||
Conversion option for convertible senior notes
|
33,577
|
|
|
—
|
|
||
Accrued interest on Brazil spectrum financing
|
30,864
|
|
|
17,261
|
|
||
Other
|
39,049
|
|
|
43,845
|
|
||
|
$
|
249,055
|
|
|
$
|
218,590
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Capital expenditures
|
|
|
|
|
|
|
|||||
Cash paid for capital expenditures, including capitalized interest
|
$
|
60,942
|
|
|
$
|
66,536
|
|
|
$
|
61,291
|
|
Change in capital expenditures accrued and unpaid or financed, including accreted interest capitalized
|
3,284
|
|
|
(15,433
|
)
|
|
(9,984
|
)
|
|||
|
$
|
64,226
|
|
|
$
|
51,103
|
|
|
$
|
51,307
|
|
Interest costs
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
$
|
100,513
|
|
|
$
|
118,605
|
|
|
$
|
113,732
|
|
Interest capitalized
|
1,669
|
|
|
1,669
|
|
|
283
|
|
|||
|
$
|
102,182
|
|
|
$
|
120,274
|
|
|
$
|
114,015
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
67,361
|
|
|
$
|
91,297
|
|
|
$
|
105,636
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Brazil equipment financing
|
$
|
238,380
|
|
|
$
|
242,883
|
|
Brazil bank loans
|
169,946
|
|
|
200,567
|
|
||
Brazil spectrum financing
|
104,344
|
|
|
122,044
|
|
||
Convertible senior notes
|
72,264
|
|
|
—
|
|
||
Brazil capital lease and tower financing obligations
|
69,273
|
|
|
90,213
|
|
||
Total debt
|
654,207
|
|
|
655,707
|
|
||
Less: current portion
|
(21,350
|
)
|
|
(7,990
|
)
|
||
|
$
|
632,857
|
|
|
$
|
647,717
|
|
•
|
during any calendar quarter commencing after September 30, 2018 if the last reported sale price of our common stock is greater than or equal to
130%
of the conversion price of
$6.21
per share for at least
20
trading days during a period of
30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
|
•
|
during the
five
business day period after any
five
consecutive trading day period in which the trading price per
$1,000
principal amount of notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
Year
|
Principal Repayments
|
||
2019
|
$
|
22,007
|
|
2020
|
22,717
|
|
|
2021
|
22,800
|
|
|
2022
|
117,553
|
|
|
2023
|
233,108
|
|
|
Thereafter
|
296,323
|
|
|
Total
|
$
|
714,508
|
|
|
December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Brazil equipment financing
|
$
|
238,380
|
|
|
$
|
233,581
|
|
|
$
|
242,883
|
|
|
$
|
237,958
|
|
Bank bank loans
|
169,946
|
|
|
119,218
|
|
|
200,567
|
|
|
144,312
|
|
||||
Brazil spectrum financing
|
104,344
|
|
|
123,531
|
|
|
122,044
|
|
|
128,225
|
|
||||
Convertible senior notes
|
72,264
|
|
|
80,704
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
584,934
|
|
|
$
|
557,034
|
|
|
$
|
565,494
|
|
|
$
|
510,495
|
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Total
|
||||||
2019
|
$
|
34,400
|
|
|
$
|
106,922
|
|
|
$
|
141,322
|
|
2020
|
33,959
|
|
|
101,228
|
|
|
135,187
|
|
|||
2021
|
33,294
|
|
|
96,719
|
|
|
130,013
|
|
|||
2022
|
31,644
|
|
|
86,120
|
|
|
117,764
|
|
|||
2023
|
30,589
|
|
|
72,808
|
|
|
103,397
|
|
|||
Thereafter
|
453,634
|
|
|
628,449
|
|
|
1,082,083
|
|
|||
Total minimum lease payments
|
617,520
|
|
|
1,092,246
|
|
|
1,709,766
|
|
|||
Less: imputed interest
|
(551,535
|
)
|
|
—
|
|
|
(551,535
|
)
|
|||
Total
|
$
|
65,985
|
|
|
$
|
1,092,246
|
|
|
$
|
1,158,231
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
|||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign
|
—
|
|
|
5,779
|
|
|
(291
|
)
|
|||
Total current income tax benefit (provision)
|
—
|
|
|
5,779
|
|
|
(291
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
|||||
Federal
|
—
|
|
|
—
|
|
|
2,864
|
|
|||
State, net of Federal tax benefit
|
—
|
|
|
—
|
|
|
319
|
|
|||
Foreign
|
—
|
|
|
568
|
|
|
—
|
|
|||
Total deferred income tax benefit
|
—
|
|
|
568
|
|
|
3,183
|
|
|||
Total income tax benefit
|
$
|
—
|
|
|
$
|
6,347
|
|
|
$
|
2,892
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Statutory Federal tax rate
|
21%
|
|
35%
|
|
35%
|
Effect of foreign operations
|
7
|
|
—
|
|
(2)
|
Effect of statutory Federal tax rate change on deferred tax asset
|
—
|
|
(37)
|
|
—
|
Change in deferred tax asset valuation allowance
|
(20)
|
|
16
|
|
(32)
|
Effect of permanent differences
|
(6)
|
|
(12)
|
|
—
|
Other, net
|
(2)
|
|
—
|
|
(1)
|
Effective tax rate
|
—
|
|
2%
|
|
—
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating losses and capital loss carryforwards
|
$
|
6,296,017
|
|
|
$
|
6,509,165
|
|
Allowance for doubtful accounts
|
8,248
|
|
|
20,122
|
|
||
Accrued expenses
|
78,786
|
|
|
53,867
|
|
||
Accrual for contingent liabilities
|
25,753
|
|
|
27,016
|
|
||
Intangible assets
|
88,603
|
|
|
121,122
|
|
||
Property, plant and equipment
|
82,760
|
|
|
143,701
|
|
||
Leasing related activity
|
21,851
|
|
|
27,519
|
|
||
Equity compensation
|
1,333
|
|
|
1,151
|
|
||
Long term debt
|
46,722
|
|
|
55,146
|
|
||
Inventory reserve
|
440
|
|
|
717
|
|
||
Other
|
352
|
|
|
1,004
|
|
||
|
6,650,865
|
|
|
6,960,530
|
|
||
Valuation allowance
|
(6,622,915
|
)
|
|
(6,957,569
|
)
|
||
Total deferred tax asset
|
27,950
|
|
|
2,961
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Other
|
13,505
|
|
|
2,432
|
|
||
Deferred commissions
|
13,993
|
|
|
—
|
|
||
Total deferred tax liability
|
27,498
|
|
|
2,432
|
|
||
Net deferred tax asset
|
$
|
452
|
|
|
$
|
529
|
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Brazil
|
$
|
1,020.4
|
|
|
$
|
1,162.5
|
|
U.S.
|
243.1
|
|
|
240.4
|
|
||
Luxembourg
|
5,128.6
|
|
|
5,313.7
|
|
||
Spain
|
230.8
|
|
|
241.0
|
|
||
Total
|
$
|
6,622.9
|
|
|
$
|
6,957.6
|
|
|
Number of
Options
|
|
Weighted Average
Exercise Price
per Option
|
|
Weighted Average
Remaining Life
|
|
Aggregate Intrinsic
Value
|
|||||
Outstanding, December 31, 2017
|
3,357,698
|
|
|
$
|
3.16
|
|
|
8.83
|
|
|
||
Granted
|
1,000,000
|
|
|
$
|
2.19
|
|
|
|
|
|
||
Exercised
|
(552,363
|
)
|
|
$
|
4.00
|
|
|
|
|
|
||
Forfeited
|
(832,702
|
)
|
|
$
|
3.14
|
|
|
|
|
|
||
Outstanding, December 31, 2018
|
2,972,633
|
|
|
$
|
2.69
|
|
|
8.41
|
|
$
|
823,695
|
|
Exercisable, December 31, 2018
|
818,634
|
|
|
$
|
6.01
|
|
|
7.22
|
|
$
|
207,454
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Risk free interest rate
|
1.53%
|
|
1.53%
|
|
1.53% - 1.90%
|
Expected stock price volatility
|
40.87%
|
|
40.87%
|
|
40.71% - 40.87%
|
Expected term in years
|
5.16
|
|
5.16
|
|
5.16
|
Expected dividend yield
|
—
|
|
—
|
|
—
|
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value
Per Share
|
|||
Restricted stock awards as of December 31, 2017
|
97,350
|
|
|
$
|
15.99
|
|
Granted
|
2,483,806
|
|
|
$
|
4.15
|
|
Vested
|
(524,282
|
)
|
|
$
|
4.69
|
|
Forfeited
|
(2,447
|
)
|
|
$
|
16.00
|
|
Restricted stock awards as of December 31, 2018
|
2,054,427
|
|
|
$
|
4.56
|
|
|
Brazil
|
|
Corporate and Eliminations
|
|
Consolidated
|
||||||
|
(in thousands)
|
||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
620,675
|
|
|
$
|
22
|
|
|
$
|
620,697
|
|
Segment earnings (losses)
|
$
|
23,004
|
|
|
$
|
(17,304
|
)
|
|
$
|
5,700
|
|
Less:
|
|
|
|
|
|
|
|||||
Impairment, restructuring and other charges, net
|
|
|
|
|
(18,949
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
(28,616
|
)
|
|||||
Foreign currency transaction losses, net
|
|
|
|
|
(49,008
|
)
|
|||||
Interest expense and other, net
|
|
|
|
|
(95,373
|
)
|
|||||
Loss from continuing operations before income tax benefit
|
|
|
|
|
$
|
(186,246
|
)
|
||||
Capital expenditures
|
$
|
64,226
|
|
|
$
|
—
|
|
|
$
|
64,226
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
870,588
|
|
|
$
|
106
|
|
|
$
|
870,694
|
|
Segment losses
|
$
|
(25,942
|
)
|
|
$
|
(24,174
|
)
|
|
$
|
(50,116
|
)
|
Less:
|
|
|
|
|
|
|
|||||
Impairment, restructuring and other charges, net
|
|
|
|
|
(175,358
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
(35,446
|
)
|
|||||
Foreign currency transaction losses, net
|
|
|
|
|
(1,271
|
)
|
|||||
Interest expense and other, net
|
|
|
|
|
(84,583
|
)
|
|||||
Loss from continuing operations before income tax benefit
|
|
|
|
|
$
|
(346,774
|
)
|
||||
Capital expenditures
|
$
|
51,103
|
|
|
$
|
—
|
|
|
$
|
51,103
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
984,878
|
|
|
$
|
168
|
|
|
$
|
985,046
|
|
Segment earnings (losses)
|
$
|
67,186
|
|
|
$
|
(36,821
|
)
|
|
$
|
30,365
|
|
Less:
|
|
|
|
|
|
|
|||||
Impairment, restructuring and other charges, net
|
|
|
|
|
(1,384,811
|
)
|
|||||
Depreciation and amortization
|
|
|
|
|
(172,383
|
)
|
|||||
Foreign currency transaction gains, net
|
|
|
|
|
76,615
|
|
|||||
Interest expense and other, net
|
|
|
|
|
(86,557
|
)
|
|||||
Loss from continuing operations before income tax benefit
|
|
|
|
|
$
|
(1,536,771
|
)
|
||||
Capital expenditures
|
$
|
51,307
|
|
|
$
|
—
|
|
|
$
|
51,307
|
|
December 31, 2018
|
|
|
|
|
|
|
|||||
Identifiable assets
|
$
|
857,385
|
|
|
$
|
202,445
|
|
|
$
|
1,059,830
|
|
December 31, 2017
|
|
|
|
|
|
|
|||||
Identifiable assets
|
$
|
965,919
|
|
|
$
|
147,603
|
|
|
$
|
1,113,522
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues
|
$
|
181,241
|
|
|
$
|
156,008
|
|
|
$
|
141,737
|
|
|
$
|
141,711
|
|
Operating (loss) income
|
(13,293
|
)
|
|
(20,292
|
)
|
|
1,345
|
|
|
(9,625
|
)
|
||||
Net (loss) income from continuing operations
|
(42,031
|
)
|
|
(96,626
|
)
|
|
(49,721
|
)
|
|
2,132
|
|
||||
Net loss from discontinued operations
|
(121
|
)
|
|
(2,662
|
)
|
|
(163
|
)
|
|
(5,468
|
)
|
||||
Net (loss) income from continuing operations, per common share, basic
|
$
|
(0.42
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
0.02
|
|
Net loss from discontinued operations, per common share, basic
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
|
$
|
—
|
|
|
$
|
(0.06
|
)
|
Net (loss) income from continuing operations, per common share, diluted
|
$
|
(0.42
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
0.02
|
|
Net loss from discontinued operations, per common share, diluted
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
|
$
|
—
|
|
|
$
|
(0.06
|
)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues
|
$
|
250,955
|
|
|
$
|
225,134
|
|
|
$
|
205,423
|
|
|
$
|
189,182
|
|
Operating loss
|
(79,849
|
)
|
|
(68,931
|
)
|
|
(74,432
|
)
|
|
(37,708
|
)
|
||||
Net loss from continuing operations
|
(92,675
|
)
|
|
(87,467
|
)
|
|
(85,488
|
)
|
|
(74,797
|
)
|
||||
Net (loss) income from discontinued operations
|
(38
|
)
|
|
2,697
|
|
|
(92
|
)
|
|
(1,562
|
)
|
||||
Net loss from continuing operations, per common share, basic
|
$
|
(0.92
|
)
|
|
$
|
(0.87
|
)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.75
|
)
|
Net income (loss) from discontinued operations, per common share, basic
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
Net loss from continuing operations, per common share, diluted
|
$
|
(0.92
|
)
|
|
$
|
(0.87
|
)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.75
|
)
|
Net income (loss) from discontinued operations, per common share, diluted
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
NII HOLDINGS, INC.
CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)
(in thousands)
|
|||||||
|
December 31,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|||||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
91,046
|
|
|
$
|
28,167
|
|
Prepaid expenses and other
|
334
|
|
|
104
|
|
||
Total current assets
|
91,380
|
|
|
28,271
|
|
||
Long-term intercompany receivables
|
15
|
|
|
15
|
|
||
Other assets
|
2
|
|
|
2
|
|
||
Total assets
|
$
|
91,397
|
|
|
$
|
28,288
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|||||||
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term intercompany payables
|
$
|
1,439
|
|
|
$
|
1,439
|
|
Accrued expenses and other
|
1,887
|
|
|
—
|
|
||
Total current liabilities
|
3,326
|
|
|
1,439
|
|
||
Long-term debt
|
72,264
|
|
|
—
|
|
||
Other long-term liabilities
|
197,376
|
|
|
138,037
|
|
||
Total liabilities
|
272,966
|
|
|
139,476
|
|
||
Total deficit
|
(181,569
|
)
|
|
(111,188
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
91,397
|
|
|
$
|
28,288
|
|
NII HOLDINGS, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (PARENT COMPANY ONLY)
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating expenses
|
|
|
|
|
|
||||||
Selling, general and administrative
|
54
|
|
|
—
|
|
|
—
|
|
|||
Impairment, restructuring and other charges, net
|
—
|
|
|
—
|
|
|
36,839
|
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1,116
|
|
|||
|
54
|
|
|
—
|
|
|
37,955
|
|
|||
Operating loss
|
(54
|
)
|
|
—
|
|
|
(37,955
|
)
|
|||
Other (expense) income
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
(4,207
|
)
|
|
—
|
|
|
—
|
|
|||
Intercompany interest expense
|
—
|
|
|
—
|
|
|
(117,078
|
)
|
|||
Intercompany interest income
|
1,101
|
|
|
231
|
|
|
197
|
|
|||
Equity in loss of affiliates
|
(146,344
|
)
|
|
(292,240
|
)
|
|
(1,401,998
|
)
|
|||
Other income (expense), net
|
6,424
|
|
|
(1,138
|
)
|
|
(206
|
)
|
|||
|
(143,026
|
)
|
|
(293,147
|
)
|
|
(1,519,085
|
)
|
|||
Loss before income tax benefit
|
(143,080
|
)
|
|
(293,147
|
)
|
|
(1,557,040
|
)
|
|||
Income tax benefit
|
—
|
|
|
—
|
|
|
3,183
|
|
|||
Net loss from continuing operations
|
(143,080
|
)
|
|
(293,147
|
)
|
|
(1,553,857
|
)
|
|||
Loss from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||
Net loss
|
$
|
(143,080
|
)
|
|
$
|
(293,147
|
)
|
|
$
|
(1,553,873
|
)
|
|
|
|
|
|
|
|
|||||
Comprehensive loss, net of income taxes
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
$
|
38,804
|
|
|
$
|
7,360
|
|
|
$
|
169,785
|
|
Other comprehensive income
|
38,804
|
|
|
7,360
|
|
|
169,785
|
|
|||
Net loss
|
(143,080
|
)
|
|
(293,147
|
)
|
|
(1,553,873
|
)
|
|||
Total comprehensive loss
|
$
|
(104,276
|
)
|
|
$
|
(285,787
|
)
|
|
$
|
(1,384,088
|
)
|
|
|
|
|
|
|
|
NII HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(143,080
|
)
|
|
$
|
(293,147
|
)
|
|
$
|
(1,553,873
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
|
104,103
|
|
|
277,065
|
|
|
1,554,075
|
|
|||
Net cash (used in) provided by operating activities
|
(38,977
|
)
|
|
(16,082
|
)
|
|
202
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Investments in subsidiaries
|
(10,043
|
)
|
|
(10,043
|
)
|
|
(36,356
|
)
|
|||
Return of investments in subsidiaries
|
162
|
|
|
162
|
|
|
34,260
|
|
|||
Other, net
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||
Net cash used in investing activities
|
(9,881
|
)
|
|
(9,881
|
)
|
|
(2,112
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Gross proceeds from issuance of convertible notes
|
115,000
|
|
|
—
|
|
|
—
|
|
|||
Payments of debt financing costs
|
(3,292
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
29
|
|
|
29
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
111,737
|
|
|
29
|
|
|
—
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
62,879
|
|
|
(25,934
|
)
|
|
(1,910
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of year
|
28,167
|
|
|
54,101
|
|
|
56,011
|
|
|||
Cash, cash equivalents and restricted cash, end of year
|
$
|
91,046
|
|
|
$
|
28,167
|
|
|
$
|
54,101
|
|
|
Balance at
Beginning of
Year
|
|
Charged to
Costs and
Expenses
|
|
Deductions
and Other
Adjustments (1)
|
|
Balance at
End of
Year
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
42,011
|
|
|
$
|
36,042
|
|
|
$
|
(58,416
|
)
|
|
$
|
19,637
|
|
Valuation allowance for deferred tax assets
|
$
|
6,957,569
|
|
|
$
|
(164,607
|
)
|
|
$
|
(170,047
|
)
|
|
$
|
6,622,915
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
54,221
|
|
|
$
|
76,518
|
|
|
$
|
(88,728
|
)
|
|
$
|
42,011
|
|
Valuation allowance for deferred tax assets
|
$
|
6,945,044
|
|
|
$
|
28,637
|
|
|
$
|
(16,112
|
)
|
|
$
|
6,957,569
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
39,033
|
|
|
$
|
77,883
|
|
|
$
|
(62,695
|
)
|
|
$
|
54,221
|
|
Valuation allowance for deferred tax assets
|
$
|
5,290,813
|
|
|
$
|
1,555,006
|
|
|
$
|
99,225
|
|
|
$
|
6,945,044
|
|
(1)
|
Includes the impact of foreign currency translation adjustments.
|
Corporation
|
Jurisdiction of Incorporation
|
Nextel International Services, Ltd.
|
Delaware, USA
|
NII Capital Corp.
|
Delaware, USA
|
NII International Holdings S.à r.l.
|
Luxembourg
|
NII Brazil Holdings S.à r.l.
|
Luxembourg
|
NII International Telecom
|
Luxembourg
|
NII Mercosur Móviles, S.L
.
|
Spain
|
NII Mercosur Telecom, S.L.
|
Spain
|
NIU Holdings, LLC
|
Delaware, USA
|
Nextel Holdings S.à r.l.
|
Luxembourg
|
NII International Mobile S.à r.l.
|
Luxembourg
|
NII International Mobile S.à r.l., Inc.
|
Virginia, USA
|
McCaw International (Brazil), LLC
|
Virginia, USA
|
Airfone Holdings, LLC
|
Delaware, USA
|
Nextel Participações Ltda.
|
Brazil
|
Nextel Telecomunicações Ltda.
|
Brazil
|
Nextel Telecomunicações de Longa Distancia Ltda.
|
Brazil
|
Sunbird Participações Ltda.
|
Brazil
|
Sunbird Telecomunicações Ltda.
|
Brazil
|
1.
|
I have reviewed this annual report on Form 10-K for the period ended
December 31, 2018
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 registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.
|
|
/s/ ROBERTO RITTES
|
|
|
Roberto Rittes
|
|
|
Principal Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K for the period ended
December 31, 2018
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 registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.
|
|
/s/ DANIEL E. FREIMAN
|
|
|
Daniel E. Freiman
|
|
|
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/ ROBERTO RITTES
|
|
|
Roberto Rittes
|
|
|
Principal Executive Officer
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1.
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The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ DANIEL E. FREIMAN
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Daniel E. Freiman
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Chief Financial Officer
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