(2) | The amounts in this column reflect the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718) of options to purchase common stock, but disregarding estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining these amounts are described in footnote 13 to our consolidated financial statements included in our 2013 annual report on Form 10-K. Additional information regarding the awards of options to purchase common stock to the named executive officers in 2013(2) The amounts in this column reflect the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718) of options to purchase common stock, but disregarding estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining these amounts are described in Note 14 to our consolidated financial statements. Additional information regarding the awards of options to purchase common stock to the named executive officers in 2014 is included in the Grants of Plan-Based Awards table below.
(3) The amounts in this column represent the bonus that we paid under the Bonus Plans in effect in 2012, 2013 and 2014. The bonus is determined based on a target bonus amount, which is a predetermined percentage of base salary, and is adjusted based on achievement of operating unit and/or consolidated performance goals as well as personal performance.
(4) Consists of: (a) amounts contributed by us under our 401(k) plan, (b) in the case of Mr. Hemmady, amounts contributed by Nextel Brazil to the Fundo de Garantia de Tempo de Servico, or FGTS, and a private savings plan, and in the case of Mr. Alvarez, amounts contributed by Nextel Mexico to government mandated retirement and savings plans or other government mandated payments, (c) perquisites and other personal benefits described in more detail below, (d) severance payments and (e) tax gross-up payments made in connection with the foregoing:
| | | | | | | | | | | | | | Year | Company Contributions to 401(k) Plan ($) |
| Company Contributions to Government Plans ($) |
| Company Contributions to Private Savings Plan ($)(a) | Perquisites and Other Personal Benefits ($)(b) |
| Tax Gross-Up Payments ($)(c) |
| Severance Payments($) | Mr. Shindler | 2014 | - |
| N/A |
| N/A | 9,483 |
| - |
| N/A | | 2013 | - |
| N/A |
| N/A | 22,046 |
| 1,745 |
| N/A | | 2012 | 5,576 |
| N/A |
| N/A | - |
| 4 |
| N/A | Mr. Figuereo | 2014 | 10,400 |
| N/A |
| N/A | 1,977 |
| 654 |
| N/A | | 2013 | 9,167 |
| N/A |
| N/A | 14,952 |
| 7,276 |
| N/A | | 2012 | - |
| N/A |
| N/A | 51,193 |
| 24,813 |
| N/A | Mr. Hemmady | 2014 | 8,944 |
| N/A |
| 46,817 | 524,147 |
| 205,145 |
| N/A | | 2013 | 10,200 |
| N/A |
| N/A | 304,606 |
| 14,487 |
| N/A | | 2012 | 9,800 |
| N/A |
| N/A | - |
| 2,055 |
| N/A | Mr. Alvarez | 2014 | - |
| 60,691 |
| N/A | 54,697 |
| - |
| N/A | | | | | | | | | Mr. Begeman | 2014 | 10,400 |
| N/A |
| N/A | - |
| - |
| N/A | | 2013 | 10,200 |
| N/A |
| N/A | - |
| - |
| N/A | | 2012 | 9,800 |
| N/A |
| N/A | - |
| 1,229 |
| N/A | Mr. Foyo | 2014 | 5,358 |
| N/A |
| N/A | 277 |
| 7 |
| 1,100,000 | | 2013 | 10,200 |
| 14,487 |
| N/A | 457,820 |
| 96,176 |
| N/A | | 2012 | 9,800 |
| 14,556 |
| N/A | 583,950 |
| 82,936 |
| N/A |
| | (a) | Represents the contribution by Nextel Brazil to a private savings program designed to complement Brazilian social security in which Nextel Brazil matches employee contributions up to 8% of an employee’s annual salary. The employer contribution vests based on length of service. |
| | (3) | The amounts in this column represent the bonus that we paid under the 2012 Annual Bonus Plan. The bonus is determined based on a target bonus amount, which is a predetermined percentage of base salary, and is adjusted based on achievement of operating unit and/or consolidated performance goals as well as personal performance. |
| | (4) | Consists of: (a) amounts contributed by us under our 401(k) plan, (b) in the case of Mr. Foyo amounts contributed by Nextel Mexico to government mandated retirement and savings plans, (c) perquisites and other personal benefits described in more detail below, and (d) tax gross-up payments made in connection with the foregoing: |
| | | | | | | | | | | Year | Company Contributions to 401(k) Plan ($) | Company Contributions to Government Plans ($) |
| Perquisites and Other Personal Benefits ($)(a) |
| Tax Gross-Up Payments ($)(b) |
| Mr. Shindler | 2013 | - | N/A |
| 22,046 |
| 1,745 |
| | 2012 | 5,576 | N/A |
| - |
| 4 |
| Mr. Figuereo | 2013 | 9,167 | N/A |
| 14,952 |
| 7,276 |
| | 2012 | - | N/A |
| 51,193 |
| 24,813 |
| Mr. Hemmady | 2013 | 10,200 | N/A |
| 304,606 |
| 14,487 |
| | 2012 | 9,800 | N/A |
| - |
| 2,055 |
| | 2011 | 9,800 | N/A |
| - |
| 133 |
| Mr. Begeman | 2013 | 10,200 | N/A |
| - |
| - |
| | 2012 | 9,800 | N/A |
| - |
| 1,229 |
| | 2011 | 9,800 | N/A |
| - |
| 2,186 |
| Mr. McMahon | 2013 | 10,200 | N/A |
| - |
| - |
| Mr. Foyo | 2013 | 10,200 | 14,487 |
| 457,820 |
| 96,176 |
| | 2012 | 9,800 | 14,556 |
| 583,950 |
| 82,936 |
| | 2011 | 9,800 | 13,797 |
| 637,550 |
| 126,918 |
|
| | (a) | The dollar value of perquisites and other personal benefits received by Messrs. Shindler, Figuereo, Hemmady and FoyoAlvarez each exceeded $10,000 in 2013.2014. |
The perquisites and other personal benefits received by Mr. Shindler consist of occasional transportation assistance on the corporate aircraft.
The perquisites and other personal benefits received by Mr. Figuereo consist of relocation benefits provided by the Company and occasional transportation assistance on the corporate aircraft.
Pursuant to an international assignment agreement with Mr. Hemmady, who is a U.S. citizen, we agreed to provide certain benefits and expatriation/repatriation assistance for the period of his assignment in Brazil that are reflected as perquisites and other personal benefits. Some of these benefits are paid to Mr. Hemmady or to third parties on Mr. Hemmady's behalf in Brazilian Reais, the amounts of which are reflected in Benefits column of the table above and the All Other Compensation column of the Summary Compensation Table in U.S. dollars based on the average exchange rate of 2.162.35 Brazilian Reais to 1.00 U.S. Dollar for 2013.2014. Perquisites and other personal benefits received by Mr. Hemmady in 20132014 consist of $141,281$244,761 for housing and utilities; $57,257$194,250 representing Mr. Hemmady’s foreign services differential; $75,000 for relocation expenses; $24,009$79,009 for expenses relating to a car and driver; $7,059$6,128 for language training. We also provide Mr. Hemmady with tax counseling and make tax equalization payments on his behalf so that Mr. Hemmady pays the same taxes as he would as a U.S. citizen working in the U.S.
Pursuant to an employment contract with Mr. Foyo, who is a U.S. citizen, we agreed to provide certain benefits and expatriation/repatriation assistance for the period of his assignment in Mexico that are reflected asThe perquisites and other personal benefits. Some of these benefits are paid to Mr. Foyo or to third parties on Mr. Foyo’s behalfAlvarez in Mexican Pesos, the amounts of which are reflected in the Benefits column of the table above and the All Other Compensation column of the Summary Compensation Table in U.S. dollars based on the average exchange rate of 12.77 Mexican Peso to 1.00 U.S. Dollar for 2013. Perquisites and other personal benefits received by Mr. Foyo in 20132014 consist of $97,046an annual allowance for housinga Company supplied automobile, including related maintenance and utilities; $31,542 representing Mr. Foyo’s foreign services differential; $9,728 in personal travel costs, including home country visits and travel to and lodgingfuel, which is a customary element of compensation for senior executives in Mexico City; $54,548 in hardship allowance; $42,256 for children’s tuition; $196,440and which had an incremental cost to Nextel Mexico of $13,192, $39,568 in security costs including expenses relating to a car and driver; $9,924 for cost of living allowance; and $16,336$1,937 for wireless handsets and service for Mr. Foyo’sAlvarez's family. We also provide Mr. Foyo with tax counseling and make tax equalization payments on his behalf so that Mr. Foyo pays the same taxes as he would as a U.S. citizen working in the U.S.
| | (b)(c) | Tax gross up payments in 20132014 reflect amounts paid for Messrs. Shindler,Mr. Figuereo and Hemmady for travel by family members and friends on our corporate aircraft to business events;events and Mr. Hemmady for Mr. Figuereo relatingtax equalization, housing allowance, language courses and travel by family members on our corporate aircraft to relocation benefits; and for Mr. Foyo for payments relating to the housing, tuition, travel and other benefits provided pursuant to his employment contract.business events. |
| | (5) | In 2014, Mr. Alvarez’s salary, bonus and benefits, other than his equity grants, were paid in Mexican Pesos. As a result, the amount of compensation provided to Mr. Alvarez as reflected in U.S. dollars in the Salary, Bonus, Non-Equity Incentive Plan Compensation and All Other Compensation columns varies based on the applicable exchange rate of the Mexican Peso relative to the U.S. dollar. Mr. Alvarez’s compensation as reported in U.S. dollars can vary significantly with no actual change to the compensation paid to Mr. Alvarez in Mexican currency if the exchange rates are volatile. The amounts for Mr. Alvarez reflected in the Salary, Bonus, Non-Equity Incentive Plan Compensation and All Other Compensation columns in the table above are based on the average exchange rate of 13.30 Mexican Pesos to 1.00 U.S. Dollar for 2014. |
Grants of Plan-Based Awards Table
In the table below and discussion that follows, we summarize the grants of stock options and stock awards to each of the named executive officers during 2013.2014. Our 2013 Annual2014 Bonus Plan does not provide for payouts in fiscal years after 2013, and we did not issue any performance-based equity incentive plan awards prior to 2013.
2014.
| | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Steven M. Shindler | | | | | | | | | Annual Bonus | N/A | 307,641 | 1,230,562 | 2,461,124 | N/A | | — | 1,844,692 | 3,689,384 | N/A | Restricted Stock | | 4/30/2014 | N/A | 377,937 | N/A | 325,025 | Stock Options | | 4/30/2014 | N/A | 685,912 | 0.86 | 466,420 | Performance Shares | 4/30/13 | N/A | 499,998 | 999,995 | 1,999,991 | N/A | 4/30/2014 | N/A | — | 98,850 | — | N/A | Juan R. Figuereo | | | | | Annual Bonus | N/A | 137,500 | 550,000 | 1,100,000 | N/A | | — | 825,000 | 1,650,000 | N/A | Restricted Stock | 4/30/13 | N/A | 53,640 | N/A | 466,668 | 4/30/2014 | N/A | 53,640 | N/A | 46,130 | Stock Options | 4/30/13 | N/A | 95,434 | 8.70 | 466,673 | 4/30/2014 | N/A | 95,434 | 0.86 | 64,895 | Performance Shares | 4/30/13 | N/A | 233,334 | 466,668 | 933,336 | N/A | 4/30/2014 | N/A | — | 46,130 | — | N/A | Gokul V. Hemmady | | | | | Annual Bonus | N/A | 161,875 | 647,500 | 1,295,000 | N/A | | — | 971,250 | 1,942,500 | N/A | Restricted Stock | 4/30/13 | N/A | 74,904 | N/A | 651,664 | 4/30/2014 | N/A | 74,904 | N/A | 64,417 | Stock Options | 4/30/13 | N/A | 133,265 | 8.70 | 651,666 | 4/30/2014 | N/A | 133,265 | 0.86 | 90,620 | Performance Shares | 4/30/13 | N/A | 325,833 | 651,665 | 1,303,330 | N/A | 4/30/2014 | N/A | — | 64,417 | — | N/A | Salvador Alvarez | | | Annual Bonus(4) | | | — | 451,819 | 903,637 | N/A | Restricted Stock | | 7/14/2014 | N/A | 975,610 | N/A | 800,000 | Gary D. Begeman | | | | | N/A | | Annual Bonus | N/A | 92,676 | 370,704 | 741,408 | N/A | | — | 556,056 | 1,112,112 | N/A | Restricted Stock | 4/30/13 | N/A | 33,365 | N/A | 290,275 | 4/30/2014 | N/A | 33,365 | N/A | 28,694 | Stock Options | 4/30/13 | N/A | 59,361 | 8.70 | 290,275 | 4/30/2014 | N/A | 59,361 | 0.86 | 40,365 | Performance Shares | 4/30/13 | N/A | 145,138 | 290,275 | 580,551 | N/A | 4/30/2014 | N/A | — | 28,694 | — | N/A | John McMahon | | | Annual Bonus | N/A | 89,063 | 356,250 | 712,500 | N/A | | Restricted Stock | 4/30/13 | N/A | 23,943 | N/A | 208,304 | | Stock Options | 4/30/13 | N/A | 42,599 | 8.70 | 208,313 | | Stock Options | 12/16/13 | N/A | 50,000 | 2.01 | 57,500 | | Performance Shares | 4/30/13 | N/A | 104,152 | 208,304 | 416,608 | N/A | | Peter A. Foyo | | | | | Peter Foyo | | | Annual Bonus | N/A | 80,374 | 321,497 | 642,995 | N/A | | — | Restricted Stock | 4/30/13 | N/A | 30,648 | N/A | 266,637 | 4/30/2014 | — | Stock Options | 4/30/13 | N/A | 54,527 | 8.70 | 266,636 | 4/30/2014 | — | Performance Shares | 4/30/13 | N/A | 133,319 | 266,637 | 533,275 | N/A | 4/30/2014 | — |
(1) The amounts reflect the potential range of payouts pursuant to the 2013 Annual Bonus Plan. The actual amounts of the payments made under this plan to the named executive officers are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
| | (1) | The amounts reflect the potential range of payouts pursuant to the 2014 Bonus Plan. The actual amounts of the payments made under this plan to the named executive officers are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
| | (2) | The amounts reflect the potential range of payouts pursuant to the performance share units granted in 2013. The actual amounts of the2014. There were no payments made pursuant to the performance share units will be determined atas the end of their performance period in 2016.OIBDA target for December 31, 2014 was not achieved. |
| | (3) | The amounts in this column reflect the grant date fair value of the restricted stock and option awards on the date of grant computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718), with respect to awards of shares of restricted common stock and awards of options to purchase shares of common stock held by each of the named executives, but disregarding estimated forfeitures related to service-based vesting conditions. We value restricted stock awards at the date of grant based on the number of shares subject to the grant multiplied by the closing price of our common stock on the date of grant. We determined the fair market value of option awards based on the Black-Scholes option pricing model. The valuation assumptions used in determining these amounts are described in footnote 1314 to our consolidated financial statements includedstatements.The long-term equity incentives disclosed in this table do not reflect the expected cancellation of all outstanding equity awards granted to our 2013 annual report on Form 10-K.named executive officers as a result of the Chapter 11 proceedings. |
(4) Mr. Alvarez was eligible to participate in the 2014 Bonus Plan on a pro rata basis beginning July 14, 2014. The target and maximum annual bonus amounts for Mr. Alvarez have been adjusted to reflect his start date of July 14, 2014.
Outstanding Equity Awards at Fiscal Year-End 20132014 Table
| | | | | | | | | | | | | | | | Name | Grant Date | Option Awards | Stock Awards | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) |
| | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#) | | Market Value of Shares or Units of Stock That Have Not Vested (1) ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | Steven M. Shindler (2) | 4/27/2005 | 150,000 | (3) | - |
| | 26.20 | 4/27/2015 | - | | - | - | | - | | 4/26/2006 | 130,000 | (3) | - |
| | 60.77 | 4/26/2016 | - | | - | - | | - | | 4/25/2007 | 135,000 | (3) | - |
| | 78.30 | 4/25/2017 | - | | - | - | | - | | 4/22/2009 | - | | - |
| | - | - | - | | - | - | | - | | 4/23/2010 | - | | - |
| | - | - | - | | - | - | | - | | 4/20/2011 | - | | - |
| | - | - | 952 | (4) | 2,618 | - | | - | | 4/24/2012 | - | | - |
| | - | - | 4,066 | (5) | 11,182 | - | | - | | 12/17/2012 | 228,638 | | 457,274 |
| (6) | 6.53 | 12/17/2022 | 251,958 | (7) | 692,885 | - | | - | | 4/30/2013 | - | | - |
| | - | - | - | | - | 114,942 | (8) | 316,091 | Juan R. Figuereo | 10/17/2012 | 13,334 | | 26,666 |
| (9) | 7.81 | 10/17/2022 | 20,000 | (10) | 55,000 | - | | - | | 4/30/2013 | - | | 95,434 |
| (11) | 8.70 | 4/30/2023 | 53,640 | (12) | 147,510 | 53,640(8) | (8) | 147,510 | Gokul V. Hemmady | 5/21/2007 | 50,000 | (3) | - |
| | 78.87 | 5/21/2017 | - | | - | - | | - | | 4/23/2008 | 85,000 | (3) | - |
| | 40.62 | 4/23/2018 | - | | - | - | | - | | 4/22/2009 | 83,333 | (13) | - |
| | 14.33 | 4/22/2019 | - | | - | - | | - | | 4/23/2010 | 59,000 | (13) | | | 40.40 | 4/23/2020 | - | | | - | | - | | 4/20/2011 | 28,169 | (14) | 14,085 |
| (14) | 40.28 | 4/20/2021 | 9,084 | (4) | 24,981 | - | | - | | 4/24/2012 | 31,485 | (15) | 62,969 |
| (15) | 18.85 | 4/24/2022 | 34,708 | (5) | 95,447 | - | | - | | 4/30/2013 | - | | 133,265 |
| (11) | 8.70 | 4/30/2023 | 74,904 | (12) | 205,986 | 74,904 | (8) | 205,986 | Gary D. Begeman | 11/27/2006 | 40,000 | (3) | - |
| | 65.17 | 11/27/2016 | - | | - | - | | - | | 4/25/2007 | 40,000 | (3) | - |
| | 78.30 | 4/25/2017 | - | | - | - | | - | | 4/23/2008 | 70,000 | (3) | - |
| | 40.62 | 4/23/2018 | - | | - | - | | - | | 4/22/2009 | 93,333 | (13) | - |
| | 14.33 | 4/22/2019 | - | | - | - | | - | | 4/23/2010 | 31,900 | (13) | - |
| | 40.40 | 4/23/2020 | - | | - | - | | - | | 4/20/2011 | 20,908 | (14) | 10,454 |
| (14) | 40.28 | 4/20/2021 | 6,743 | (4) | 18,543 | - | | - | | 4/24/2012 | 23,355 | (15) | 46,708 |
| (15) | 18.85 | 4/24/2022 | 25,745 | (5) | 70,799 | - | | - | | 4/30/2013 | - | | 59,361 |
| (11) | 8.70 | 4/30/2023 | 33,365 | (12) | 91,754 | 33,365 | (8) | 91,753 | John McMahon | 4/27/2005 | 27,500 | (3) | - |
| | 26.20 | 4/27/2015 | - | | - | - | | - | | 4/26/2006 | 40,000 | (3) | - |
| | 60.77 | 4/26/2016 | - | | - | - | | - | | 4/25/2007 | 40,000 | (3) | - |
| | 78.30 | 4/25/2017 | - | | - | - | | - | | 4/23/2008 | 45,000 | (3) | - |
| | 40.62 | 4/23/2018 | - | | - | - | | - | | 4/22/2009 | 115,000 | (13) | - |
| | 14.33 | 4/22/2019 | - | | - | - | | - | | 4/23/2010 | 35,200 | (13) | - |
| | 40.40 | 4/23/2020 | - | | - | - | | - | | 4/20/2011 | 16,164 | (14) | 8,082 |
| (14) | 40.28 | 4/20/2021 | 5,213 | (4) | 14,336 | - | | - | | 4/24/2012 | 18,188 | -15 | 36,376 |
| (15) | 18.85 | 4/24/2022 | 20,050 | (5) | 55,138 | - | | - | | 4/30/2013 | - | | 42,599 |
| (11) | 8.70 | 4/30/2023 | 23,943 | (12) | 65,843 | 23,943 | (8) | 65,843 | | 12/16/2013 | - | | 50,000 |
| (16) | 2.01 | 12/16/2023 | - | | - | - | | - | Peter A. Foyo(17) | 4/26/2006 | 55,000 | (3) | - |
| | 60.77 | 4/26/2016 | - | | - | - | | - |
| | | | | | | | | | | | | | | | | 4/25/2007 | 55,000 | (3) | - |
| | 78.30 | 4/25/2017 | - | | - | - | | - | | 4/23/2008 | 60,000 | (3) | - |
| | 40.62 | 4/23/2018 | - | | - | - | | - | | 4/22/2009 | 30,000 | (13) | - |
| | 14.33 | 4/22/2019 | - | | - | - | | - | | 4/23/2010 | 43,100 | (13) | - |
| | 40.40 | 4/23/2020 | - | | - | - | | - | | 4/20/2011 | 20,317 | (14) | 10,158 |
| (14) | 40.28 | 4/20/2021 | 6,552 | (4) | 18,018 | - | | - | | 4/24/2012 | 23,142 | (15) | 46,284 |
| (15) | 18.85 | 4/24/2022 | 25,511 | (5) | 70,155 | - | | - | | 4/30/2013 | - | | 54,527 |
| (11) | 8.70 | 4/30/2023 | 30,648 | (12) | 84,282 | 30,648 | (8) | 84,282 |
| | | | | | | | | | | | | | | | | | | Name | Grant Date | Option Awards | Stock Awards | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#) | | Market Value of Shares or Units of Stock That Have Not Vested (1) ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | Steven M. Shindler (2) | 4/27/2005 | 150,000 |
| (3) | - |
| | 26.20 |
| 4/27/2015 | - |
| | - | - | | - | | 4/26/2006 | 130,000 |
| (3) | - |
| | 60.77 |
| 4/26/2016 | - |
| | - | - | | - | | 4/25/2007 | 135,000 |
| (3) | - |
| | 78.30 |
| 4/25/2017 | - |
| | - | - | | - | | 4/22/2009 | - |
| | - |
| | - |
| - | - |
| | - | - | | - | | 4/23/2010 | - |
| | - |
| | - |
| - | - |
| | - | - | | - | | 4/20/2011 | - |
| | - |
| | - |
| - | | | | - | | - | | 4/24/2012 | - |
| | - |
| | - |
| - | 2,033 |
| (4) | 41 | - | | - | | 12/17/2012 | 457,274 |
| (5) | 228,638 |
| (5) | 6.53 |
| 12/17/2022 | 125,979 |
| (6) | 2,520 | - | | - | | 4/30/2013 | - |
| | - |
| | - |
| - | - |
| | - | 114,942 | (7) | 2,298 | | 4/30/2014 | - |
| | 685,912 |
| (8) | 0.86 |
| 4/30/2024 | 377,937 |
| (9) | 7,559 | 114,942 | (10) | 2,299 | Juan R. Figuereo | 10/17/2012 | 26,667 |
| (11) | 13,333 |
| (11) | 7.81 |
| 10/17/2022 | 20,000 |
| (12) | 400 | - | | - | | 4/30/2013 | 31,811 |
| (13) | 63,623 |
| (13) | 8.70 |
| 4/30/2023 | 35,757 |
| (14) | 715 | 53,640 | (7) | 1,073 | | 4/30/2014 | | | 95,434 |
| (8) | 0.86 |
| 4/30/2024 | 53,640 |
| (9) | 1,073 | 53,640 | (10) | 1,073 | Gokul V. Hemmady | 5/21/2007 | 50,000 |
| (3) | - |
| | 78.87 |
| 5/21/2017 | - |
| | - | - | | - | | 4/23/2008 | 85,000 |
| (3) | - |
| | 40.62 |
| 4/23/2018 | - |
| | - | - | | - | | 4/22/2009 | 83,333 |
| (15) | - |
| | 14.33 |
| 4/22/2019 | - |
| | - | - | | - | | 4/23/2010 | 59,000 |
| (15) | - |
| | 40.40 |
| 4/23/2020 | - |
| | - | - | | - | | 4/20/2011 | 42,254 |
| (15) | - |
| | 40.28 |
| 4/20/2021 | - |
| | - | - | | - | | 4/24/2012 | 62,970 |
| (16) | 31,484 |
| (16) | 18.85 |
| 4/24/2022 | 17,354 |
| (4) | 347 | - | | - | | 4/30/2013 | 44,422 |
| (13) | 88,843 |
| (13) | 8.70 |
| 4/30/2023 | 49,936 |
| (14) | 999 | 74,904 | (7) | 1,498 | | 4/30/2014 | - |
| | 133,265 |
| (8) | 0.86 |
| 4/30/2024 | 74,904 |
| (9) | 1,498 | 74,904 | (10) | 1,498 | Salvador Alvarez | 7/14/2014 | - |
| | - |
| | - |
| - | 957,610 |
| (17) | 19,512 | - | | - | Gary D. Begeman | 11/27/2006 | 40,000 |
| (3) | - |
| | 65.17 |
| 11/27/2016 | - |
| | - | - | | - | | 4/25/2007 | 40,000 |
| (3) | - |
| | 78.30 |
| 4/25/2017 | - |
| | - | - | | - | | 4/23/2008 | 70,000 |
| (3) | - |
| | 40.62 |
| 4/23/2018 | - |
| | - | - | | - | | 4/22/2009 | 93,333 |
| (15) | - |
| | 14.33 |
| 4/22/2019 | - |
| | - | - | | - | | 4/23/2010 | 31,900 |
| (15) | - |
| | 40.40 |
| 4/23/2020 | - |
| | - | - | | - | | 4/20/2011 | 31,362 |
| (15) | | | 40.28 |
| 4/20/2021 | | | | - | | - | | 4/24/2012 | 46,709 |
| (16) | 23,354 |
| (16) | 18.85 |
| 4/24/2022 | 12,873 |
| (4) | 257 | - | | - | | 4/30/2013 | 19,787 |
| (13) | 39,574 |
| (13) | 8.70 |
| 4/30/2023 | 22,243 |
| (14) | 445 | 33,365 | (7) | 667 | | 4/30/2014 | - |
| | 59,361 |
| (8) | 0.86 |
| 4/30/2024 | 33,365 |
| (9) | 667 | 33,365 | (10) | 667 | Peter A. Foyo(17) | - | - |
| | - |
| | - |
| - | - |
| | - | - | | - |
| | (1) | The market value of the restricted stock and performance share units are based on the $2.75reported $0.02 closing price of a share of our common stock as reported on the NASDAQover the counter market, on December 31, 2013.2014. The long-term equity incentives disclosed in this table reflect the current fair value of our outstanding equity awards and do not reflect the expected cancellation of all outstanding equity awards granted to our named executive officers as a result of the Chapter 11 proceedings. |
| | (2) | Mr. Shindler was not granted any awards in 2008. Mr. Shindler was only granted restricted stock awards in April of 2009, 2010 and 2011 in his capacity as a member of our Board. Mr. Shindler was granted restricted stock awards in April 2012 in his capacity as a member of our Board and was granted restricted stock awards and stock option in December 2012 upon his appointment as interim, chief executive officer. Mr. Shindler was not granted stock options or restricted stock awards in April of 2013. |
| | (3) | Stock options vested 25% on the four anniversary dates following the date of grant. |
| | (4) | Restricted stock vests/vested 33 1/3% on each of April 20, 2012, April 20, 2013 and April 20, 2014. |
| | (5) | Restricted stock vests/vested 33 1/3% on each of April 24, 2013, April 24, 2014 and April 24, 2015. |
| | (6)(5) | Stock option award vests/vested 33 1/3% on each of December 17, 2013, December 17, 2014 and December 17, 2015. |
| | (7)(6) | Restricted stock vests/vested 33 1/3% on each of December 17, 2013, December 17, 2014 and December 17, 2015. |
| | (8)(7) | Performance share units vest on the third anniversary following the date of grant in an amount based on the Company’s performance during the performance period. |
| | (9)(8) | StockStock option vests/vestedaward vests 33 1/3% on each of October 17, 2013, October 17, 2014April 30, 2015, April 30, 2016 and October 17, 2015.April 30, 2017. |
| | (9) | Restricted stock vests 33 1/3% on each of April 30, 2015, April 30, 2016 and April 30, 2017. |
| | (10) | Performance share units vest on the second and third anniversary following the date of grant in an amount based on the Company’s performance during the performance period. |
(11) Stock option vests/vested 33 1/3% on each of October 17, 2013, October 17, 2014 and October 17, 2015. | | (12) | Restricted stock vests on the third anniversary following the date of grant. |
| | (11)(13) | Stock option award vestsvests/vested 33 1/3% on each of April 30, 2014, April 30, 2015 and April 30, 2016. |
| | (12)(14) | Restricted stock vestsvests/vested 33 1/3% on each of April 30, 2014, April 30, 2015 and April 30, 2016. |
| | (13)(15) | Stock options vested 33 1/3% on the three anniversary dates following the date of grant. |
| | (14)(16) | Stock options vest/vests/vested 33 1/3% on each of April 20, 2012, April 20, 2013 and April 20, 2014. |
| | (15) | Stock options vest 33 1/3% on each of April 24, 2013, April 24, 2014 and April 24, 2015. |
| | (16) | Stock options vest 33 1/3% on each of December 16, 2014, December 16, 2015 and December 16, 2016. |
| | (17) | All outstanding stock options held by Mr. Foyo well terminate ninety days after his termination of employment on February 28, 2014. |
(17) Restricted stock vests/vested 33 1/3% on each of July 14, 2015, July 14, 2016 and July 14, 2017.
Option Exercises and Stock Vested Table
In the table below, we list information on the exercise of options and the vesting of restricted stock during the year ended December 31, 2013.2014.
OPTION EXERCISES AND STOCK VESTED FISCAL YEAR 20132014 | | Name | Option Awards | Stock Awards | Option Awards | Stock Awards | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting(1)($) | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($) | Number of Shares Acquired on Vesting(#) |
| Value Realized on Vesting(1)($) |
| Steven M. Shindler | - | 130,005 | 287,242 | - | 128,964 |
| 6,644 |
| Juan R. Figuereo | - | - | 17,880 |
| 15,377 |
| Gokul V. Hemmady | - | 30,671 | 247,778 | - | 51,406 |
| 46,860 |
| Salvador Alvarez | | - | - |
| - |
| Gary D. Begeman | - | 21,815 | 175,884 | - | 30,737 |
| 28,401 |
| John McMahon | - | 17,170 | 138,531 | | Peter Foyo | - | 22,275 | 179,938 | - | - |
| - |
|
(1) | | (1) | The value realized on vesting is calculated as the number of shares vested multiplied by the closing price of the shares on the date of vesting, unless vesting occurs on a Saturday or Sunday, in which case the shares vested are multiplied by the closing price on the Friday preceding the vesting date. In accordance with our stock ownership guidelines the executive officers retained all of the shares acquired at vesting and will not realize any value or receive any recovery for the vested shares in connection with the Chapter 11 bankruptcy proceedings. |
Pension Benefits and Nonqualified Deferred Compensation
None of our executive officers are entitled to pension benefits from us. None of our executive officers participated in our Executive Deferral Plan in 2013.2014.
Potential Payments under Severance Plans
We have arrangements with each of our U.S.-based named executive officers under our Change of Control Severance Plan that provide for payments and benefits if an executive officer’s employment is terminated in connection with the occurrence of certain events involving a change in control. In addition, we have an obligation to make payments and provide certain benefits to our U.S.-based named executive officers under our Severance Plan and the 2012 Plan resulting from termination of employment upon the occurrence of certain events. The following is a summary of the payments that we or our successor may make under each of these arrangements.
Payments upon Termination of Employment. Each of our U.S.-based named executive officers is covered by our Change of Control Severance Plan and our Severance Plan. As part of the Chapter 11 proceedings, the Bankruptcy Court must approve the terms of each compensatory plan and any payments provided for under each plan. The Bankruptcy Court has reviewed and approved the terms of our Severance Plan, but has not reviewed our Change of Control Severance Plan. Absent such approval, no payments can be made pursuant to the Change of Control Severance Plan. The Change of Control Severance Plan provides for the payment of certain benefits if an executive officer’s employment is terminated by the company without cause or by the executive officer for good reason in connection with a change of control. No benefits are required to be paid unless the executive officer’s employment is terminated. The named executive officers are also entitled to severance benefits if their employment is terminated by the Company in specified circumstances under the Severance Plan. Although the benefits under the Severance Plan apply without regard to whether any change of control has occurred or is pending, the Change of Control Severance Plan provides that employees entitled to receive amounts paid under the Change in Control Severance Plan will not be entitled to cash severance under any other severance plan, including the Severance Plan. Each of the named executive officers has also received awards of stock options, restricted stock and performance share units under the 2012 Plan, which contains provisions that may accelerate the vesting of awards made to a named executive officer if we terminate the executive officer’s employment with us or if the executive officer terminates his or her employment with us for good reason in connection with a change of control. As a result of our Chapter 11 filing and the proposals for reorganization, which do not contemplate any recoveries with respect to equity interests in the Company, the named executive officers will not realize any value or receive any recovery from any awards that receive accelerated vesting based on a change of control.
Except as noted below, we otherwise have not entered into any employment agreements or other arrangements that provide for benefits in connection with a termination of employment of our named executive officers.
The following table shows the estimated amount of the payments to be made to each of the named executive officers upon termination of their employment in connection with a change of control under the Change of Control Severance Plan, their involuntary termination under the Severance Plan, which has been approved by the Bankruptcy Court, or upon their termination in connection with their death or disability. For purposes of calculating the value of the benefits, we have assumed that the triggering event for payment occurred under each of the arrangements as of December 31, 2013.2014. The footnotes to the table contain an explanation of the assumptions made by us to calculate the payments, and the discussion that follows the table provides additional details on these arrangements. The Company cannot currently issue payments under the Change of Control Severance Plan because the Change of Control Severance Plan has not been approved by the Bankruptcy Court.
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| | Termination Event(1) | Base Salary (2) ($) | Bonus(3) ($) | Other Payments (4) ($) | Equity Awards (5) ($) |
| Total(6) ($) |
| Base Salary (2) ($) | Bonus(3) ($) | Other Payments (4) ($) | Equity Awards (5) ($) |
| Total(6) ($) |
| Change of Control Plan - Termination by Executive for Good Reason or by the Company Without Cause (7)(8) | | Severance Plan - Involuntary Termination (7)(8) | | | | | | Steven M. Shindler | 2,366,465 | 3,076,405 | 38,000 | 1,022,775 |
| 6,503,645 |
| 945,996 | 1,437,323 | - | - |
| 2,383,319 |
| Juan R. Figuereo | 1,375,000 | 38,000 | 350,020 |
| 3,138,020 |
| 550,000 | 642,813 | - | - |
| 1,192,813 |
| Gokul V. Hemmady | 1,618,750 | 73,000 | 532,400 |
| 3,842,900 |
| 647,500 | 756,766 | - | - |
| 1,404,266 |
| Gary D. Begeman | 1,158,450 | 926,760 | 38,000 | 272,850 |
| 2,396,060 |
| 550,000 | 602,023 | - | - |
| 1,152,023 |
| John McMahon | 1,312,500 | 984,375 | 113,000 | 201,160 |
| 2,611,035 |
| | Severance Plan - Involuntary Termination (9) | | | | | | Steven M. Shindler | 946,586 | 246,112 | - | - |
| 1,192,698 |
| | Juan R. Figuereo | 550,000 | 110,000 | - | - |
| 660,000 |
| | Gokul V. Hemmady | 647,500 | 129,500 | - | - |
| 777,000 |
| | Gary D. Begeman | 463,380 | 74,141 | - | - |
| 537,521 |
| | John McMahon | 525,000 | 78,750 | - | - |
| 603,750 |
| | Death, Disability or Retirement | | | | | | | Steven M. Shindler | - | 812,047 |
| 812,047 |
| - | 11,652 |
| 11,652 |
| Juan R. Figuereo | - | 251,680 |
| 251,680 |
| - | 2,903 |
| 2,903 |
| Gokul V. Hemmady | - | 395,076 |
| 395,076 |
| - | 3,842 |
| 3,842 |
| Gary D. Begeman | - | 211,680 |
| 211,680 |
| - | 1,815 |
| 1,815 |
| John McMahon | - | 157,264 |
| 157,264 |
| |
| | (1) | No payments are required to be made to any named executive officer under the Change of Control Severance Plan or the Severance Plan if the executive is terminated for cause or if the executive voluntarily terminates his employment (other than for good reason in connection with a change of control under the Change of Control Plan).employment. |
| | (2) | Amounts included in this column with respect to the Change of Control Severance Plan reflect the portion of the severance payment attributable to base salary. Amounts attributable to the target bonus are included in the “Bonus” column (see note 3 below). The severance payment under the Change of Control Severance Plan is 250% of the executive’s annual base salary on the day immediately preceding the change of control. The severance payment under the Severance Plan for the named executive officers is 12 months of the named executive officer’s annualized base salary at the time of termination. |
| | (3) | Amounts included in this column with respect to the Change of Control Severance Plan reflect the portion of the severance payment attributable to the target bonus. The portion of the severance payment attributable to base salary is included in the “Base Salary” column (see note 2 above). Under the Change of Control Severance Plan, upon termination an executive is entitled to receive as part of the severance payment 250% of the executive’s annual target bonus based on the target bonus percentage on the day immediately preceding the change of control. Under the Change of Control Plan, the executive is also entitled to receive an amount equal to a prorated portion of the annual target bonus payment for the period ending on the termination event. The Severance Plan provides for the payment of an amount equal to a prorated portion of the actual annual bonus payment for the period ending on the termination event for each named executive officer, payable when bonuses are paid for the applicable plan year. |
| | (4) | Other Payments for the named executive officers include tax gross-ups, COBRA health insurance and outplacement counseling assistance provided under the Change of Control Severance Plan. In addition, for Messrs. Hemmady and McMahon, Other Payments includes repatriation relocation benefits.benefits for Mr. Hemmady. |
| | (5) | Amounts included in the Equity Awards column reflect the value (calculated in the case of options as the difference between the exercise price of the options and the market value of the related shares on December 31, 20132014 and in the case of restricted shares and performance share units as the value of shares on that date) of any awards granted under the 2012 Plan whose vesting or payment are accelerated upon the triggering event. We have assumed in the case of a change of control that the surviving entity has elected not to assume, replace or convert any of the awards made under the 2012 Plan. As described in more detail below, the 2012 Plan provides for the vesting of unvested options, restricted stock and performance share units in specific circumstances following a change of control of the Company. The 2012 Plan and the grant agreements made under that plan also provide that outstanding and unvested options and restricted stock and a pro rata portion of the outstanding and unvested performance share units will vest upon an employee’s death or disability, and for options if the employee retires at or after age 65 or at an earlier age with the consent of the Compensation Committee, with vested options remaining exercisable for a period of one year after the date the employee ceases to be an employee of the Company. The 2012 Plan and the grant agreements also provide for continued exercisability of vested options for a period of 90 days from the employee’s date of termination in all other situations. |
and for options if the employee retires at or after age 65 or at an earlier age with the consent of the Compensation Committee, with vested options remaining exercisable for a period of one year after the date the employee ceases to be an employee of the Company. The 2012 Plan and the grant agreements also provide for continued exercisability of vested options for a period of 90 days from the employee’s date of termination in all other situations. | | (6) | In addition to the amounts specified in this column, upon termination in each of the circumstances noted the executive officer is entitled to receive base salary and cash or non-cash benefits earned prior to the date of the named executive officer’s termination, including payments with respect to accrued and unused vacation time and any reimbursements for the reasonable and necessary business expenses incurred by the named executive officer prior to termination. |
| | (7) | Change of Control Plan - Termination by Executive for Good Reason or by the Company Without Cause describes the benefits payable to a named executive officer if the named executive officer voluntarily terminates his or her employment for good reason in connection with a change of control or if the named executive officer’s employment is terminated without cause by us or the surviving entity in connection |
with a change of control as described below in “Change of Control Severance Plan.”
| | (8) | In cases in which a named executive officer’s employment is terminated by us or the surviving entity in connection with a change of control, each named executive officer will be entitled to a severance payment under the Change of Control Severance Plan, but not the Severance Plan. |
| | (9) | Severance Plan - Involuntary Termination describes the benefits payable to a named executive officer if the named executive officer’s employment is terminated by us other than in connection with a change of control under the circumstances described below under “Severance Plan.” |
| | (8) | Section 503(c)(2) of the Bankruptcy Code prohibits the payment of any severance to an "insider" (as defined under the Bankruptcy Code) unless: (a) the payment is part of a program that is generally applicable to all full-time employees; and (b) the amount of the payment is no more than 10 times the amount of the mean severance pay given to non-management employees during the calendar year in which the payment is made. Pursuant to Section 503(c)(2), any severance payment provided to our named executive officers in 2014 would have been limited to $840,750. |
Change of Control Severance Plan. Any payments under our Change of Control Severance Plan are contingent on approval from the Bankruptcy Court. At this time, the Company has not presented the Change of Control Severance Plan for approval and the Bankruptcy Court has not reviewed or approved the terms or potential payments under our Change of Control Severance Plan. The Change of Control Severance Plan provides that each named executive officer will receive a payment if a change of control, as defined below, occurs and he either is terminated without cause or resigns for good reason. Each named executive officer will be entitled to receive 250% of their annual base salary and target bonus at the date of his termination upon such an event as provided in the Change of Control Severance Plan. Each named executive officer will be entitled to receive their payment under the Change of Control Severance Plan in a lump sum within thirty days following his termination of employment.
We or the surviving entity will also pay the full premium cost of continued health care coverage for each named executive officer under the federal “COBRA” law in such a termination. We will make the COBRA payments up to the lesser of 18 months or the time at which the named executive officer is reemployed and is eligible to receive group health coverage benefits under another employer-provided plan. The payments may also cease for any of the reasons provided in the COBRA law.
In addition, in the event that any of the named executive officers incur any legal, accounting or other fees and expenses in a good faith effort to obtain benefits under the Change of Control Severance Plan, we or the surviving entity will reimburse the named executive officer for such reasonable expenses. The named executive officer will be entitled to receive a tax gross-up payment in the event that any payment made under the Change of Control Severance Plan is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. Such reimbursement and gross-up payments will be subject to Section 409A of the Internal Revenue Code and will be paid within the timeframe prescribed by the regulations thereunder.
A change of control will be deemed to occur under the Change of Control Severance Plan when:
we are merged, consolidated or reorganized into or with another company, or we sell or otherwise transfer all or substantially all of our assets to another company, and, as a result of either transaction, less than a majority of the combined voting power of the then outstanding securities of the resulting company immediately after the transaction is held by the holders of our voting securities immediately prior to the transaction; the directors on our board as of the effective date of the Change of Control Severance Plan or directors elected subsequent to that date and whose nomination or election was approved by a vote of at least two-thirds of the directors on the board as of effective date of the Change of Control Severance Plan cease to be a majority of our board; our stockholders approve our complete liquidation or dissolution; an individual, entity or group acquires beneficial ownership of 50% or more of our then outstanding shares or 50% of our then outstanding voting power to vote in an election of our directors, excluding any acquisition directly from us; or our board approves a resolution stating that a change of control has occurred.
A named executive officer will receive compensation under the Change of Control Severance Plan if:
the named executive officer is terminated without cause, as defined in the 2012 Plan, within 18 months from a change of control or prior to the change of control if the named executive officer reasonably demonstrates that the termination was at the request of a third party attempting to effect a change of control or otherwise in connection with a change of control; or
the named executive officer voluntarily terminates his employment for good reason during the 18 months following a change of control, defined as when, after the change of control: there was a material and adverse change in or reduction of the named executive officer's duties, responsibilities and authority that the named executive officer held preceding the change of control; the named executive officer's principal work location was moved to a location more than 40 miles away from his prior work location; the named executive officer was required to travel on business to a substantially greater extent than prior to the change of control, which results in a material adverse change in his employment conditions; the named executive officer's salary, bonus or bonus potential were materially reduced or any other significant adverse financial consequences occurred; the benefits provided to the named executive officer were materially reduced in the aggregate; or we or any successor fail to assume or comply with any material provisions of the Change of Control Severance Plan.
Severance Plan. The Severance Plan provides payments to our named executive officers in the event of an involuntary termination of employment, which includes termination due to job elimination, work force reductions, lack of work, a determination by us that the executive officer’s contributions no longer meet the needs of the business and any other reason determined by us. Under the Severance Plan, each of the named executive officers will be entitled to a payment equal to 12 months of his annualized base salary, not including any bonus, incentive payments or commission payments. Each eligible named executive officer will also receive a pro rata payment of his bonus based on the portion of the year that the named executive officer was employed by us. We will pay the bonus to the named executive officer when we pay bonuses to employees at the same position level for the bonus plan year in the following year, and such bonus will be based on the achievement level of the named executive officer’s business unit for the applicable year.
We expect to make a lump sum payment of the amount due under the Severance Plan although we reserve the right to make the payments periodically for a period not to exceed 24 months. In order to receive payments under the Severance Plan, each named executive officer must return all of our property and execute a release agreement:
acknowledging that the payments to be received represent the full amount that the named executive officer is entitled to under the Severance Plan;
releasing any claims that the named executive officer has or may have against us; and
in our discretion, agreeing not to compete with us for a certain period.
The release agreement will also require the named executive officer to comply with specified confidentiality, non-disparagement and non-solicitation obligations. Our obligation to make or continue severance payments to the executive officer will cease if the executive officer does not comply with those obligations. The terms of the Severance Plan have been reviewed and approved by the Bankruptcy Court.
2012 Incentive Compensation Plan. The 2012 Plan currently covers the grant of certain incentives and awards, including stock options, restricted stock, restricted stock units and cash-based incentives, to our employees, including the named executive officers. Under the 2012 Plan, if a change of control occurs and the incentives and awards granted under the 2012 Plan are not assumed by the surviving entity, or the employee is terminated within a certain period following a change of control, each outstanding award is treated as explained below. A change of control under the 2012 Plan is defined the same as in the Change of Control Severance Plan and the same events that trigger payments to the named executive officer under the Change of Control Severance Plan trigger payments under the 2012 Plan.
Options. If the surviving entity assumes, replaces or converts the options and the named executive officer is terminated within 24 months under circumstances that would trigger payment, the options will become fully exercisable, vested or earned. If the options are not assumed, replaced or converted, each option shall be fully exercisable upon a change of control.
Restricted Stock and Restricted Stock Units. If the surviving entity assumes, replaces or converts the stock award and the named executive officer is terminated within 24 months under circumstances that would trigger payment, the stock awards shall be vested. If the restricted stock and restricted stock unit awards are not assumed, replaced or converted, the restricted stock or restricted stock units shall be vested upon a change of control.
Performance Share Units. If the surviving entity assumes, replaces or converts the performance share units and the named executive officer is terminated within 24 months under circumstances that would trigger payment, the performance share units shall be vest at the target level of performance. If the performance share units are not assumed, replaced or converted, the performance share units shall vest at the target level of performance upon a change of control.
Cash-based Incentives. If the surviving entity assumes, replaces or converts cash-based incentives and the named executive officer is terminated within 24 months under circumstances that would trigger payment, each outstanding cash-based incentive award shall be deemed earned pro-rata based on the fraction of the performance period that has elapsed from the beginning of the performance period until termination. If the cash-based incentives are not assumed, replaced or converted, the cash-based incentives shall be deemed earned upon a change of control.
The 2012 Plan provides that the Compensation Committee, as administrator of the plan, shall determine what amounts will be payable to the named executive officer upon death, disability or retirement in the agreement under which awards are made under the 2012 Plan.
Offer Letter with Mr. Foyo. Mr. Foyo resigned as the Company’s executive vice president, business development effective February 28, 2014 and under the terms of his Offer Letter dated December 16, 2013, Mr. Foyo received a payment of $1,100,000. Mr. Foyo did not receive any accelerated vesting for his outstanding and unvested equity awards.
Retention Agreement with Mr. Alvarez. In connection with the proposed sale of Nextel Mexico, Nextel Mexico has entered into a retention agreement with Mr. Alvarez that provides for a payment of $510,923 on the earlier of 30 days after closing of the sale transaction, September 30, 2015 or the date Mr. Alvarez is involuntarily terminated without cause. In the event that Mr. Alvarez is terminated without cause prior to the closing date or the sale transaction is not completed by September 30, 2015, the retention payment will be provided by Nextel Mexico, otherwise the purchaser will be responsible for the retention payment.
Director Compensation
Fees Payable to Non-Employee Directors. Each of our non-employee directors receives an annual retainer and equity grant for serving on the Board. In addition our non-employee directors receive additional fees for their service on committees. Our director compensation for 20132014 consisted of the following components: | | Board: | | | | | Annual Retainer | $ | 70,000 | | $ | 70,000 |
| | Annual Equity Grant | $ | 105,000 | (1) | $ | 10,378 |
| (1) | Lead Independent Director | $ | 20,000 | | $ | 20,000 |
| | Non-Executive Chairman | $ | 45,000 | | $ | 45,000 |
| | | | | | |
| | Committees: | | | | | Committee Chairs | $ | 5,000 | | $ | 5,000 |
| | Audit Committee | $ | 25,000 | | $ | 25,000 |
| | Compensation Committee | $ | 20,000 | | $ | 20,000 |
| | Corporate Governance and Nominating Committee | $ | 15,000 | | $ | 15,000 |
| | Finance Committee | $ | 15,000 | | $ | 15,000 |
| | Risk Committee | $ | 15,000 | | $ | 15,000 |
| |
| | (1) | On April 30, 2013,2014, each non-employee director then serving received 12,068 restricted shares that vest 33 1/3 % annually over a three year period. The number of restricted shares granted was determined by dividingconsistent with the annualphilosophy applied to the long-term equity grant targetgrants provided to the named executive officers and equals the number of $105,000 by the closing price of our common stock on the date the grant was made.restricted shares received in 2013. |
We pay all retainers in arrears in quarterly installments. We also reimburse directors for travel expenses incurred in connection with attending Board, committee and stockholder meetings and for other related expenses. We do not provide any additional compensation to employees who serve as a director or a committee member in periods in which
they are also employees. Non-employee directors are also permitted to defer all or a portion of their annual retainer pursuant to the NII Holdings, Inc. Outside Directors Deferral Plan described below.
Director Compensation Table
In the table and discussion below, we summarize the compensation paid to our directors during 20132014 who were not our employees as of December 31, 2013.2014.
DIRECTOR COMPENSATION FISCAL YEAR 20132014 | | Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) |
| Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) |
| Kevin L. Beebe | 123,972 | 104,992 | N/A | - | - | 228,964 |
| 155,000 | 10,378 | N/A | - | - | 165,378 |
| Donald Guthrie | 112,948 | 104,992 | N/A | - | 217,940 |
| 115,000 | 10,378 | N/A | - | 125,378 |
| Charles M. Herington (3) | 110,000 | 104,992 | N/A | - | 214,992 |
| 110,000 | 10,378 | N/A | - | 120,378 |
| Carolyn F. Katz | 142,800 | 104,992 | N/A | - | 247,792 |
| 130,000 | 10,378 | N/A | - | 140,378 |
| Ricardo Knoepfelmacher | 25,300 | 98,959 | N/A | - | 124,259 |
| 70,000 | 10,378 | N/A | - | 80,378 |
| Rosendo G. Parra | 110,000 | 104,992 | N/A | - | 214,992 |
| 110,000 | 10,378 | N/A | - | 120,378 |
| Paulino do Rego Barros, Jr. | 78,833 | 104,992 | N/A | - | 183,825 |
| 85,000 | 10,378 | N/A | - | 95,378 |
| John W. Risner | 112,052 | 104,992 | N/A | - | 217,044 |
| 110,000 | 10,378 | N/A | - | 120,378 |
|
| | (1) | The amounts in this column reflect the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718), but disregarding estimated forfeitures related to service-based vesting conditions. We value restricted stock awards at the date of grant based on the number of shares subject to the grant multiplied by the closing price of our common stock on the date of grant. On April 30, 2013,2014, we provided each non-employee director then serving with a grant of 12,068 shares of restricted stock that vest 33 1/3 % on each of April 30, 2014,2015, April 30, 20152016 and April 30, 2016.2017. The grant date fair value was $8.70$0.86 per share. The dollar value of the shares subject to those grants, based on the $2.75$0.02 closing price of a share of our common stock as reported on the NASDAQover the counter market on December 31, 2013,2014, was $33,187. On May 22, 2013, we provided Mr. Knoepfelmacher a prorated grant of 12,339 shares of restricted stock that vest 33 1/3% on each of May 22, 2014, May 22, 2015 and May 22, 2016. The grant date fair value was $8.02 per share. The dollar value of the shares subject to Mr. Knoepfelmacher’s grant, based on the $2.75 closing price of a share of our common stock as reported on the NASDAQ on December 31, 2013, was $33,932.25.$241. |
The aggregate number of shares of unvested restricted stock held by each of our non-employee directors on December 31, 2013,2014, and the dollar value of the shares based on the closing price on that date, were as follows: Ms. Katz and Messrs. Beebe, Guthrie, Herington, Parra, and Risner -17,086, $46,986.50;-22,147, $443; Mr. Rego Barros -15,118, $41,574.50;-21,638, $432; and Mr. Knoepfelmacher -12,339, $33,932.25.-20,264, $405.
| | (2) | In 2009, we discontinued our prior practice of making annual grants of options to purchase our common stock to our directors. Consistent with that change, no awards of options to purchase common stock were made to our directors in 2013.2014. The aggregate number of shares of our common stock underlying options held by each of the non-employee directors on December 31, 20132014 were as follows: Messrs. Beebe, Knoepfelmacher and Rego Barros - 0; Mr. Guthrie - 19,700; Ms. Katz and Messrs. Herington and Risner - 63,500; and Mr. Parra - 17,100. |
| | (3) | Amounts included in Fees Earned or Paid in Cash for Mr. Herington include $110,000 in director fees subject to deferral under the NII Holdings, Inc. Outside Directors Deferral Plan. As of December 31, 2013,2014, Mr. Herington held approximately 22,676 deferred share units under that plan that were granted in lieu of director fees earned in 2008, 2009, 2010, 2011, 2012 and 2013. |
Outside Directors Deferral Plan. The Company maintains the NII Holdings, Inc. Outside Directors Deferral Plan, which we refer to as the Director Deferral Plan. The Director Deferral Plan allows our non-employee directors to elect to defer 0%, 50% or 100% of his or her annual retainer and committee fees with the amount deferred by a participant attributed to a hypothetical account and treated as if it is invested in deferred stock units with the value of those units linked to the value of our common stock. The number of deferred stock units credited to a participating director’s account is determined by dividing the amount of the fee compensation elected to be deferred by the closing price of our common stock on the date the compensation would otherwise have been paid to the non-employee directors, and is increased for dividends paid on the Company’s common stock and adjusted equitably for stock splits, mergers, reorganizations and similar events. Deferral elections may be made annually by December 31 of the preceding year and remain in effect until the participating director revokes the election or timely files a new election for a subsequent year. Newly eligible non-employee directors have thirty days to make an initial deferral election. Payments out of the participating director’s hypothetical account are made in shares of the Company’s common stock, except that any
fractional share is paid in cash. The Company may also elect to make the payment in a lump sum in cash in an amount equal to the value of the deferred stock units credited to the participating director’s hypothetical account. Shares are issued under and governed in accordance with the 2012 Plan. A participating director’s account is payable to the participating director on the first day of the month following his termination of service on the Board. None of our non-employee directors currently participate in our Director Deferral Plan.Plan and the Director Deferral Plan is not available for 2015.
Stock Ownership Guidelines
We have adopted director stock ownership guidelines that require our non-employee directors to attain certain stock ownership levels and therefore maintain a vested interest in our equity performance. Over a five-year period from the date a director joins the Board, non-employee directors are expected to reach an ownership level of five times their cash base retainer and to retain that ownership. Our current base retainer is $70,000, thus our non-employee directors currently have a share ownership target of $350,000.
Under our policy, an increase in the base retainer of non-employee directors will result in an increase in the ownership requirement. The types of stock ownership that qualify toward the ownership requirement under our policy include direct stock ownership and the value of unexercised but vested options to the extent that the fair market value of our common stock exceeds the option exercise price.
Non-employee directors must hold all equity received until their target is met. Directors will be deemed to be in compliance with the guidelines and will not be required to purchase additional shares to meet the ownership requirement if they met their target ownership level in compliance with the guidelines following any sale of shares.
AsOn December 5, 2014, the Company granted a waiver under the stock ownership guidelines for the sale of common stock by a non-employee director who had previously attained his required stock ownership level. There were no other dispositions of Company common stock during 2014 and as of December 31, 2013, three2014, each of our seventhe non-employee directors have completed their five year grace period and were in compliance with the guidelines. Mr. Shindler is covered by the employee stock ownership guidelines, and as chief executive officer, he is expected to hold equity equivalent to five times his base salary.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a current or former officer of us or any of our subsidiaries. In addition, there are no compensation committee interlocks with other entities with respect to any such member.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2013,2014, with respect to the 2012 Plan, the equity compensation plan under which shares of our common stock are authorized for issuance. | | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights |
| Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans(1) |
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights |
| Weighted-average exercise price of outstanding options, warrants and rights |
| Number of securities remaining available for future issuance under equity compensation plans(1) |
| | Equity compensation plans approved by security holders | 11,259,868 |
| $36.20 | 22,089,643 |
| (2) | 6,034,151 |
| 26.57 |
| 23,824,039 |
| (2) | Total | 11,259,868 |
| $36.20 | 22,089,643 |
| | 6,034,151 |
| | 23,824,039 |
| |
(1) Amounts exclude any securities to be issued upon exercise of outstanding options, warrants and rights, and shares subject to an outstanding but unvested restricted stock or restricted stock unit award. (2) The 2012 Plan permits the grant of one or more of the following awards: options, restricted stock, restricted stock units and cash-based incentives. The number of shares authorized to be issued under the 2012 Plan will be reduced by one share of common stock for each share of common stock issued pursuant to a stock option and by one and one-half shares of common stock for each share of common stock issued pursuant to all other equity-based awards. As of December 31, 2013,2014, common stock reserved for future issuance does not include 3,341,1322,386,673 restricted stock units that were issued in 2012, 2013 and 20132014 that, if settled in shares of common stock, would reduce the shares available for grant under our 2012 Plan by 5,011,6983,580,009 shares.
Securities Ownership of Directors and Management
In the table and the related footnotes below, we list the amount and percentage of shares of our common stock that are deemed under the rules of the Securities and Exchange Commission to be beneficially owned on April 1, 2014February 28, 2015 by:
each person who served as one of our directors as of that date;
each of the named executive officers; and
all directors and executive officers as a group.
| | | Shares Covered by | Shares Covered by | Name of Beneficial Owner | Shares Owned and Vested Options (1) |
| Options to Vest (2) | Restricted Stock to Vest (3) | Percent of Class (4) | | Shares Owned and Vested Options (1) |
| Options to Vest (2) | Restricted Stock to Vest (3) | Percent of Class (4) | | Salvador Alvarez | | - |
| - | * | | Kevin L. Beebe | 29,503 |
| - | 7,008 | * | | 38,543 |
| - | * | | Gary D. Begeman | 379,037 |
| 53,595 | 30,737 | * | | 489,420 |
| - | * | | Juan R. Figuereo | 13,334 |
| 31,812 | 17,880 | * | | 70,439 |
| - | * | | Peter Foyo(5) | 103,886 |
| - | * | | | Donald Guthrie | 55,482 |
| - | 7,008 | * | | 64,522 |
| - | * | | Gokul V. Hemmady | 408,248 |
| 89,991 | 51,406 | * | | 581,467 |
| - | * | | Charles M. Herington(6)(5) | 106,959 |
| - | 7,008 | * | | 93,322 |
| - | * | | Carolyn F. Katz | 115,282 |
| - | 7,008 | * | | 124,322 |
| - | * | | Ricardo Knoepfelmacher | - |
| - | * | | 4,113 |
| - | * | | John McMahon | 421,901 |
| 40,470 | 23,219 | * | | | Rosendo G. Parra | 32,882 |
| - | 7,008 | * | | 41,922 |
| - | * | | Paulino do Rego Barros, Jr. | - |
| - | 4,023 | * | | 7,073 |
| - | * | | John W. Risner | 97,782 |
| - | 7,008 | * | | 74,573 |
| - | * | | Steven M. Shindler | 851,210 |
| - | 2,985 | * | | 1,209,855 |
| - | * | | All directors and executive officers as a group (17 persons) | 3,040,294 |
| 287,101 | 207,658 | 2.05 | % | | All directors and executive officers as a group (15 persons) | | 2,982,527 |
| | 1.73 | % |
* Indicates ownership of less than 1%. | | (1) | Includes common stock currently owned, deferred share units and exercisable options, including those options with an exercise price that is greater than the trading price of our common stock on the NASDAQ on April 1, 2014.February 28, 2015. This column does not include shares covered by options and restricted stock that vest within 60 days of April 1, 2014,February 28, 2015, which are reflected in the second and third columns in the table. Unless otherwise indicated by footnote, the named individuals have sole voting and investment power with respect to beneficially owned shares of stock. A person is also deemed to be a beneficial owner of any securities if that person has the right to acquire beneficial ownership within 60 days of the relevant date. Shares beneficially owned as a result of the right to acquire beneficial ownership within 60 days are reflected in the second and third columns of the table. |
| | (2) | Indicates shares that may be acquired upon the exercise of stock options exercisable on or within 60 days of April 1, 2014.February 28, 2015. |
| | (3) | Indicates shares of restricted common stock that are scheduled to vest on or within 60 days of April 1, 2014.February 28, 2015. |
| | (4) | Based on the total amount of shares reflected in columns one through three and 172,105,746172,363,259 shares of common stock issued and outstanding on April 1, 2014.February 28, 2015. |
| | (5) | According to a Form 4 filed with the Securities and Exchange Commission on May 2, 2013. Does not include shares of unvested restricted stock and unvested stock options removed that were cancelled upon Mr. Foyo's resignation on February 28, 2014. The information reported is based on information available to the Company and may not reflect current beneficial ownership. |
| | (6) | Includes 22,677 deferred share units granted in lieu of cash compensation pursuant to the Company’s Outside Director Deferral Plan. |
Securities Ownership of Principal Stockholders
The table below lists eachThere is no person or group, as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, known by us to be the beneficial owner of more than 5% of our outstanding common stock as of April 1, 2014.February 28, 2015.
| | | | | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) |
| Capital World Investors(2) 333 South Hope Street Los Angeles, CA 90071 | 18,194,205 | 10.57 | % | Frontier Capital Management Co., LLC(3) 99 Summer Street Boston, MA 02110 | 16,848,363 | 9.79 | % | UBS Global Asset Management Americas Inc.(4) Bahnhofstrasse 45 PO Box CH-8001 Zurich V8 CH 8001 Switzerland | 14,224,403 | 8.26 | % | Blackrock, Inc. (5) 40 East 52nd Street New York, NY 10022 | 13,687,403 | 7.95 | % | FMR LLC(6) 82 Devonshire Street Boston, Massachusetts 02109 | 13,222,505 | 7.68 | % | Vanguard Group Inc.(7) 100 Vanguard Blvd. Malvem, PA 19355 | 11,187,959 | 6.50 | % |
| | (1)Item 13. | Based on 172,105,746 shares of common stock issuedCertain Relationships and outstanding on April 1, 2014.Related Transactions, and Director Independence |
| | (2) | According to a Schedule 13G/A filed with the Securities and Exchange Commission on February 13, 2014, Capital World Investors has sole voting and dispositive power with respect to 18,194,205 shares of our common stock. |
| | (3) | According to a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2014, Frontier Capital Management Co., LLC has sole power to vote or to direct the vote of 10,096,701 shares of our common stock, and sole power to dispose or to direct the disposition of 16,848,363 of our common stock. |
| | (4) | According to a Schedule 13G/A filed with the Securities and Exchange Commission on February 13, 2014, UBS Global Asset Management Americas Inc. has sole voting power with respect to 12,911,280 shares of our common stock and shared dispositive power with respect to 14,224,403 shares of our common stock. |
| | (5) | According to a Schedule 13G filed with the Securities and Exchange Commission on January 30, 2014, Blackrock Inc. has sole power to vote or to direct the vote of 13,098,052 shares of our common stock and sole power to dispose or to direct the disposition of 13,687,403 shares of our common stock. |
| | (6) | According to a Schedule 13G/A filed with the Securities and Exchange Commission on March 10, 2014, FMR LLC has sole power to dispose or to direct the disposition of 13,222,505 shares of our common stock. Of that amount, Fidelity Management & Research Company (“Fidelity”) is the beneficial owner of 11,764,683 shares of our common stock. Fidelity, a wholly-owned subsidiary of FMR LLC, owns the securities as investment adviser to various investment companies. Edward C. Johnson 3d and FMR LLC, through its control of Fidelity and the funds, each has sole power to dispose of the 11,764,683 shares owned by the funds. Fidelity SelectCo, LLC (“SelectCo”), a wholly-owned subsidiary of FMR LLC and an investment adviser to various investment companies, is the beneficial owner of 1,457,822 shares of our common stock. Edward C. Johnson 3d and FMR LLC, through its control of SelectCo, and the SelectCo Funds each has sole power to dispose of the 1,457,822 owned by Seletco. The members of the family of Edward C. Johnson 3d, chairman of FMR LLC, are a controlling group of FMR LLC due to their ownership of approximately 49% voting power of FMR LLC and a voting agreement. |
| | (7) | According to a Schedule 13G/A filed with the Securities and Exchange Commission on February 12, 2014, Vanguard Group Inc. has sole voting power with respect to 269,054 shares of our common stock, sole dispositive power with respect to 10,926,905 shares of our common stock and shared dispositive power with respect to 261,054 shares of our common stock. |
Item 13.Certain Relationships and Related Transactions, and Director Independence.
Director Independence
In accordance with our Corporate Governance Guidelines, a majority of our Board must be independent as defined by the NASDAQ listing rules and the Securities Exchange Act of 1934, as amended. On February 12, 2014,11, 2015, the Board determined that the following eight of its nine current members (88%(89%) are independent: Kevin L. Beebe, Donald Guthrie, Charles M. Herington, Carolyn F. Katz, Ricardo Knoepfelmacher, Rosendo G. Parra, Paulino do Rego Barros, Jr. and John W. Risner. In making that determination, the Board considered the relationships described below in “Certain Relationships and Related Transactions.” The Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee are comprised entirely of independent directors.
Certain Relationships and Related Transactions
Our Corporate Governance Guidelines require that the Audit Committee review and approve or ratify transactions involving the Company and related persons (such as the Company’s officers, directors, family members
of the officers and directors and other related parties) in accordance with the requirements of NASDAQ.. In determining whether to approve or ratify a related party transaction, the Audit Committee evaluates whether the transaction is in the best interests of the Company taking into consideration all relevant factors, including as applicable the Company’s business rationale for entering into the transaction and the fairness of the transaction to the Company. The Audit Committee generally seeks to consider and approve these transactions in advance where practicable, but may also ratify them after the transactions are entered into, particularly in instances where the transactions are entered into in the ordinary course of business or if the transaction is on terms that are consistent with a policy previously approved by the Audit Committee or the Board. In
instances where the transaction is subject to renewal or if the Company has the right to terminate the relationship, the Audit Committee expects to periodically monitor the transaction to ensure that there are no changed circumstances that would render it advisable for the Company to amend or terminate the transaction.
Currently, the only related person transactions aretransaction is the transactionstransaction described in more detail below. The Audit Committee has approved and ratified these arrangements in accordance with the Corporate Governance Guidelines.
| | | Transaction | Description of Relationship | 4DK Technologies, Inc. | In accordance with our Corporate Governance Guidelines, theRelationship; Audit Committee has continued to monitor the Company’s relationship with 4DK Technologies, Inc. (“4DK”), a wireless network and device solution provider that supports services relating to our push-to-talk solution.
As of December, 31, 2013, Steven M. Shindler, our chief executive officer, continued to hold slightly more than 10% equity ownership in 4DK, and in accordance with the Corporate Governance Guidelines, the Audit Committee reviewed the relationship to ensure there were no changed circumstances that would render it advisable for the Company to amend or terminate the transaction.
In 2013, the Company paid approximately $376,000 for the services provided under the arrangements with 4DK and, in the ordinary course of business. As of December 31, 2013, 4DK had been liquidated and the relationship between the Company and 4DK had been terminated. In February 2014, the Audit Committee determined, upon review, that the transaction was in the best interest of the Company and ratified the transaction. Determination | Equifax, Inc. | In accordance with our Corporate Governance Guidelines, the Audit Committee has continued to monitor the Company’s relationship with Equifax, Inc., which providesprovided customer credit evaluation services to the Company in Argentina and Chile.
during 2014. | | As of December, 31, 2013,2014, Paulino do Rego Barros, Jr., a member of the Board, serves as president, international of Equifax.
In accordance with our Corporate Governance Guidelines, the
| | The Audit Committee has continued to monitor the Company’s relationship with Equifax and its affiliates to ensure there were no changed circumstances that would render it advisable for the Company to amend or terminate the transaction. Consistent with previous years, theThe Company made payments of approximately $2,650,000$2,000,000 to Equifax and its affiliates for the services provided in 2013.2014, excluding any payments made by Nextel Chile, which was sold in August 2014. In February 2014,2015, the Audit CommitteeBoard determined, upon review, that the transaction continued to be in the best interest of the Company and ratified the transaction. |
Item 14. Principal Accounting Fees and Services
| | Item 14. | Principal Accountant Fees and Services |
Fees Paid to Independent Registered Public Accounting FirmFirms
KPMG LLP audited our consolidated financial statements for the fiscal year ended December 31, 2014 and PricewaterhouseCoopers LLP audited our consolidated financial statements for the fiscal yearsyear ended December 31, 2013 and December 31, 2012.2013. The following table sets forth the fees accrued or paid to the Company’s independent registered public accounting firm for the years ended December 31, 20132014 and December 31, 2012.2013.
| | | | | | | | KPMG | PwC | | 2013 | | 2012 | | 2014 | 2013 | Audit Fees(1) | $ | 9,766,035 |
| $ | 10,751,879 |
| $ | 9,609,173 |
| $ | 9,766,035 |
| Audit-Related Fees(2) | $ | 31,304 |
| $ | 3,750 |
| $ | — |
| $ | 31,304 |
| Tax Fees(3) | $ | 202,373 |
| $ | 240,580 |
| $ | 39,890 |
| $ | 202,373 |
| All Other Fees(4) | $ | 210,102 |
| $ | 1,902,887 |
| $ | — |
| $ | 210,102 |
| TOTAL | $ | 10,209,814 |
| $ | 12,899,096 |
| $ | 9,649,063 |
| $ | 10,209,814 |
|
| | (1) | Audit fees consist of those fees rendered for the audit of our annual consolidated financial statements, audit of the effectiveness of internal controls over financial reporting, review of financial statements included in our quarterly reports and for services normally provided in connection with statutory and regulatory filings or engagements, such as comfort letters or attest services. |
| | (2) | Audit-related fees consist of those fees for assurance and related services that are reasonably related to the review of our financial statements. |
| | (3) | Tax fees consist of those fees billed by PricewaterhouseCoopers for professional services for tax compliance, tax advice, tax planning, transfer pricing and expatriate tax services. |
| | (4) | Fees incurred for services other than those described above for consulting, assessment of information technology systems, salary and human resources projects, research and disclosure tools and expenses. |
(1) Audit fees consist of those fees rendered for the audit of our annual consolidated financial statements, audit of the effectiveness of internal controls over financial reporting, review of financial statements included in our quarterly reports and for services normally provided in connection with statutory and regulatory filings or engagements, such as comfort letters or attest services. (2) Audit-related fees consist of those fees for assurance and related services that are reasonably related to the review of our financial statements. (3) Tax fees consist of those fees billed for professional services for tax compliance, tax advice, tax planning, transfer pricing and expatriate tax services. (4) Fees incurred for services other than those described above for consulting, assessment of information technology systems, salary and human resources projects, research and disclosure tools and expenses.
Audit Committee Pre-Approval Policies and Procedures
It is the policy of the Audit Committee that our independent registered public accounting firm may provide only those services that have been pre-approved by the Audit Committee. Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it requires specific pre-approval by the Audit Committee or, in specified circumstances, the Audit Committee chair pursuant to authority delegated by the Audit Committee. The term of any general pre-approval is eighteen months from the date of pre-approval, unless the Audit Committee or a related engagement letter specifically provides for a different period. The Audit Committee annually reviews and pre-approves the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval. The Audit Committee has delegated its pre-approval authority to Carolyn Katz, the chair of the Audit Committee.
Requests or applications to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent registered public accounting firm and our controller, and must include a joint statement as to whether, in their view, the request or application is consistent with the Securities and Exchange Commission’s rules on auditor independence. For the years ended December 31, 20132014 and December 31, 2012,2013, all services provided by our independent registered public accounting firmfirms were pre-approved in accordance with the Audit Committee policy described above.
PART IV
| | Item 15. | Exhibits, Financial Statement Schedules. |
Item 15. Exhibits,(a)(1) Financial Statement Schedules
A listStatements. Consolidated financial statements and reports of the exhibitsindependent registered public accounting firms filed or furnished withas part of this report (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index of this Form 10-K/A.are listed below:
| | | | Page | Report of Independent Registered Public Accounting Firm | | Report of Independent Registered Public Accounting Firm | | Report of Independent Registered Public Accounting Firm | | Consolidated Balance Sheets — As of December 31, 2014 and 2013 | | Consolidated Statements of Comprehensive Loss — For the Years Ended December 31, 2014, 2013 and 2012 | | Consolidated Statements of Changes in Stockholders’ (Deficit) Equity — For the Years Ended December 31, 2014, 2013 and 2012 | | Consolidated Statements of Cash Flows — For the Years Ended December 31, 2014, 2013 and 2012 | | Notes to Consolidated Financial Statements | |
| | (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. |
| | | | Page | Schedule I — Condensed Financial Information of Registrant | | Schedule II — Valuation and Qualifying Accounts | |
| | (3) | List of Exhibits. The exhibits filed as part of this report are listed in the Exhibit Index, which is incorporated in this item by reference. |
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NII HOLDINGS, INC. | | | | April 29, 2014 | By: | /s/ Shana C. SmithESTEBAN NARANJO | | | Shana C. SmithEsteban Naranjo
Vice President, Corporate Controller (on behalf of the registrant and Secretaryas Principal Accounting Officer) |
March 10, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 10, 2015. | | | | Signature | | Title | | | | /s/ Steven M. Shindler | | Chief Executive Officer | Steven M. Shindler | | | | | | /s/ Juan R. Figuereo | | Executive Vice President, Chief Financial Officer (Principal Financial Officer) | Juan R. Figuereo | | | | | | /s/ Kevin L. Beebe | | Chairman of the Board of Directors | Kevin L. Beebe | | | | | | /s/ Donald Guthrie | | Director | Donald Guthrie | | | | | | /s/ Charles M. Herington | | Director | Charles M. Herington | | | | | | /s/ Carolyn Katz | | Director | Carolyn Katz | | | | | | | | Director | Ricardo Knoepfelmacher | | | | | | /s/ Rosendo G. Parra | | Director | Rosendo G. Parra | | | | | | /s/ Paulino do Rego Barros | | Director | Paulino do Rego Barros | | | | | | /s/ John W. Risner | | Director | John W. Risner | | |
NII HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
| | | | | | | | | CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | FINANCIAL STATEMENT SCHEDULES | | | | | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders NII Holdings, Inc. (Debtor-In-Possession): We have audited the accompanying consolidated balance sheet of NII Holdings, Inc. (Debtor-In-Possession) and subsidiaries (the Company) as of December 31, 2014, and the related consolidated statements of comprehensive loss, changes in stockholders’ (deficit) equity, and cash flows for the year then ended. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NII Holdings, Inc. (Debtor-In-Possession) and subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. The accompanying consolidated financial statements and financial statement schedules have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a net capital deficiency, and filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements and financial statement schedules do not include any adjustments that might result from the outcome of this uncertainty. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), NII Holdings, Inc.’s (Debtor-In-Possession) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 10, 2015 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP McLean, Virginia March 10, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders NII Holdings, Inc. (Debtor-in-Possession):
We have audited NII Holdings, Inc.’s (Debtor-in-Possession) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NII Holdings, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting (Item 9A). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness was identified at the Company’s reportable segment in Brazil (Nextel Brazil) related to the failure to establish an effective control environment and monitoring activities, including an organizational structure with sufficiently trained resources where supervisory roles, responsibilities, and monitoring activities are aligned with the Company’s financial reporting objectives. Further, Nextel Brazil did not maintain effective operation of process level controls, including reconciliation and management review controls. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of NII Holdings, Inc. (Debtor-in-Possession) and subsidiaries as of December 31, 2014 and the related consolidated statements of comprehensive loss, changes in stockholders’ (deficit) equity, and cash flows for the year then ended. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2014 consolidated financial statements, and this report does not affect our report dated March 10, 2015, which expressed an unqualified opinion on those consolidated financial statements. In our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, NII Holdings, Inc. (Debtor-in-Possession) has not maintained effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)..
/s/ KPMG LLP McLean, Virginia March 10, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To theBoard of Directors and Stockholders of NII Holdings, Inc.:
In our opinion, the consolidated balance sheet as of December 31, 2013 and the related consolidated statements of comprehensive loss, changes in stockholders’ (deficit) equity and cash flows for each of two years in the period ended December 31, 2013 present fairly, in all material respects, the financial position of NII Holdings, Inc. (Debtor-in-Possession) and its subsidiaries at December 31, 2013, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules for each of the two years in the period ended December 31, 2013 present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 1 to the consolidated financial statements appearing under Item 15 of the Company's 2013 annual report on Form 10-K (not presented herein), the Company projected that it was likely that it would not be able to comply with certain debt covenants throughout 2014. This condition and its impact on the Company’s liquidity raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1 to the consolidated financial statements appearing under Item 15 of the Company's 2013 annual report on Form 10-K (not presented herein). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ PricewaterhouseCoopers LLP McLean, Virginia February 28, 2014, except for the effects of discontinued operations discussed in Note 5 to the consolidated financial statements, as to which the date is March 10, 2015
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except par values)
| | | | | | | | | | December 31, 2014 | | December 31, 2013 | ASSETS | Current assets | |
| | |
| Cash and cash equivalents | $ | 573,600 |
| | $ | 1,730,335 |
| Short-term investments | 153,612 |
| | 585,760 |
| Accounts receivable, net of allowance for doubtful accounts of $55,015 and $54,531 | 398,678 |
| | 511,406 |
| Handset and accessory inventory | 207,633 |
| | 336,620 |
| Deferred income taxes, net | 50,692 |
| | 127,395 |
| Prepaid expenses and other | 329,197 |
| | 397,574 |
| Assets related to discontinued operations | — |
| | 59,096 |
| Total current assets | 1,713,412 |
| | 3,748,186 |
| Property, plant and equipment, net | 2,432,933 |
| | 3,337,545 |
| Intangible assets, net | 822,124 |
| | 980,369 |
| Deferred income taxes, net | 5,767 |
| | 26,713 |
| Other assets | 456,355 |
| | 477,306 |
| Assets related to discontinued operations | — |
| | 109,835 |
| Total assets | $ | 5,430,591 |
| | $ | 8,679,954 |
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | Liabilities not subject to compromise | | | | Current liabilities | |
| | |
| Accounts payable | $ | 279,804 |
| | $ | 346,128 |
| Accrued expenses and other | 562,988 |
| | 959,059 |
| Deferred revenues | 89,019 |
| | 127,782 |
| Current portion of long-term debt | 777,569 |
| | 96,839 |
| Deposits related to 2013 sale of towers | — |
| | 720,013 |
| Liabilities related to discontinued operations | — |
| | 36,769 |
| Total current liabilities | 1,709,380 |
| | 2,286,590 |
| Long-term debt | 734,823 |
| | 5,696,632 |
| Deferred income tax liabilities | 58,088 |
| | 108,991 |
| Other long-term liabilities | 299,571 |
| | 227,028 |
| Liabilities related to discontinued operations | — |
| | 5,326 |
| Total liabilities not subject to compromise | 2,801,862 |
| | 8,324,567 |
| Liabilities subject to compromise (Note 2) | 4,593,493 |
| | — |
| Commitments and contingencies (Note 11) |
|
| |
|
| Stockholders’ (deficit) equity | |
| | |
| Undesignated preferred stock, par value $0.001, 10,000 shares authorized — 2014 and 2013, no shares issued or outstanding — 2014 and 2013 | — |
| | — |
| Common stock, par value $0.001, 600,000 shares authorized — 2014 and 2013, 172,363 shares issued and outstanding — 2014, 172,105 shares issued and outstanding — 2013 | 172 |
| | 172 |
| Paid-in capital | 1,517,081 |
| | 1,504,258 |
| Accumulated deficit | (2,150,664 | ) | | (192,966 | ) | Accumulated other comprehensive loss | (1,331,353 | ) | | (956,077 | ) | Total stockholders’ (deficit) equity | (1,964,764 | ) | | 355,387 |
| Total liabilities and stockholders’ (deficit) equity | $ | 5,430,591 |
| | $ | 8,679,954 |
|
The accompanying notes are an integral part of these consolidated financial statements.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands, except per share amounts)
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Operating revenues | |
| | |
| | |
| Service and other revenues | $ | 3,447,167 |
| | $ | 4,517,154 |
| | $ | 5,424,766 |
| Handset and accessory revenues | 241,553 |
| | 194,413 |
| | 268,469 |
| | 3,688,720 |
| | 4,711,567 |
| | 5,693,235 |
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,308,835 |
| | 1,392,140 |
| | 1,509,543 |
| Cost of handsets and accessories | 973,491 |
| | 884,789 |
| | 792,466 |
| Selling, general and administrative | 1,699,058 |
| | 1,941,773 |
| | 2,261,922 |
| Impairment and restructuring charges | 220,742 |
| | 168,543 |
| | 30,401 |
| Gain on sale of towers, net (Note 9) | (74,631 | ) | | — |
| | — |
| Depreciation | 592,056 |
| | 629,606 |
| | 558,224 |
| Amortization | 80,649 |
| | 63,321 |
| | 46,937 |
| | 4,800,200 |
| | 5,080,172 |
| | 5,199,493 |
| Operating (loss) income | (1,111,480 | ) | | (368,605 | ) | | 493,742 |
| Other (expense) income | |
| | |
| | |
| Interest expense, net | (449,345 | ) | | (526,530 | ) | | (359,795 | ) | Interest income | 66,425 |
| | 43,327 |
| | 33,785 |
| Foreign currency transaction losses, net | (130,499 | ) | | (123,369 | ) | | (63,330 | ) | Other expense, net | (6,721 | ) | | (12,859 | ) | | (28,097 | ) | | (520,140 | ) | | (619,431 | ) | | (417,437 | ) | (Loss) income from continuing operations before reorganization items and income tax provision | (1,631,620 | ) | | (988,036 | ) | | 76,305 |
| Reorganization items (Note 2) | (71,601 | ) | | — |
| | — |
| Income tax provision (Note 13) | (74,091 | ) | | (446,052 | ) | | (158,144 | ) | Net loss from continuing operations | (1,777,312 | ) | | (1,434,088 | ) | | (81,839 | ) | Loss from discontinued operations, net of income taxes (Note 5) | (180,386 | ) | | (215,511 | ) | | (683,410 | ) | Net loss | $ | (1,957,698 | ) | | $ | (1,649,599 | ) | | $ | (765,249 | ) | | | | | | | Net loss from continuing operations per common share, basic and diluted | $ | (10.31 | ) | | $ | (8.34 | ) | | $ | (0.48 | ) | Net loss from discontinued operations per common share, basic and diluted | (1.05 | ) | | (1.26 | ) | | (3.98 | ) | Net loss per common share, basic and diluted | $ | (11.36 | ) | | $ | (9.60 | ) | | $ | (4.46 | ) | | | | | | | Weighted average number of common shares outstanding, basic and diluted | 172,283 |
| | 171,912 |
| | 171,499 |
| | | | | | | Comprehensive loss, net of income taxes | | | | | | Foreign currency translation adjustment | $ | (340,847 | ) | | $ | (334,893 | ) | | $ | (97,589 | ) | Reclassification adjustment for sale of Nextel Chile (Note 5) | (33,885 | ) | | — |
| | — |
| Other | (544 | ) | | 2,257 |
| | (1,802 | ) | Other comprehensive loss | (375,276 | ) | | (332,636 | ) | | (99,391 | ) | Net loss | (1,957,698 | ) | | (1,649,599 | ) | | (765,249 | ) | Total comprehensive loss | $ | (2,332,974 | ) | | $ | (1,982,235 | ) |
| $ | (864,640 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY (in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | Common Stock | | Paid-in Capital | | (Accumulated Deficit) Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Stockholders’ (Deficit) Equity | | Shares | | Amount | | | | | Balance, January 1, 2012 | 171,177 |
| | $ | 171 |
| | $ | 1,440,079 |
| | $ | 2,221,882 |
| | $ | (524,050 | ) | | $ | 3,138,082 |
| Net loss | — |
| | — |
| | — |
| | (765,249 | ) | | — |
| | (765,249 | ) | Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | (99,391 | ) | | (99,391 | ) | Purchase of convertible notes | — |
| | — |
| | (526 | ) | | — |
| | — |
| | (526 | ) | Share-based compensation activity | 476 |
| | — |
| | 43,533 |
| | — |
| | — |
| | 43,533 |
| Balance, December 31, 2012 | 171,653 |
| | 171 |
| | 1,483,086 |
| | 1,456,633 |
| | (623,441 | ) | | 2,316,449 |
| Net loss | — |
| | — |
| | — |
| | (1,649,599 | ) | | — |
| | (1,649,599 | ) | Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | (332,636 | ) | | (332,636 | ) | Share-based compensation activity | 452 |
| | 1 |
| | 21,172 |
| | — |
| | — |
| | 21,173 |
| Balance, December 31, 2013 | 172,105 |
| | 172 |
| | 1,504,258 |
| | (192,966 | ) | | (956,077 | ) | | 355,387 |
| Net loss | — |
| | — |
| | — |
| | (1,957,698 | ) | | — |
| | (1,957,698 | ) | Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | (375,276 | ) | | (375,276 | ) | Share-based compensation activity | 258 |
| | — |
| | 12,823 |
| | — |
| | — |
| | 12,823 |
| Balance, December 31, 2014 | 172,363 |
| | $ | 172 |
| | $ | 1,517,081 |
| | $ | (2,150,664 | ) | | $ | (1,331,353 | ) | | $ | (1,964,764 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Cash flows from operating activities: | |
| | |
| | |
| Net loss | $ | (1,957,698 | ) | | $ | (1,649,599 | ) | | $ | (765,249 | ) | Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | | | |
| | |
| Loss from discontinued operations | 180,386 |
| | 215,511 |
| | 683,410 |
| Reorganization items | 54,851 |
| | — |
| | — |
| Amortization of debt discount and financing costs | 16,816 |
| | 31,283 |
| | 21,598 |
| Depreciation and amortization | 672,705 |
| | 692,927 |
| | 605,161 |
| Provision for doubtful accounts | 114,784 |
| | 111,460 |
| | 214,454 |
| Provision for inventory obsolescence | 40,768 |
| | 56,077 |
| | 1,470 |
| Foreign currency transaction losses, net | 130,499 |
| | 123,369 |
| | 63,330 |
| Impairment charges, restructuring charges and losses on disposal of fixed assets | 176,577 |
| | 149,227 |
| | 38,535 |
| Gain on sale of towers | (74,631 | ) | | — |
| | — |
| Deferred income tax provision (benefit) | 48,453 |
| | 382,070 |
| | (17,877 | ) | Share-based compensation expense | 13,845 |
| | 27,255 |
| | 40,430 |
| Other, net | (5,002 | ) | | (11,537 | ) | | 30,981 |
| Changes in assets and liabilities: | | | |
| | |
| Accounts receivable | (52,706 | ) | | (29,458 | ) | | (83,946 | ) | Handset and accessory inventory | 57,465 |
| | (112,919 | ) | | (48,705 | ) | Prepaid expenses and other | (66,218 | ) | | (24,495 | ) | | (239,876 | ) | Other long-term assets | (166,366 | ) | | (52,875 | ) | | (99,862 | ) | Accounts payable, accrued expenses and other | 249,339 |
| | 63,386 |
| | 119,865 |
| Total operating cash (used in) provided by continuing operations | (566,133 | ) | | (28,318 | ) | | 563,719 |
| Total operating cash used in discontinued operations | (62,583 | ) | | (164,133 | ) | | (210,536 | ) | Net cash (used in) provided by operating activities | (628,716 | ) | | (192,451 | ) | | 353,183 |
| Cash flows from investing activities: | | | |
| | |
| Capital expenditures | (612,161 | ) | | (620,895 | ) | | (953,882 | ) | Purchase of investments | (1,637,913 | ) | | (2,360,529 | ) | | (1,678,918 | ) | Proceeds from sales of investments | 2,092,459 |
| | 1,942,886 |
| | 1,813,783 |
| (Payments) proceeds related to 2013 sale of towers, net | (39,618 | ) | | 721,404 |
| | — |
| Change in restricted cash and escrow accounts | (137,827 | ) | | (39,436 | ) | | (4,087 | ) | Proceeds from sale of corporate aircraft | 32,390 |
| | — |
| | — |
| Purchase of licenses and other | (30,870 | ) | | (52,859 | ) | | (99,167 | ) | Total investing cash used in continuing operations | (333,540 | ) | | (409,429 | ) | | (922,271 | ) | Total investing cash (used in) provided by discontinued operations | (13,998 | ) | | 231,817 |
| | (132,889 | ) | Net cash used in investing activities | (347,538 | ) | | (177,612 | ) | | (1,055,160 | ) | Cash flows from financing activities: | | | |
| | |
| Borrowings under equipment financing facilities and other | 14,590 |
| | 145,122 |
| | 446,546 |
| Proceeds from issuance of senior notes | — |
| | 1,600,000 |
| | — |
| Repayments and purchases of convertible notes | — |
| | — |
| | (212,782 | ) | Repayments under bank loans, capital leases and other borrowings | (142,230 | ) | | (787,572 | ) | | (352,048 | ) | Other, net | (632 | ) | | (27,994 | ) | | (46,001 | ) | Total financing cash (used in) provided by continuing operations | (128,272 | ) | | 929,556 |
| | (164,285 | ) | Total financing cash used in discontinued operations | — |
| | (152,965 | ) | | (74,010 | ) | Net cash (used in) provided by financing activities | (128,272 | ) | | 776,591 |
| | (238,295 | ) | Effect of exchange rate changes on cash and cash equivalents | (55,657 | ) | | (56,236 | ) | | 844 |
| Change in cash and cash equivalents related to discontinued operations | 3,448 |
| | 15,090 |
| | 22,226 |
| Net (decrease) increase in cash and cash equivalents | (1,156,735 | ) | | 365,382 |
| | (917,202 | ) | Cash and cash equivalents, beginning of year | 1,730,335 |
| | 1,364,953 |
| | 2,282,155 |
| Cash and cash equivalents, end of year | $ | 573,600 |
| | $ | 1,730,335 |
| | $ | 1,364,953 |
|
The accompanying notes are an integral part of these consolidated financial statements.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Operations We provide wireless communication services under the NextelTM brand. Historically, our services were targeted to meet the needs of business customers and individuals who used our services to meet both professional and personal needs. With the deployment of our wideband code division multiple access, or WCDMA, networks in our markets, our target market has expanded to include both business subscribers and consumers who exhibit above average usage, revenue and loyalty characteristics and who we believe will be attracted to the services and attractive pricing plans we offer, the quality of and data speeds provided by our WCDMA networks and the quality of our customer service. We provide our services through operating companies located in Brazil, Mexico and Argentina, with our principal operations located in major business centers and related transportation corridors of these countries. We provide services in major urban and suburban centers with high population densities where we believe there is a concentration of the country’s business users and economic activity. We believe that the growing economic base, increase in the middle and upper class and lower wireline service penetration encourage the use of the mobile wireless communications services that we offer and plan to offer in the future. Our WCDMA networks in Brazil and Mexico serve these major business centers and, in some instances, a broader geographic area in order to meet the requirements of our spectrum licenses. We also utilize roaming arrangements to expand the geographic coverage of our WCDMA-based services in Brazil and Mexico. Our original networks utilize integrated digital enhanced network, or iDEN, technology developed by Motorola, Inc. to provide mobile services on our 800 megahertz, or MHz, spectrum holdings in all of our markets. Our next generation networks utilize WCDMA technology, which is a standards-based technology that is being deployed by carriers throughout the world. We also offer long-term evolution, or LTE, services in Rio de Janeiro in Brazil and in certain cities in Mexico. These technologies allow us to use our spectrum efficiently and offer multiple wireless services integrated into a variety of handset and data devices. The services we currently offer include: mobile telephone voice service; wireless data services, including text messaging services, mobile internet services and email services; | | • | push-to-talk services, including Direct Connect®, Prip and International Direct Connect® services, which allow subscribers to talk to each other instantly; |
| | • | other value-added services, including location-based services, which include the use of Global Positioning System, or GPS, technologies; digital media services; and a wide ranging set of applications available via our content management system, as well as the AndroidTM open application market; |
business solutions, such as security, work force management, logistics support and other applications that help our business subscribers improve their productivity; and voice and data roaming services outside of our coverage areas. The deployment and expansion of our WCDMA networks in Brazil and Mexico enables us to offer a wider range of products and services that are supported by that technology, including data services provided at substantially higher speeds than can be delivered on our iDEN networks. These WCDMA networks also support our unique push-to-talk services that provide differentiation from our competitors' offerings. In the third quarter of 2013, our WCDMA network reached geographic coverage parity with our iDEN network in Mexico, and in Brazil we are currently offering services supported by our WCDMA network in about 260 cities, including cities in and around Sao Paulo and Rio de Janeiro. In the second quarter of 2014, we launched LTE services in Rio de Janeiro, and during the fourth quarter of 2014, we began offering similar LTE services in certain cities in Mexico. We also offer service on our iDEN network in Argentina and continue to provide services on our iDEN networks in Brazil and Mexico.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Chapter 11 Filing
Overview. On September 15, 2014, NII Holdings, Inc. and eight of its U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and Nextel International Telecom, S.C.A, or NIIT, filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. Since September 15, 2014, five additional subsidiaries of NII Holdings, Inc. have filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court, with four subsidiaries filing on October 8, 2014 and one subsidiary filing on January 25, 2015. The entities that have filed petitions seeking relief under Chapter 11, which we refer to collectively as the debtors, continue to operate as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Our operating subsidiaries in Brazil, Mexico and Argentina are not debtors in the Chapter 11 cases.
Under Chapter 11, we are permitted to continue to operate our business and manage our properties in the ordinary course of business without prior approval from the Bankruptcy Court. Transactions outside the ordinary course of business proposed to be undertaken by any of the debtors, including certain types of capital expenditures, as well as certain sales of assets, certain requests for additional financings and certain other arrangements, including material changes to agreements and employee compensation arrangements, require approval by the Bankruptcy Court. There can be no assurance that the Bankruptcy Court will grant any requests for such approvals. On October 14, 2014, the Bankruptcy Court issued a final order permitting us to pay pre-petition salaries, wages and benefits to all employees of our debtor entities and authorized the payment of certain other pre-petition claims, in limited circumstances, to avoid undue disruption to our operations.
On November 24, 2014, certain of the holders of the senior notes issued by NII Capital Corp. and NIIT, certain other creditors and the official committee of unsecured creditors appointed in the Chapter 11 cases, which we refer to as the Committee, reached agreement regarding the terms of a plan of reorganization, which we refer to as the Original Plan, and the debtors, consenting parties and the Committee entered into a plan support agreement, which we refer to as the Original PSA, that governed the respective parties' obligations in connection with the formulation and filing of, and the solicitation of votes with respect to, the Original Plan. The Original Plan and a related disclosure statement were filed with the Bankruptcy Court on December 22, 2014. As described below, on January 26, 2015, NII Holdings, Inc. and certain of its subsidiaries entered into a purchase and sale agreement with an indirect subsidiary of AT&T, Inc., or AT&T, for the sale of our Mexico operations, which we refer to as Nextel Mexico. The agreement to sell Nextel Mexico is inconsistent with the terms of the Original PSA and the Original Plan, and as a result, NII Holdings, Inc. exercised its right to terminate the Original PSA.
On March 5, 2015, certain of the debtors, holders of approximately $1.93 billion, or 70%, of the senior notes issued by NII Capital Corp. and approximately $1.15 billion, or 72%, of the senior notes issued by NIIT, which we refer to collectively as the Consenting Creditors, and the Committee reached agreement regarding the terms of a revised plan of reorganization, which we refer to as the Revised Plan, that takes into account the impact of, and is contingent upon, the sale of Nextel Mexico. Certain debtors, the Consenting Creditors and the Committee entered into a Revised PSA that governs the respective parties' obligations in connection with the formulation, filing and solicitation of votes with respect to the Revised PSA. The Revised Plan will provide for, among other things, the distribution of a portion of the net proceeds of the sale of Nextel Mexico to holders of the senior notes issued by NII Capital Corp. and NIIT and for the conversion of the remaining balance of these senior notes into equity interests in the reorganized company. The Revised Plan will also include a settlement of certain estate claims and claims related to the purported release of certain guarantees of our NII Capital Corp. senior notes due 2016 and 2019. The terms of the Revised PSA do not provide for any return of value to equity holders. In addition, the Revised PSA requires, among other things, (i) the plan proponents to file and solicit votes on the Revised Plan; (ii) the consenting parties to vote in favor of and otherwise support the Revised Plan; and (iii) the parties thereto to use commercially reasonable efforts to obtain confirmation of the Revised Plan and consummate the transactions contemplated under the plan term sheet that is part of the Revised PSA. The Revised PSA may be terminated under various circumstances, including if the Revised Plan is not confirmed or is not confirmed by specified dates.
The Revised PSA also contemplates that certain of our creditors will provide up to $350.0 million in bridge loan financing while our Chapter 11 case is pending that would remain outstanding in order to provide us with the additional liquidity necessary to fund our business plan until the sale of Nextel Mexico is completed.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The circumstances leading to our decision
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to seek relief under Chapter 11 and their impact on our business, including on our liquidity and the uncertainties associated with the Chapter 11 process, in combination with the potential impact of our failure to satisfy certain financial covenants under our existing debt obligations, raise substantial doubt about our ability to continue as a going concern. See Note 9 for more information on financial covenants. These consolidated financial statements do not include any adjustments that might result from the outcome of any of the uncertainties described herein.
Liabilities Subject to Compromise.
We have segregated liabilities and obligations whose treatment and satisfaction are dependent on the outcome of our reorganization in the Chapter 11 proceedings and have classified these items as liabilities subject to compromise. Generally, all actions to enforce or otherwise effect repayment of pre-petition liabilities of the debtors, as well as all pending litigation against the debtors, are stayed while we are subject to the Chapter 11 proceedings. The ultimate amount of and settlement terms for these types of liabilities will be subject to the claims resolution processes in the Chapter 11 cases and the terms of any plan of reorganization confirmed by the Bankruptcy Court in the Chapter 11 cases. Only those liabilities that are obligations of the debtors (and not the obligations of our operating subsidiaries that are not debtors in the Chapter 11 cases) are included in liabilities subject to compromise. These liabilities subject to compromise may vary significantly from the stated amounts of claims filed with the Bankruptcy Court. Obligations classified as liabilities subject to compromise may be subject to future adjustments depending on the decisions of the Bankruptcy Court in the Chapter 11 cases, further developments with respect to potential disputed claims and/or determination as to the value of any collateral securing claims or other events. Further, additional claims may arise subsequent to the Chapter 11 filing date resulting from the rejection of executory contracts and from a determination by the Bankruptcy Court, or agreed to by parties in interest, of allowed claims for contingencies and other disputed amounts.
We report interest expense incurred subsequent to our Chapter 11 filing date only to the extent that it will be paid during the cases or that it is probable that it will be an allowed claim. Principal and interest payments may not be made on pre-petition debt subject to compromise without approval from the Bankruptcy Court or until a plan of reorganization defining the repayment terms, if any, has been confirmed. Further, the Bankruptcy Code generally disallows the payment of post-petition interest that accrues with respect to unsecured or undersecured claims. As a result, we have not accrued interest that we believe is not probable of being treated as an allowed claim in the Chapter 11 cases. As a result, during the year ended December 31, 2014, we did not accrue interest aggregating $119.6 million on our NII Capital Corp. and NIIT senior notes subsequent to our Chapter 11 filing date.
As of December 31, 2014, we classified the entire principal balance of our NII Capital Corp. and NIIT senior notes, as well as interest that was accrued and due but unpaid prior to our Chapter 11 filing date, as liabilities subject to compromise in accordance with the requirements of reorganization accounting since these notes are obligations of the debtors. The components of our liabilities subject to compromise are as follows (in thousands): | | | | | | December 31, 2014 | 7.625% Capital Corp. senior notes due 2021 | $ | 1,450,000 |
| 8.875% Capital Corp. senior notes due 2019 | 500,000 |
| 10.0% Capital Corp. senior notes due 2016 | 800,000 |
| 7.875% NII International Telecom S.C.A. senior notes due 2019 | 700,000 |
| 11.375% NII International Telecom S.C.A. senior notes due 2019 | 900,000 |
| Total debt subject to compromise | 4,350,000 |
| Accrued interest on debt subject to compromise | 203,010 |
| Accounts payable | 3,644 |
| Accrued expenses and other | 36,839 |
| Total liabilities subject to compromise | $ | 4,593,493 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reorganization Items.
We classify all income, expenses, gains or losses that are incurred or realized as a result of the commencement of the Chapter 11 cases as reorganization items in our consolidated statements of comprehensive loss. In addition, we report professional fees and related costs associated with and incurred during the Chapter 11 cases as reorganization items. We also reclassify interest income earned by the debtors that would not have been earned but for our Chapter 11 filing as reorganization items. During 2014, we wrote off $8.6 million in net unamortized discounts and premiums, as well as $48.2 million in unamortized financing costs related to all series of our NII Capital Corp. and NIIT senior notes, both of which are included as reorganization items in our consolidated statements of comprehensive loss. We also recognized $14.8 million in professional fees and other costs related to our Chapter 11 filing as reorganization items in our consolidated statements of comprehensive loss for the year ended December 31, 2014.
In accordance with the requirements of reorganization accounting, the following are condensed combined financial statements of the debtor entities:
NII HOLDINGS, INC. AND CERTAIN SUBSIDIARIES (DEBTORS-IN-POSSESSION) (1) CONDENSED COMBINED BALANCE SHEET (in thousands)
| | | | | | December 31, 2014 | | | ASSETS | Current assets | | Cash and cash equivalents | $ | 321,690 |
| Short-term intercompany receivables | 127,215 |
| Accounts receivable, prepaid expenses and other | 16,584 |
| Total current assets | 465,489 |
| Property, plant and equipment, net | 48,167 |
| Intangible assets, net | 18,000 |
| Investments in and advances to non-debtor subsidiaries | 423,163 |
| Long-term intercompany receivables | 1,712,199 |
| Other assets | 1,339 |
| Total assets | $ | 2,668,357 |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | Liabilities not subject to compromise | | Current liabilities | |
| Accounts payable | $ | 1,996 |
| Accrued expenses and other | 20,257 |
| Total current liabilities | 22,253 |
| Other long-term liabilities | 4,805 |
| Total liabilities not subject to compromise | 27,058 |
| Liabilities subject to compromise | 4,593,493 |
| Intercompany liabilities subject to compromise | 12,570 |
| Total liabilities | 4,633,121 |
| Total stockholders’ deficit | (1,964,764 | ) | Total liabilities and stockholders’ deficit | $ | 2,668,357 |
|
| | (1) | The condensed combined balance sheet above includes those subsidiaries of NII Holdings, Inc. that had filed voluntary petitions seeking protection under Chapter 11 of the U.S. Bankruptcy Code as of December 31, 2014. These debtor subsidiaries consisted of: Nextel International Services, Ltd.; NII Capital Corp.; NII Aviation, Inc.; NII Funding Corp.; NII Global Holdings, Inc.; NII International Telecom S.C.A.; NII International Holdings S.à r.l.; NII International Services S.à r.l.; Airfone Holdings, LLC; Nextel International (Uruguay), LLC; McCaw International (Brazil), LLC; and NII Mercosur, LLC. |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NII HOLDINGS, INC. AND CERTAIN SUBSIDIARIES (DEBTORS-IN-POSSESSION) (1) CONDENSED COMBINED STATEMENT OF COMPREHENSIVE LOSS (in thousands)
| | | | | | Year Ended December 31, | | 2014 | | | Operating revenues | $ | 351 |
| Operating expenses | |
| Selling, general and administrative | 148,538 |
| Impairment and restructuring charges | 63,393 |
| Management fee and other | (49,010 | ) | Depreciation and amortization | 19,309 |
| | 182,230 |
| Operating loss | (181,879 | ) | Other expense | |
| Interest expense, net | (287,630 | ) | Intercompany interest expense | (50 | ) | Interest income | 900 |
| Intercompany interest income | 34,507 |
| Equity in losses of non-debtor subsidiaries | (1,460,247 | ) | Other income, net | 8,302 |
| | (1,704,218 | ) | Loss before reorganization items and income tax provision | (1,886,097 | ) | Reorganization items | (71,601 | ) | Income tax provision | — |
| Net loss | $ | (1,957,698 | ) | | | Comprehensive loss, net of income taxes | | Foreign currency translation adjustment | $ | (340,847 | ) | Reclassification adjustment for sale of Nextel Chile | (33,885 | ) | Other | (544 | ) | Other comprehensive loss | (375,276 | ) | Net loss | (1,957,698 | ) | Total comprehensive loss | $ | (2,332,974 | ) |
| | (1) | The condensed combined statement of comprehensive loss above includes those subsidiaries of NII Holdings, Inc. that had filed voluntary petitions seeking protection under Chapter 11 of the U.S. Bankruptcy Code as of December 31, 2014. These debtor subsidiaries consisted of: Nextel International Services, Ltd.; NII Capital Corp.; NII Aviation, Inc.; NII Funding Corp.; NII Global Holdings, Inc.; NII International Telecom S.C.A.; NII International Holdings S.à r.l.; NII International Services S.à r.l.; Airfone Holdings, LLC; Nextel International (Uruguay), LLC; McCaw International (Brazil), LLC; and NII Mercosur, LLC. |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NII HOLDINGS, INC. AND CERTAIN SUBSIDIARIES (DEBTORS-IN-POSSESSION) (1) CONDENSED COMBINED STATEMENT OF CASH FLOWS (in thousands)
| | | | | | Year Ended December 31, | | 2014 | | | Cash flows from operating activities: | |
| Net loss | $ | (1,957,698 | ) | Adjustments to reconcile net loss to net cash used in operating activities | 1,606,769 |
| Net cash used in operating activities | (350,929 | ) | Cash flows from investing activities: | |
| Capital expenditures | (7,012 | ) | Proceeds from sales of fixed assets | 32,390 |
| Proceeds from sales of investments | 198,007 |
| Intercompany long-term loans | (542,000 | ) | Investments in and advances to non-debtor subsidiaries | (124,532 | ) | Changes in restricted cash | 25,300 |
| Net cash used in investing activities | (417,847 | ) | Cash flows from financing activities: | |
| Repayments under capital lease and other | (42,414 | ) | Other, net | (396 | ) | Net cash used in financing activities | (42,810 | ) | Net decrease in cash and cash equivalents | (811,586 | ) | Cash and cash equivalents, beginning of year | 1,133,276 |
| Cash and cash equivalents, end of year | $ | 321,690 |
|
| | (1) | The condensed combined statement of cash flows above includes those subsidiaries of NII Holdings, Inc. that had filed voluntary petitions seeking protection under Chapter 11 of the U.S. Bankruptcy Code as of December 31, 2014. These debtor subsidiaries consisted of: Nextel International Services, Ltd.; NII Capital Corp.; NII Aviation, Inc.; NII Funding Corp.; NII Global Holdings, Inc.; NII International Telecom S.C.A.; NII International Holdings S.à r.l.; NII International Services S.à r.l.; Airfone Holdings, LLC; Nextel International (Uruguay), LLC; McCaw International (Brazil), LLC; and NII Mercosur, LLC. |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Summary of Significant Accounting Policies Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States, or the U.S., requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results to be reported in future periods could differ from our estimates. Principles of Consolidation. The consolidated financial statements include the accounts of NII Holdings and our subsidiaries. Our decision to consolidate an entity is based on our control of the entity through direct and indirect majority interest in the entity. We eliminate all significant intercompany transactions, including intercompany profits and losses, in consolidation. We refer to our subsidiaries by the countries in which they operate, such as Nextel Brazil, Nextel Mexico and Nextel Argentina. Concentrations of Risk. All of our revenues are generated from our operations located in Brazil, Mexico and Argentina. Regulatory entities in each country regulate the licensing, construction, acquisition, ownership and operation of our networks, and certain other aspects of our business, including some of the rates we charge our subscribers. Changes in the current telecommunications statutes or regulations in any of these countries could adversely affect our business. In addition, as of December 31, 2014 and 2013, $4.7 billion and $6.4 billion, respectively, of our assets were owned by Nextel Brazil and Nextel Mexico. Political, financial and economic developments in Brazil and Mexico could impact the recoverability of our assets. Motorola Solutions is the primary supplier for iDEN network equipment, and Motorola Mobility is the primary supplier of iDEN handsets. We expect to continue to rely on Motorola Solutions and Motorola Mobility for iDEN network equipment and handsets. The recent significant reduction in demand for iDEN network equipment and handsets may make it uneconomical for Motorola Solutions to continue to provide the same level of ongoing support for our iDEN networks and could also affect Motorola Mobility's ability or willingness to provide iDEN handsets. As a result, we may not be able to adequately service our existing iDEN subscribers or attract new iDEN subscribers. The impact of this transition is particularly significant in Argentina where we do not currently hold spectrum that supports the deployment of a WCDMA or LTE network. Financial instruments that potentially subject us to significant amounts of credit risk consist of cash, cash equivalents, short-term investments and accounts receivable. Our cash and cash equivalents are deposited with high-quality financial institutions. At times, we maintain cash balances in excess of Federal Deposit Insurance Corporation (or the foreign country equivalent institution) limits. Our short-term investments are composed of investments in U.S. treasury securities, investments in corporate bonds and certain investments made by Nextel Brazil and Nextel Argentina. See Note 10 for further information. Our accounts receivable are generally unsecured. In some cases, for certain higher risk subscribers, we require a subscriber deposit. We routinely assess the credit worthiness of our subscribers and maintain allowances for probable losses, where necessary. Foreign Currency. We translate the results of operations for our non-U.S. subsidiaries and affiliates from the designated functional currency to the U.S. dollar using average exchange rates during the relevant period, while we translate assets and liabilities at the exchange rate in effect at the reporting date. We translate equity balances at historical rates. We report the resulting gains or losses from translating foreign currency financial statements as other comprehensive income or loss. In general, monetary assets and liabilities held by our operating subsidiaries that are denominated in U.S. dollars give rise to realized and unrealized foreign currency transaction gains and losses, which we record in the consolidated statement of comprehensive loss as foreign currency transaction losses, net. We report the effects of changes in exchange rates associated with certain U.S. dollar-denominated intercompany loans and advances to our foreign subsidiaries that are of a long-term investment nature as other comprehensive income or loss in our consolidated financial statements. We have determined that certain U.S. dollar-denominated intercompany loans and advances to Nextel Brazil are of a long-term investment nature. The authorities in some of our markets have, from time to time, used formal and informal restrictions to limit the convertibility of currency and our ability to repatriate capital from our market operations to their parent companies. For example, the Argentine government continues to impose formal and informal limitations on our ability to repatriate funds and repay intercompany contractual obligations. Cash and Cash Equivalents. We consider all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of money market funds and other similarly structured funds. As of December 31, 2014 and 2013, we had $200.3 million and $738.9 million, respectively, in time deposits. Short-Term Investments. We classify investments in debt securities as available-for-sale as of the balance sheet date and report them at fair value. We record unrealized gains and losses, net of income tax, as other comprehensive income or loss. We
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
report realized gains or losses, as determined on a specific identification basis, and other-than-temporary declines in value, if any, in net other expense in our consolidated statement of comprehensive loss. We assess declines in the value of individual investments to determine whether the decline is other-than-temporary and thus the investment is impaired. We make these assessments by considering available evidence, including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the individual company and our intent and ability to hold the investment. See Note 10 for additional information. Handset and Accessory Inventory. We record handsets and accessories at the lower of cost or market. We determine cost by the weighted average costing method. We expense handset costs at the time of sale and classify such costs in cost of handsets and accessories. Inventory cost includes amounts associated with non-income based taxes. We analyze the net realizable value and replacement cost of handset and accessory inventory on a periodic basis. This analysis includes an assessment of the obsolescence of individual devices, our sales forecasts and other factors. For the years ended December 31, 2014, 2013 and 2012, we recorded losses related to inventory obsolescence of $40.8 million, $70.2 million and $1.5 million, respectively, which included $14.1 million in 2013 related to expected losses on firm purchase commitments. Property, Plant and Equipment. We record property, plant and equipment, including improvements that extend useful lives or enhance functionality, at cost, while we charge maintenance and repairs to operations as incurred. We capitalize internal and external costs incurred to develop internal-use software, which consist primarily of costs related to configuration, interfaces, installation and testing. We also capitalize internal and external costs incurred to develop specified upgrades and enhancements if they result in significant additional functionalities for our existing software. We expense all costs related to evaluation of software needs, data conversion, training, maintenance and other post-implementation operating activities. We calculate depreciation using the straight-line method based on estimated useful lives ranging from 3 to 30 years for network equipment, communication towers and software and 3 to 10 years for office equipment, furniture and fixtures, and other, which includes non-network internal use software. We include depreciation expense on our capital leases in accumulated depreciation. We amortize leasehold improvements over the shorter of the lease terms or the useful lives of the improvements. Construction in progress includes internal and external labor, materials, transmission and related equipment, engineering, site development, interest and other costs relating to the construction and development of our digital wireless networks. We do not depreciate assets under construction until they are ready for their intended use. We capitalize interest and other costs, including labor and software upgrades, which are applicable to the construction of, and significant improvements that enhance functionality to, our network equipment. We periodically review the depreciation method, useful lives and estimated salvage value of our property, plant and equipment and revise those estimates if current estimates are significantly different from previous estimates. During the fourth quarter of 2013, we reviewed the useful lives of our communication towers and determined that the useful lives of some of these towers should be increased to 30 years compared to the 10- or 15-year useful lives over which we were previously depreciating these sites. As a result of this change in useful lives, our depreciation expense decreased by approximately $80.0 million in 2014. Asset Retirement Obligations. We record an asset retirement obligation and an associated asset retirement cost when we have a legal obligation in connection with the retirement of tangible long-lived assets. Our obligations arise from certain of our leases and relate primarily to the cost of removing our communication towers and network equipment from leased sites. We recognize an asset retirement obligation, and the associated asset retirement cost, in the period in which it is incurred at fair value computed using discounted cash flow techniques. The liability is then accreted over time until the obligation is settled and the asset retirement cost is depreciated over the useful life of the related assets. We make adjustments for changes to either the timing or amount of the estimated future settlement obligation in the period incurred. We recognize increases in the present value of the asset retirement obligations as an additional liability and add this amount to the carrying amount of the associated asset retirement cost. We record decreases as a reduction in both the recorded liability and the carrying amount of the associated asset retirement cost. To the extent that the decrease in the recorded liability exceeds the carrying amount of the associated asset retirement cost, we record the excess as a component of operating income. For the year ended December 31, 2013, we recorded a $75.9 million reduction to our asset retirement obligations as the result of a change in the timing and amount of estimated future settlements, of which $48.3 million represented the amount of the liability that was in excess of the carrying amount of the associated asset retirement cost. As of December 31, 2014 and 2013, our asset retirement obligations were as follows (in thousands):
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | 2014 | | 2013 | Balance, January 1 | $ | 49,879 |
| | $ | 102,465 |
| New asset retirement obligations | 8,718 |
| | 18,292 |
| Change in assumptions | (2,096 | ) | | (75,900 | ) | Accretion | 6,531 |
| | 17,171 |
| Settlement of asset retirement obligations | (9,844 | ) | | 323 |
| Foreign currency translation and other | (9,650 | ) | | (12,472 | ) | Balance, December 31 | $ | 43,538 |
| | $ | 49,879 |
|
Derivative Financial Instruments. We enter into derivative transactions for risk management purposes only. We have not and will not enter into any derivative transactions for speculative or profit generating purposes. As of December 31, 2014 and 2013, the values of our derivative instruments were not material. Valuation of Long-Lived Assets. We review long-lived assets such as property, plant and equipment and identifiable intangible assets with definite useful lives, which include our licenses, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows of the asset or asset group is less than the carrying amount of the asset, we recognize a loss, if any, for the difference between the fair value and carrying value of the asset. Intangible Assets. Substantially all of our intangible assets are wireless telecommunications licenses. We amortize our intangible assets using the straight-line method over the estimated period benefited. We amortize licenses acquired after our emergence from reorganization in 2002 over their estimated useful lives of 3 to 20 years. In the countries in which we operate, licenses are customarily issued conditionally for specified periods of time ranging from 10 to 40 years, including renewals. The licenses are generally renewable provided the licensee has complied with applicable rules and policies. We believe we have complied with these standards in all material respects. However, the political and regulatory environments in the markets we serve are continuously changing and, in many cases, the renewal fees could be significant. Therefore, we do not view the renewal of our licenses to be perfunctory. In addition, the wireless telecommunications industry is experiencing significant technological change, and the commercial life of any particular technology is difficult to predict. Our licenses in Mexico give us the right to use 800 MHz spectrum that is non-contiguous, and the iDEN technology is the only commercially available technology that operates on non-contiguous spectrum. As a result, our ability to deploy new technologies using 800 MHz spectrum in Mexico may be limited. In light of these uncertainties, we classify our licenses as definite lived intangible assets. Revenue Recognition. Operating revenues primarily consist of wireless service revenues and revenues generated from the sale of handsets and accessories. We present our operating revenues net of value-added taxes, but we include certain revenue-based taxes that are our primary obligation. Service revenues primarily consist of fixed monthly access charges. Other components of service revenue include revenues from calling party pays programs, where applicable, variable charges for airtime usage in excess of plan minutes, long-distance charges, international roaming revenues derived from calls placed by our subscribers on other carriers’ networks and revenues generated from broadband data services we provide on our WCDMA networks, net of credits and adjustments for service discounts and value-added taxes. We recognize excess usage, local, long distance and calling party pays revenue at contractual rates per minute as minutes are used. We record cash received in excess of revenues earned as deferred revenues. We recognize service revenue as service is provided. We recognize handset revenue when title and risk of loss passes to the customer. We bill excess usage to certain of our subscribers in arrears. In order to recognize the revenues originating from excess usage subsequent to subscriber invoicing, we estimate the unbilled portion based on the usage that the handset had during the part of the month already billed, and we use this actual usage to estimate the unbilled usage for the rest of the month taking into consideration working days and seasonality. Our estimates are based on our experience in each market. We periodically evaluate our estimates by comparing them to actual excess usage revenue billed the following month. While our estimates have been consistent with our actual results, actual usage in future periods could differ from our estimates. Other revenues primarily include amounts generated from our handset maintenance programs, roaming revenues generated from other companies’ subscribers that roam on our networks and co-location rental revenues from third party tenants that rent space on our towers. We recognize revenue generated from our handset maintenance programs on a monthly basis at fixed amounts over the service period. We recognize roaming revenues at contractual rates per minute as minutes are used. We recognize co-location revenues from third party tenants on a monthly basis based on the terms set by the underlying agreements.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue-Based Taxes. We record revenue-based taxes and other excise taxes on a gross basis as a component of both service and other revenues and selling, general and administrative expenses in our consolidated financial statements. For the years ended December 31, 2014, 2013 and 2012, we had $120.6 million, $166.0 million and $211.5 million, respectively, in revenue-based taxes and other excise taxes. Accounts Receivable. Accounts receivable represents amounts due from subscribers, net of an allowance for doubtful accounts, and includes amounts that have been billed to customers and amounts that have not yet been billed. Trade accounts receivable consists of fixed monthly charges, as well as charges for excess and roaming minutes used in arrears. Allowance for Doubtful Accounts. We establish an allowance for doubtful accounts receivable sufficient to cover probable and reasonably estimated losses. We estimate this allowance based on historical experience, aging of accounts receivable and individual subscriber payment history. While we believe that the estimates we use are reasonable, actual results could differ from those estimates. Subscriber Related Direct Costs. We recognize all costs of handset sales when title and risk of loss passes upon delivery of the handset to the subscriber. Advertising Costs. We expense costs related to advertising and other promotional expenditures as incurred. Advertising costs totaled $146.9 million, $142.5 million and $159.8 million during the years ended December 31, 2014, 2013 and 2012, respectively. Stock-Based Compensation. We measure and recognize compensation expense for all stock-based compensation awards based on estimated fair values. We account for share-based awards exchanged for employee services in accordance with the authoritative guidance for stock compensation. Under the guidance, stock compensation expense is measured at the grant date, based on the estimated fair value of the award when settled in shares, and is recognized, net of estimated forfeitures, over the employee's requisite service period. Compensation expense is amortized on a straight-line basis over the requisite service period for the entire award, which is generally the maximum vesting period of the award. Our stock options and restricted shares generally vest thirty-three percent per year over a three-year period. See Note 14 for more information. Net Loss Per Common Share, Basic and Diluted. Basic net loss per common share is computed by dividing adjusted net loss attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted net loss per common share reflects the potential dilution of securities that could participate in our earnings, but not securities that are antidilutive, including stock options with an exercise price greater than the average market price of our common stock. Our unvested restricted stock awards, or RSAs, contain non-forfeitable rights to dividends, whether paid or unpaid. As a result, our RSAs are considered participating securities because their holders have the right to participate in earnings with common stockholders. We use the two-class method to allocate net income between common shares and other participating securities. As presented for the years ended December 31, 2014, 2013 and 2012, our calculation of diluted net loss per common share is based on the weighted average number of common shares outstanding during the period and does not include other potential common shares, including shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans or restricted common shares issued under those plans. In addition, for the years ended December 31, 2014, 2013 and 2012, we did not include 5.4 million, 10.8 million or 16.8 million stock options, respectively, and 0.9 million, 2.8 million or 2.0 million in restricted stock, respectively, in our calculation of diluted net loss per common share because their effect would have been antidilutive to our net loss per common share for those periods. Income Taxes. We account for income taxes using the asset and liability method, under which we recognize deferred income taxes for the tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. We recognize the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. We provide a valuation allowance against deferred tax assets if, based upon the weight of available evidence, we do not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. Reclassifications. We have reclassified some prior period amounts in our consolidated financial statements to conform to our current year presentation. New Accounting Pronouncements. On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued new authoritative guidance surrounding revenue recognition, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new authoritative guidance will replace
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
most existing revenue recognition guidance when it becomes effective. The new standard is effective on January 1, 2017, and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that the new revenue recognition guidance will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. On April 10, 2014, the FASB issued new authoritative guidance surrounding discontinued operations and disclosures of components of an entity, which updates the definition of discontinued operations. Going forward only those disposals of components of an entity that represent a strategic shift that has or will have a major effect on an entity's operations and financial results will be reported as discontinued operations in a company's financial statements. The new standard is effective for disposals of components of an entity that occur within annual periods beginning on or after December 15, 2014, and early adoption is permitted. We intend to adopt this standard in the first quarter of 2015. We do not expect the adoption of this standard to have a material impact on our financial statements. On August 27, 2014, the FASB issued new authoritative guidance surrounding the evaluation and disclosures of uncertainties about an entity's ability to continue as a going concern. The new guidance requires management to perform an assessment of going concern and, under certain circumstances, disclose information regarding this assessment in the footnotes to the financial statements. The new standard is effective for periods beginning after December 15, 2016. We intend to adopt this standard in the first quarter of 2017. We do not expect the adoption of this standard to have a material impact on our financial statements.
4. Impairment and Restructuring Charges
Asset Impairments. In accordance with the FASB's authoritative guidance on the impairment and disposal of long-lived assets, we review our long-lived assets for impairment whenever events and circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. The recoverability of an asset or asset group held and used is measured by a comparison of the carrying amount of the asset or asset group to the estimated and undiscounted future cash flows expected to be generated by the asset or asset group. Although we plan to continue to support our operations in Argentina, we are also exploring various strategic options for this market, such as partnerships, service arrangements and asset sales, to maximize the value of Nextel Argentina and generate additional liquidity. As a result of the review of our long-lived assets and our exploration of strategic options for Nextel Argentina in 2014, we determined that the carrying value of Nextel Argentina's asset group, which includes all of the operating assets and liabilities held by our Argentine segment, was not recoverable. Accordingly, we recorded a non-cash asset impairment charge of $84.7 million to reduce the carrying amount of the asset group to its estimated fair value. We estimated the fair value of Nextel Argentina's asset group using assumed proceeds from a potential disposition, which is a Level 3 input within the fair value hierarchy under the FASB's authoritative guidance on fair value measurements. During 2014, we also tested the long-lived assets in our Nextel Brazil and Nextel Mexico segments for recoverability and, based on our estimates of undiscounted cash flows, determined the carrying values to be recoverable. Our estimates of undiscounted cash flows for each asset group exceeded the carrying value of the respective asset groups. In 2014, we evaluated strategic options for the next generation of our push-to-talk services and determined that, for one of these options, further development was no longer probable. As a result, we recognized a $47.9 million asset impairment charge, $5.1 million of which was recognized by Nextel Mexico and the remainder of which was recognized at the corporate level. We recognized a $6.4 million asset impairment charge at the corporate level related to the sale of our corporate aircraft in 2014. During 2014, we also recognized $25.5 million in asset impairment charges, the majority of which related to the shutdown or abandonment of approximately 300 transmitter and receiver sites in Brazil and Mexico and about 50 retail store closures in Brazil related to the realignment of our distribution channels. In 2013, we discontinued the use of software previously developed to support our customer relationship management systems. As a result of this evaluation, in the first quarter of 2013, we recognized an asset impairment charge of $85.3 million related to the discontinuation of this software, of which $76.3 million was recognized at the corporate level and $9.0 million was recognized by Nextel Mexico.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We recognized a $5.9 million asset impairment at the corporate level in 2013 related to the discontinuation of the development of certain network features.
During 2012, we recognized $22.8 million in asset impairment charges, the majority of which related to the write-off of certain information technology projects at the corporate level.
Restructuring Charges.
During 2014, we recognized $48.4 million in severance and related costs as a result of the termination of employees at the corporate level and in our markets. These actions included the separation of: approximately 85 employees at the corporate level, all of whom were severed in the second quarter of 2014; approximately 800 employees in Brazil, all of whom were severed in the third quarter of 2014; approximately 1,170 employees in Mexico, 800 of whom were severed in the second quarter of 2014 and the remainder of whom were severed in the third quarter of 2014; and about 20 employees in Argentina, all of whom were severed in the second half of 2014. We terminated these employees in an effort to streamline our organizational structure and reduce general and administrative expenses. In 2009, we outsourced our network operations to a third party. During 2013, we restructured and amended this agreement, reduced the scope of the services provided, added terms to facilitate the transition of those services to us and established the terms on which further transitions of services and the termination of the arrangements could be implemented in each of our markets. Under the outsourcing agreements in effect prior to this restructuring, we classified a portion of the base contractual fees as a prepayment and were recognizing this prepayment over the life of the previous agreement. As a result of this restructuring, we recognized a non-cash charge of $38.2 million relating to the write-off of the remainder of the prepayment during 2013. In 2014, we settled certain refund claims related to this outsourcing agreement, which resulted in a restructuring benefit of $3.2 million. During 2014, we recognized a $4.5 million charge related to the cessation of our utilization of certain network services in Brazil. In 2013, we recognized $30.1 million in restructuring charges, the majority of which was related to the separation of approximately 800 employees at the corporate level and in Mexico, in connection with an organizational realignment plan that we designed to simplify the roles and responsibilities of both our headquarters and market organizations and to reduce general and administrative expenses.
During 2013, we recognized $6.8 million in contract termination costs incurred in connection with the sublease of certain excess space located in one of our corporate office buildings.
During 2012, we recognized $7.6 million in restructuring charges at the corporate level, primarily related to the separation of approximately 50 employees in conjunction with certain actions taken to realign resources and roles between our corporate headquarters and operating segments.
Total impairment and restructuring charges for the years ended December 31, 2014, 2013 and 2012 were as follows (in thousands):
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | December 31, | | 2014 | | 2013 | | 2012 | Brazil | $ | 41,492 |
| | $ | 24,515 |
| | $ | 2,437 |
| Mexico | 26,256 |
| | 39,057 |
| | 439 |
| Argentina | 89,601 |
| | 7,908 |
| | 73 |
| Corporate | 63,393 |
| | 97,063 |
| | 27,452 |
| Total impairment and restructuring charges | $ | 220,742 |
| | $ | 168,543 |
| | $ | 30,401 |
|
As of December 31, 2014, the total of our accrued restructuring charges that we expect to pay in 2015 were as follows (in thousands): | | | | | Balance, January 1, 2014 | $ | 15,410 |
| Restructuring charges | 56,260 |
| Cash payments | (63,420 | ) | Balance, December 31, 2014 | $ | 8,250 |
|
5. Discontinued Operations
Impairment and Sale of Nextel Chile. In the second quarter of 2014, we determined that the carrying value of Nextel Chile's assets was not recoverable. As a result, we recognized a non-cash impairment charge of $127.5 million to impair the carrying amount of Nextel Chile's assets. We estimated the fair value of Nextel Chile's assets using short-term projections of cash flows, as well as assumed proceeds from a potential disposition of some or all of the assets. The impairment charge we recognized in the second quarter of 2014 reduced the carrying value of Nextel Chile's net assets to a nominal amount and is included as a component of operating expenses for the year ended December 31, 2014 in the table below.
In August 2014, our wholly-owned subsidiaries NII Mercosur Telecom, S.L., NII Mercosur Moviles, S.L. and NII International Telecom S.C.A. completed the sale of all of the outstanding equity interests of our wholly-owned subsidiary, Nextel Chile S.A., or Nextel Chile, to Fucata, S.A. for a de minimus amount. During the third quarter of 2014, we recognized a $32.7 million gain on the disposal of Nextel Chile, which included the reclassification of accumulated other comprehensive income related to Nextel Chile's cumulative translation adjustment to loss from discontinued operations in connection with this sale.
Sale of Nextel Peru. In August 2013, we, together with our wholly-owned subsidiaries NII Mercosur Telecom, S.L. and NII Mercosur Moviles, S.L., completed the sale of all of the outstanding equity interests of our wholly-owned subsidiary, Nextel del Peru, S.A., or Nextel Peru, to Empresa Nacional de Telecomunicaciones S.A. and one of its subsidiaries, Entel Inversiones, S.A., which we refer to collectively as Entel, for $405.5 million in cash, which includes $50.0 million that was deposited in escrow on our behalf to satisfy potential indemnification claims. In 2013, we recognized a $2.8 million loss on the disposal of Nextel Peru in connection with this sale. In April 2014, we released $7.5 million of the amounts held in escrow to Entel as a result of the settlement of certain indemnification claims, and in February 2015, we released an additional $2.0 million as a result of the settlement of certain tax indemnification claims. The remaining funds held in escrow continue to be available to satisfy potential future indemnification claims.
In connection with the sale of Nextel Chile and Nextel Peru, we have reported the results of these operating companies as discontinued operations in our consolidated financial statements. Accordingly, we reclassified Nextel Chile's and Nextel Peru's results of operations for all periods presented to reflect Nextel Chile and Nextel Peru as discontinued operations. Unless otherwise noted, amounts included in these notes to our consolidated financial statements exclude amounts attributable to discontinued operations. The major components of loss from discontinued operations related to Nextel Chile and Nextel Peru were as follows (in thousands):
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Operating revenues | $ | 38,596 |
| | $ | 265,979 |
| | $ | 393,227 |
| Operating expenses | (228,578 | ) | | (443,166 | ) | | (1,010,229 | ) | Other expense, net | (19,989 | ) | | (34,576 | ) | | (2,443 | ) | Loss before income tax provision | (209,971 | ) | | (211,763 | ) | | (619,445 | ) | Income tax provision | — |
| | (900 | ) | | (63,965 | ) | | (209,971 | ) | | (212,663 | ) | | (683,410 | ) | Gain (loss) on disposal of Nextel Chile and Nextel Peru | 29,585 |
| | (2,848 | ) | | — |
| Loss from discontinued operations, net of income taxes | $ | (180,386 | ) | | $ | (215,511 | ) | | $ | (683,410 | ) |
The components of assets and liabilities related to discontinued operations as of December 31, 2013, all of which related to Nextel Chile, consisted of the following (in thousands):
| | | | | | December 31, 2013 | ASSETS | Cash and cash equivalents | $ | 3,448 |
| Accounts receivable, net of allowance for doubtful accounts of $6,762 | 11,157 |
| Handset and accessory inventory | 5,965 |
| Prepaid expenses and other | 38,526 |
| Property, plant and equipment, net | 50,515 |
| Intangible assets, net | 13,300 |
| Other assets | 46,020 |
| Total assets | $ | 168,931 |
| LIABILITIES | Accounts payable | $ | 22,928 |
| Accrued expenses and other | 13,841 |
| Other long-term liabilities | 5,326 |
| Total liabilities | $ | 42,095 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Property, Plant and Equipment The components of our property, plant and equipment are as follows: | | | | | | | | | | December 31, | | 2014 | | 2013 | | (in thousands) | Land | $ | 6,777 |
| | $ | 7,663 |
| Building and leasehold improvements | 137,235 |
| | 190,258 |
| Network equipment, communication towers and network software | 4,074,786 |
| | 4,735,361 |
| Software, office equipment, furniture and fixtures and other | 678,300 |
| | 753,665 |
| Corporate aircraft | — |
| | 42,747 |
| Less: Accumulated depreciation and amortization | (2,669,566 | ) | | (2,907,939 | ) | | 2,227,532 |
| | 2,821,755 |
| Construction in progress | 205,401 |
| | 515,790 |
| | $ | 2,432,933 |
| | $ | 3,337,545 |
|
7. Intangible Assets Our intangible assets include the following: | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2014 | | December 31, 2013 | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | | | | | (in thousands) | | | | | | | Amortizable intangible assets: | |
| | |
| | |
| | |
| | |
| | |
| Licenses | $ | 1,091,405 |
| | $ | (287,281 | ) | | $ | 804,124 |
| | $ | 1,205,450 |
| | $ | (243,081 | ) | | $ | 962,369 |
| Total amortizable intangible assets | $ | 1,091,405 |
| | $ | (287,281 | ) | | $ | 804,124 |
| | $ | 1,205,450 |
| | $ | (243,081 | ) | | $ | 962,369 |
|
Based on the carrying amount of intangible assets as of December 31, 2014 and current exchange rates, we estimate amortization expense for each of the next five years to be as follows (in thousands): | | | | | Years | Estimated Amortization Expense | 2015 | $ | 75,922 |
| 2016 | 75,922 |
| 2017 | 75,922 |
| 2018 | 75,922 |
| 2019 | 75,922 |
|
Actual amortization expense to be reported in future periods could differ from these estimates as a result of additional acquisitions of intangibles, as well as changes in exchange rates and other relevant factors. As of both December 31, 2014 and December 31, 2013, the balance of our indefinite lived intangible assets was $18.0 million. In addition, the weighted average useful life of the intangible assets we acquired during the year ended December 31, 2014 was 15 years.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Supplemental Balance Sheet and Cash Flow Information Prepaid Expenses and Other.
The components are as follows: | | | | | | | | | | December 31, | | 2014 | | 2013 | | (in thousands) | Value-added taxes | $ | 137,699 |
| | $ | 207,951 |
| Income taxes | 19,632 |
| | 59,054 |
| Other prepaid assets | 97,573 |
| | 90,108 |
| Other current assets | 74,293 |
| | 40,461 |
| | $ | 329,197 |
| | $ | 397,574 |
|
Restricted Cash. As of December 31, 2014, we had $107.8 million in restricted cash, the majority of which was included in other long-term assets and was comprised of cash held in escrow in connection with the sale of Nextel Peru, judicial deposits in Nextel Brazil and a debt service reserve account related to Nextel Mexico's equipment financing facility. As of December 31, 2013, we had $120.5 million in restricted cash, the majority of which was included in other long-term assets and was comprised of cash held in escrow in connection with the sale of Nextel Peru, a debt service reserve account related to Nextel Mexico's equipment financing facility, judicial deposits in Nextel Brazil, purchase commitments for handsets and cash collateral supporting the lease of our corporate headquarters. Accrued Expenses and Other. The components are as follows: | | | | | | | | | | December 31, | | 2014 | | 2013 | | (in thousands) | Capital expenditures | $ | 106,295 |
| | $ | 290,036 |
| Non-income based taxes | 87,127 |
| | 114,360 |
| Payroll related items and commissions | 66,598 |
| | 89,435 |
| Network system and information technology | 62,229 |
| | 92,109 |
| Accrued interest | 10,574 |
| | 128,509 |
| Other | 230,165 |
| | 244,610 |
| | $ | 562,988 |
| | $ | 959,059 |
|
Accumulated Other Comprehensive Loss. As of December 31, 2014 and 2013, the tax impact on our accumulated other comprehensive loss was not material. The components of our accumulated other comprehensive loss, net of taxes, are as follows: | | | | | | | | | | December 31, 2014 | | December 31, 2013 | | (in thousands) | Cumulative foreign currency translation adjustment | $ | (1,326,003 | ) | | $ | (951,271 | ) | Other | (5,350 | ) | | (4,806 | ) | | $ | (1,331,353 | ) | | $ | (956,077 | ) |
As of December 31, 2014, our consolidated cumulative foreign currency translation adjustment included $672.4 million in Brazil, $400.3 million in Mexico and $262.8 million in Argentina. During the third quarter of 2014, we reclassified $33.9 million of accumulated other comprehensive income to loss from discontinued operations in connection with the sale of Nextel Chile. See Note 5 for more information.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental Cash Flow Information. | | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | | (in thousands) | Capital expenditures | |
| | |
| | |
| Cash paid for capital expenditures, including capitalized interest | $ | 612,161 |
| | $ | 620,895 |
| | $ | 953,882 |
| Change in capital expenditures accrued and unpaid or financed, including accreted interest capitalized | (183,741 | ) | | 251,199 |
| | 351,814 |
| | $ | 428,420 |
| | $ | 872,094 |
| | $ | 1,305,696 |
| Interest costs | |
| | |
| | |
| Interest expense, net | $ | 449,345 |
| | $ | 526,530 |
| | $ | 359,795 |
| Interest capitalized | 32,541 |
| | 78,254 |
| | 127,189 |
| | $ | 481,886 |
| | $ | 604,784 |
| | $ | 486,984 |
| Acquisitions of assets and business combinations | |
| | |
| | |
| Fair value of licenses and other assets acquired | $ | 31,861 |
| | $ | 53,066 |
| | $ | 100,185 |
| Less: liabilities assumed and deferred tax liabilities incurred | — |
| | — |
| | — |
| Less: cash acquired | — |
| | — |
| | — |
| | $ | 31,861 |
| | $ | 53,066 |
| | $ | 100,185 |
| Cash paid for interest, net of amounts capitalized | $ | 310,230 |
| | $ | 389,064 |
| | $ | 290,131 |
| Cash paid for income taxes | $ | 24,544 |
| | $ | 39,292 |
| | $ | 269,597 |
|
For the year ended December 31, 2014, we had $319.6 million in non-cash financing, primarily related to capital lease obligations recognized in Brazil and Mexico in connection with the leaseback of communication towers and borrowings under our equipment financing facility in Mexico. For the year ended December 31, 2013 and 2012, we had $213.5 million and $194.5 million, respectively, in non-cash financing, primarily related to borrowings under our equipment financing facilities in Mexico, the short-term financing of imported handsets and infrastructure in Brazil and co-location capital lease obligations on our communication towers in Brazil and Mexico.
9. Debt Chapter 11 Filing. On September 15, 2014, NII Holdings, Inc. and eight of its U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and NIIT, filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. Since September 15, 2014, five additional subsidiaries of NII Holdings, Inc. have filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court, with four subsidiaries filing on October 8, 2014 and one subsidiary filing on January 25, 2015. These Chapter 11 filings constituted an event of default under the NII Capital Corp. and NIIT senior notes; however, the holders of these senior notes are currently precluded from taking any action with respect to such events of default under the Bankruptcy Code. As a result of the commencement of the Chapter 11 cases, the obligations evidenced by the NII Capital Corp. and NIIT senior notes are included in liabilities subject to compromise on our consolidated balance sheet as of December 31, 2014. See Note 2 for more information. The financings included in the table below are considered not subject to compromise.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | December 31, | | 2014 | | 2013 | | (in thousands) | NII Capital Corp. senior notes, net | $ | — |
| | $ | 2,729,321 |
| NII International Telecom, S.C.A. senior notes, net | — |
| | 1,609,962 |
| Bank loans | 343,915 |
| | 444,268 |
| Brazil equipment financing | 366,937 |
| | 352,725 |
| Mexico equipment financing | 322,993 |
| | 300,832 |
| Mexico capital lease and tower financing obligations | 264,130 |
| | 194,227 |
| Brazil capital lease and tower financing obligations | 213,163 |
| | 122,499 |
| Corporate aircraft capital lease | — |
| | 35,736 |
| Other | 1,254 |
| | 3,901 |
| Total debt | 1,512,392 |
| | 5,793,471 |
| Less: current portion | (777,569 | ) | | (96,839 | ) | | $ | 734,823 |
| | $ | 5,696,632 |
|
Bank Loans. In December 2011, Nextel Brazil borrowed funds from two Brazilian banks and utilized the proceeds of those borrowings to repay the remaining unpaid purchase price relating to the spectrum it acquired in June 2011. Both of the loans from the Brazilian banks were denominated in Brazilian reais. In the first of the two local bank financings, we borrowed the equivalent of $351.8 million that was required to be repaid semi-annually over a five-year period with principal payable beginning in May 2014. In the second quarter of 2013, we repaid all amounts outstanding under this local bank financing utilizing a portion of the proceeds from the issuance of our 7.875% senior notes. In the second transaction, we borrowed the equivalent of $341.2 million that is required to be repaid quarterly over a seven-year period beginning March 2014. The loan accrues interest at a floating interest rate of 115% of the Brazilian local borrowing rate (13.40% and 11.39% as of December 31, 2014 and 2013, respectively). Because this loan is denominated in Brazilian reais, the payments for principal and interest will fluctuate in U.S. dollars based on changes in the exchange rate of the Brazilian real relative to the U.S. dollar. In October 2012, Nextel Brazil entered into a Brazilian real-denominated bank loan agreement, under which Nextel Brazil borrowed the equivalent of approximately $196.9 million. This loan agreement has a floating interest rate equal to 113.9% of the local Brazilian borrowing rate (13.27% and 11.28% as of December 31, 2014 and 2013, respectively). Borrowings under this loan agreement have a three-year borrowing period, a two-year repayment term beginning in 2015 and a final maturity of October 2017. As of December 31, 2014, we were not in compliance with the net debt financial covenants included in each of Nextel Brazil's outstanding local bank loans. Because of our noncompliance at the December 31 measurement date, we classified the principal amounts outstanding under these local bank loans as current liabilities in our consolidated balance sheet as of December 31, 2014. In February 2015, Nextel Brazil and the lenders providing the local bank loans entered into standstill agreements under which the lenders agreed that they would not seek remedies under the provisions of the agreements related to Nextel Brazil's failure to satisfy the financial covenants in the loan agreements in the period before September 15, 2015 and that further principal repayment obligations due between the signing date and September 15, 2015 would be suspended. In addition, the standstill agreements formally commit the lenders to sign amendments, which we refer to as the second amendments, once certain conditions are met that implement permanent amendments to the terms of the local bank loans, including with respect to the financial covenants and principal repayment schedule for these loans. Among others, these conditions include: our emergence from the Chapter 11 proceedings on or prior to September 15, 2015; the absence of an insolvency event involving Nextel Brazil; the absence of events of default other than those waived or suspended in the standstill agreements; and the execution of subordination agreements subordinating any amounts due under intercompany loans between NIIT and Nextel Brazil.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the event of a breach of one or more of the conditions listed above, the lenders providing the local bank loans have the right to terminate the standstill agreement and exercise all remedies under the agreements in place, including but not limited to declaring an event of default for noncompliance with the financial covenants and/or nonpayment of amounts due under the repayment schedule. Following the declaration of an event of default, the lenders will have the right to accelerate the loans and proceed with claims against the collateral. Concurrent with the execution of the standstill agreements, Nextel Brazil and the lenders entered into amendments to the agreements relating to the local bank loans, which we refer to as the first amendments, under which Nextel Brazil granted the lenders a security interest over amounts held at any given time in certain collection accounts maintained with each lender. These first amendments also adjust the interest rates on the loans. Equipment Financing Facilities. In April 2012, Nextel Brazil entered into a U.S. dollar-denominated loan agreement with the China Development Bank, under which Nextel Brazil is able to borrow up to $500.0 million to finance infrastructure equipment and certain other costs related to the deployment of its WCDMA network. This financing has a floating interest rate based on LIBOR plus 2.90% (3.16% and 3.15% as of December 31, 2014 and 2013, respectively) and may limit our ability to pay dividends and other upstream payments. Loans under this agreement have a three-year borrowing period, a seven-year repayment term beginning in 2015 and a final maturity of June 2022. Assets purchased using the amounts borrowed under Nextel Brazil's equipment financing facility are pledged as collateral. In July 2011, Nextel Mexico entered into a U.S. dollar-denominated loan agreement with the China Development Bank, under which Nextel Mexico is entitled to borrow up to $375.0 million to finance infrastructure equipment and certain other costs related to the deployment of its WCDMA network in Mexico. This vendor financing has a floating interest rate based on LIBOR plus 2.80% (3.06% and 3.05% as of December 31, 2014 and 2013, respectively) and may limit our ability to pay dividends and other upstream payments. Loans under this agreement have a final maturity of ten years, with a three-year borrowing period and a seven-year repayment term commencing in 2014. Assets purchased using the amounts borrowed under Nextel Mexico's equipment financing facility are pledged as collateral. As of the June 30, 2014 measurement date, we were not in compliance with certain financial covenants in our equipment financing facilities in Brazil and Mexico. In December 2014, Nextel Brazil and Nextel Mexico and the lender under the equipment financing facilities agreed to amendments to those facilities that removed all financial covenants beginning with the December 31, 2014 measurement date and continuing through the June 30, 2017 measurement date. In exchange for covenant relief, Nextel Brazil granted the lender of its equipment financing facility preferential rights to the amounts held in certain bank accounts, and Nextel Mexico's parent company, Nextel International Uruguay, LLC, granted the lender of its equipment financing facility a pledge on the shares it holds in Nextel Mexico. In addition, Nextel Brazil and Nextel Mexico have the option to defer principal amortization payments in exchange for an upfront payment of 17% of the amounts outstanding under the equipment financing facilities on August 31, 2014. As a result of the amendment of our equipment financing facility in Mexico, we classified the principal amount outstanding under this facility as long-term debt in our consolidated balance sheet as of December 31, 2014. Because of certain cross-default provisions included in our equipment financing facility in Brazil, we classified the principal amount outstanding under this facility as a current liability in our consolidated balance sheet as of December 31, 2014. We do not have the ability to borrow additional amounts under these equipment financing facilities. Capital Leases and Tower Financing Obligations. 2013 Tower Transactions. In November 2013, Nextel Mexico sold 1,483 communication towers to American Tower for proceeds based on foreign currency exchange rates at the time of $374.3 million, subject to purchase price adjustments. During the adjustment period, Nextel Mexico accounted for this transaction under the deposit method and recorded the proceeds as a deposit liability. During the third quarter of 2014, the price adjustments were finalized, and we began accounting for the transaction as a sale-leaseback. As result, we recognized $75.4 million of the gain on the sale of the towers as a component of operating income in the third quarter of 2014 and deferred the remaining $179.6 million of the gain, which we will recognize into income over the term of the leaseback of the towers. Nextel Mexico also recognized a capital lease liability of $112.4 million related to the leaseback of a portion of each of these towers.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In December 2013, Nextel Brazil sold 1,940 communication towers to American Tower for proceeds based on foreign currency exchange rates at the time of $348.0 million, subject to purchase price adjustments. Nextel Brazil also sold 103 towers for proceeds of $18.6 million in June 2014, subject to purchase price adjustments. In October 2014, upon the finalization of the price adjustments, Nextel Brazil completed the sale of all of these towers and began accounting for this transaction as a sale-leaseback. As a result, Nextel Brazil recognized an immaterial loss on the sale of the towers as a component of operating income in the fourth quarter of 2014 and deferred a gain of $155.5 million, which we will recognize into income over the term of the leaseback of the towers. Nextel Brazil also recognized a capital lease liability of $186.5 million related to the leaseback of a portion of each of these towers. Site-Related Capital Lease Obligations. We have entered into various agreements under which we are entitled to lease space on towers or other structures owned by third parties and to install our transmitter and receiver equipment in that space. Tower Financing Obligations. From 2002 to 2008, we sold and subsequently leased back space on certain transmitter and receiver sites in Brazil and Mexico. Due to our continuing involvement with these properties, we account for these transactions as financing arrangements. As a result, we did not recognize any gains from the sales of these towers under these arrangements, and we maintain the tower assets on our consolidated balance sheets. In addition, we recognized the proceeds received as financing obligations. We recognize ground rent payments as operating expenses in cost of service and tower base rent payments as interest expense and a reduction in the financing obligation using the effective interest method. In addition, we recognize co-location rent payments made by the third party lessees to the owner of the site as other operating revenues because of our continuing involvement with the tower assets. During the years ended December 31, 2014, 2013 and 2012, we recognized $38.5 million, $39.4 million and $56.8 million , respectively, in other operating revenues related to these co-location lease arrangements. Corporate Aircraft Lease. In 2009, we entered into an agreement to lease a corporate aircraft, which we accounted for as a capital lease. In June 2014, we entered into an agreement to sell this corporate aircraft for $32.5 million. In addition, in conjunction with the sale, we exercised our pre-existing option to purchase this aircraft from the lessor and immediately terminated the lease. In connection with the sale of the corporate aircraft and the termination of the associated lease, we recognized a $6.4 million asset impairment charge in the second quarter of 2014. Debt Maturities. Because we were unable to meet the financial covenants in our bank loans in Brazil as of the compliance date on December 31, 2014 and because of the associated cross-default provisions included in Nextel Brazil's equipment financing facility, we classified the principal amounts outstanding under these facilities as due in 2015 for purposes of the table below. For the years subsequent to December 31, 2014, scheduled annual maturities of all debt outstanding, excluding the obligations evidenced by the NII Capital Corp. and NIIT senior notes, which are included in liabilities subject to compromise on our consolidated balance sheet as of December 31, 2014, are as follows (in thousands): | | | | | Year | Principal Repayments | 2015 | $ | 777,569 |
| 2016 | 71,376 |
| 2017 | 77,014 |
| 2018 | 67,416 |
| 2019 | 62,337 |
| Thereafter | 456,680 |
| Total | $ | 1,512,392 |
|
10. Fair Value Measurements We estimate the fair value of our long-term debt instruments, our available-for-sale securities, our held-to-maturity investments and other financial instruments as described below. The FASB’s authoritative guidance on fair value measurements defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Valuation techniques discussed under the FASB’s authoritative guidance for fair value measurements include
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the market approach (comparable market prices), the income approach (present value of future income or cash flow based on current market expectations) and the cost approach (cost to replace the service capacity of an asset or replacement cost). As a basis for considering these assumptions, the guidance utilizes a three-tier fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value. The following is a brief description of the three levels in the fair value hierarchy: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. For assets and liabilities measured at fair value on a non-recurring basis, fair value is determined by using various valuation approaches. The same hierarchy as described above, which maximizes the use of observable inputs and minimizes the use of unobservable inputs, by generally requiring that the observable inputs be used when available, is used in measuring fair value for these items. Fair value may be derived using pricing models. Pricing models take into account the contract terms (including maturity) as well as multiple inputs, including, where applicable, interest rate yield curves, credit curves, correlation, credit-worthiness of the counterparty, option volatility and currency rates. In accordance with the FASB’s authoritative guidance for fair value measurements, the impact of our own credit spreads is also considered when measuring the fair value of liabilities. Where appropriate, valuation adjustments are made to account for various factors such as credit quality and model uncertainty. These adjustments are subject to judgment, are applied on a consistent basis and are based upon observable inputs where available. We generally subject all valuations and models to a review process initially and on a periodic basis thereafter. As fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure, even when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use when pricing the asset or liability at the measurement date. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions and valuation techniques may have a material effect on the estimated fair value amounts. The following is a description of the major categories of assets and liabilities measured at fair value on a recurring basis and the valuation techniques applied to them. Available-for-Sale Securities. As of December 31, 2014 and 2013, available-for-sale securities included $110.1 million and $418.6 million, respectively, in short-term investments made by Nextel Brazil in two investment funds and certificates of deposit with a Brazilian bank. These funds invest primarily in Brazilian government bonds, long-term, low-risk bank certificates of deposit and Brazilian corporate debentures. As of December 31, 2014, available-for-sale securities also included $43.5 million in short-term investments made by Nextel Argentina in local money market funds. All of these securities are either government or corporate rated bonds with underlying performance linked to the U.S. dollar. During the years ended December 31, 2014, 2013 and 2012, we did not have any material unrealized gains or losses associated with these investments. As a result of favorable market conditions during 2013, we sold $150.0 million certificates of deposit for an immaterial gain. Prior to the third quarter of 2013, we classified these investments as held-to-maturity and recorded them at amortized cost. As a result of this sale, we transferred the remaining $167.2 million in short-term investments and $31.4 million in long-term investments held at one of our Spanish subsidiaries from held-to-maturity to available-for-sale and recognized an immaterial unrealized gain, which we recorded as other comprehensive income in 2013. We account for our available-for-sale securities at fair value in accordance with the FASB’s authoritative guidance surrounding the accounting for investments in debt and equity securities. The fair value of the Brazilian and Argentine securities is based on the net asset value of the funds. In our judgment, these types of securities trade with sufficient daily observable market activity to support a Level 1 classification within the fair value hierarchy.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Debt Instruments. The carrying amounts and estimated fair values of our debt instruments are as follows: | | | | | | | | | | | | | | | | | | December 31, | | 2014 | | 2013 | | Carrying Amount | | Estimated Fair Value | | Carrying Amount | | Estimated Fair Value | | (in thousands) | NII Capital Corp. senior notes, net (1) | $ | 2,750,000 |
| | $ | 648,500 |
| | $ | 2,729,321 |
| | $ | 1,227,950 |
| NII International Telecom, S.C.A. senior notes, net (1) | 1,600,000 |
| | 1,166,500 |
| | 1,609,962 |
| | 1,271,370 |
| Equipment financing | 689,930 |
| | 620,125 |
| | 653,557 |
| | 620,173 |
| Bank loans and other | 345,169 |
| | 275,653 |
| | 448,169 |
| | 373,796 |
| | $ | 5,385,099 |
| | $ | 2,710,778 |
| | $ | 5,441,009 |
| | $ | 3,493,289 |
|
__________________________ (1) As of December 31, 2014, both our senior notes held by NII Capital Corp. and our senior notes held by NII International Telecom S.C.A. are classified as liabilities subject to compromise in our consolidated balance sheet. We estimated the fair values of our senior notes using quoted market prices. Because our fair value measurement is based on market prices in an active market, we consider this Level 1 in the fair value hierarchy. Bank loans and other consists primarily of loans with certain banks in Brazil and Mexico. We estimated the fair value of these bank loans, as well as the fair value of our equipment financing facilities, utilizing inputs such as U.S. Treasury security yield curves, prices of comparable bonds, LIBOR and zero-coupon yield curves, U.S. Treasury bond rates and credit spreads on comparable publicly traded bonds and consider these measurements to be Level 2 in the fair value hierarchy. Other Financial Instruments. The carrying values of cash and cash equivalents, accounts receivable and accounts payable contained in our consolidated balance sheets approximate their fair values due to the short-term nature of these instruments. The fair values of our derivative instruments are not material.
11. Commitments and Contingencies Capital and Operating Lease Commitments. We have co-location capital lease obligations on some of our transmitter and receiver sites in Mexico and Brazil. See Note 9 for further information regarding these agreements. We lease various cell sites, office facilities and other assets under operating leases. Some of these leases provide for annual increases in our rent payments based on changes in locally-based consumer price indices. The remaining terms of our cell site leases range from one to fifteen years and are generally renewable for additional terms. The remaining terms of our office leases range from less than one to ten years. During the years ended December 31, 2014, 2013 and 2012, total rent expense under operating leases was $302.4 million, $300.9 million and $270.6 million, respectively. For years subsequent to December 31, 2014, future minimum payments for all capital and operating lease obligations that have initial noncancelable lease terms exceeding one year, net of rental income, are as follows (in thousands):
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | Capital Leases | | Operating Leases | | Total | 2015 | $ | 166,655 |
| | $ | 219,767 |
| | $ | 386,422 |
| 2016 | 168,602 |
| | 225,041 |
| | 393,643 |
| 2017 | 170,590 |
| | 189,730 |
| | 360,320 |
| 2018 | 139,081 |
| | 163,151 |
| | 302,232 |
| 2019 | 119,774 |
| | 141,833 |
| | 261,607 |
| Thereafter | 1,581,487 |
| | 1,025,445 |
| | 2,606,932 |
| Total minimum lease payments | 2,346,189 |
| | 1,964,967 |
| | 4,311,156 |
| Less: imputed interest | (1,868,897 | ) | | — |
| | (1,868,897 | ) | Total | $ | 477,292 |
| | $ | 1,964,967 |
| | $ | 2,442,259 |
|
Handset, Equipment and Other Commitments. We are a party to purchase agreements with various suppliers, under which we have committed to purchase handsets, equipment and network services that will be used or sold in the ordinary course of business. As of December 31, 2014, we are committed to purchase $2.5 billion under these arrangements, $1.6 billion of which we expect to pay in 2015, $622.0 million of which we expect to pay in 2016 and 2017, and the remaining $268.5 million of which we expect to pay in 2018. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. Our commitments are generally determined based on noncancelable quantities or termination amounts. As of December 31, 2014, we were required to pay a total of $1.8 billion in spectrum fees in Mexico, $130.1 million of which we expect to pay in 2015, $257.3 million of which we expect to pay in 2016 and 2017, $257.3 million of which we expect to pay in 2018 and 2019 and the remaining $1.2 billion of which we expect to pay in years subsequent to 2019. These fees are subject to increases in the Mexican Consumer Pricing Index. We also purchase products and services as needed with no firm commitment. Amounts actually paid under some of these agreements will likely be higher due to variable components of these agreements. The more significant variable components that determine the ultimate obligation owed include such items as hours contracted, subscribers and other factors. In addition, we are a party to various arrangements that are conditional in nature and obligate us to make payments only upon the occurrence of certain events, such as the delivery of functioning software or a product. Brazilian Contingencies. Nextel Brazil has received various assessment notices from state and federal Brazilian authorities asserting deficiencies in payments related primarily to value-added taxes, excise taxes on imported equipment and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitions disputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. In other cases, Nextel Brazil's petitions have been denied, and Nextel Brazil is currently appealing those decisions. Nextel Brazil also had contingencies related to certain regulatory, civil and labor-related matters as of December 31, 2014 and 2013. As of December 31, 2014 and 2013, Nextel Brazil had accrued liabilities of $69.7 million and $70.9 million, respectively, related to contingencies, all of which were classified in accrued contingencies reported as a component of other long-term liabilities, of which $8.0 million and $11.2 million related to unasserted claims, respectively. We currently estimate the reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be approximately $430.0 million as of December 31, 2014. We are continuing to evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies. As a result, future increases or decreases to our accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable. Legal Proceedings. Securities Litigation. On March 4, 2014, a purported class action lawsuit was filed against the Company, NII Capital Corp. and certain of the Company’s current and former directors and executive officers in the United States District Court for the Eastern District of Virginia on behalf of a putative class of persons who purchased or otherwise acquired the securities of the Company or NII Capital Corp. between February 25, 2010 and February 27, 2014. The lawsuit is captioned In re NII Holdings, Inc. Securities Litigation, Case Number 14-CV-227. On July 18, 2014, the parties that have been designated as the lead plaintiffs in the lawsuit filed a second amended complaint against only NII Holdings and three current and former officers, whichgenerally alleges that
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the defendants made false or misleading statements or concealed material adverse information about the Company’s financial condition and operations in violation of Section 10(b), Rule 10b-5 and Section 20(a) of the Securities Exchange Act of 1934. The complaint seeks class certification and unspecified damages, fees and injunctive relief. On September 22, 2014, the judge issued an order staying all proceedings against the Company following the Company's filing of its petition for relief under Chapter 11. On October 6, 2014, the Company's and the individual defendants' motion to dismiss was denied, and the case is currently continuing as to the remaining individual defendants. On November 3, 2014, at the request of the parties, the court ordered that the case against the three individual defendants be stayed indefinitely, and on January 7, 2015, the court extended the stay until the earlier of May 22, 2015 or the effective date of a plan of reorganization. The Company and the named individuals will continue to vigorously defend themselves in this matter. Chapter 11 Proceedings. On September 15, 2014, NII Holdings, Inc. and eight of its U.S. and Luxembourg-domiciled subsidiaries filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court (Case No. 14-12611). On October 8, 2014, four additional subsidiaries of NII Holdings filed voluntary petitions seeking relief under Chapter 11, and a fifth additional subsidiary filed a voluntary petition seeking relief under Chapter 11 on January 25, 2015. The entities that have filed petitions seeking relief under Chapter 11, which we refer to collectively as the debtors, include Nextel International (Services), Ltd.; NII Capital Corp.; NII Aviation, Inc.; NII Funding Corp.; NII Global Holdings, Inc.; NII International Telecom S.C.A.; NII International Holdings S.à r.l.; NII International Services S.à r.l.; Airfone Holdings, LLC; Nextel International (Uruguay), LLC; McCaw International (Brazil), LLC; NII Mercosur, LLC; and NIU Holdings LLC. The debtors continue to operate as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company’s other subsidiaries, including its operating subsidiaries in Brazil, Mexico and Argentina, are not debtors in the Chapter 11 case. As a result of the bankruptcy proceedings, the pending litigation against the debtors is stayed. Subject to certain exceptions and approval by the Bankruptcy Court, during the Chapter 11 proceedings, no party can take further actions to recover pre-petition claims against the Company. In addition, we are subject to other claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.
12. Capital Stock We currently have 600,000,000 shares of authorized common stock, par value $0.001 per share, and 10,000,000 shares of authorized undesignated preferred stock, par value $0.001 per share. During the years ended December 31, 2014, 2013 and 2012, we issued shares of common stock in connection with the exercise of stock options by employees and the vesting of employee restricted share awards. Common Stock. Holders of our common stock are entitled to one vote per share on all matters submitted for action by the stockholders and share equally, share for share, if dividends are declared on the common stock. If our Company is partially or completely liquidated, dissolved or wound up, whether voluntarily or involuntarily, the holders of the common stock are entitled to share ratably in the net assets remaining after payment of all liquidation preferences, if any, applicable to any outstanding preferred stock. There are no redemption or sinking fund provisions applicable to the common stock. Undesignated Preferred Stock. Our board of directors has the authority to issue undesignated preferred stock of one or more series and in connection with the creation of such series, to fix by resolution the designation, voting powers, preferences and relative, participating, optional and other special rights of such series, and the qualifications, limitations and restrictions thereof. As of December 31, 2014, we had not issued any shares of undesignated preferred stock. Common Stock Reserved for Issuance. Under our 2012 Incentive Compensation Plan, we had 23,824,039 shares of our common stock reserved for future issuance as of December 31, 2014, assuming our restricted stock units outstanding as of December 31, 2014 are settled in cash. As of December 31, 2014, common stock reserved for future issuance does not include 2,386,673 restricted stock units that were issued in 2014 that, if settled in shares of common stock, would reduce the shares available under our 2012 Incentive Compensation Plan by 3,580,009 shares. We had 22,089,643 shares of our common stock reserved for future issuance as of December 31, 2013, assuming our restricted stock units outstanding as of December 31, 2013 were settled in cash. As of December 31, 2013, common stock reserved for future issuance did not include 3,341,132 restricted stock units that were issued in 2013 that, if settled in shares of common stock, would have reduced the shares available under our 2012 Incentive Compensation Plan by 5,011,698 shares.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Income Taxes The components of (loss) income from continuing operations before income taxes and the related income tax provision are as follows (in thousands): | | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | U.S. | $ | (368,667 | ) | | $ | (377,502 | ) | | $ | (311,575 | ) | Non-U.S. | (1,334,554 | ) | | (610,534 | ) | | 387,880 |
| Total | $ | (1,703,221 | ) | | $ | (988,036 | ) | | $ | 76,305 |
|
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Current: | |
| | |
| | |
| Federal | $ | — |
| | $ | — |
| | $ | 727 |
| State, net of Federal tax benefit | — |
| | — |
| | — |
| Foreign | (25,638 | ) | | (63,982 | ) | | (176,748 | ) | Total current income tax provision | (25,638 | ) | | (63,982 | ) | | (176,021 | ) | Deferred: | |
| | |
| | |
| Federal | (1,846 | ) | | (1,310 | ) | | 895 |
| State, net of Federal tax benefit | (205 | ) | | (146 | ) | | 100 |
| Foreign | (46,402 | ) | | (380,614 | ) | | 16,882 |
| Total deferred income tax (provision) benefit | (48,453 | ) | | (382,070 | ) | | 17,877 |
| Total income tax provision | $ | (74,091 | ) | | $ | (446,052 | ) | | $ | (158,144 | ) |
A reconciliation of the U.S. statutory Federal income tax rate to our effective tax rate as a percentage of (loss) income from continuing operations before reorganization items and income tax provision is as follows: | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Statutory Federal tax rate | 35% | | 35% | | 35% | Effect of foreign operations | (3) | | (3) | | 7 | Change in deferred tax asset valuation allowance | (36) | | (81) | | 160 | Intercompany transactions | (1) | | (3) | | 9 | Tax on subpart F income | — | | — | | 11 | Withholding tax | — | | (2) | | 42 | Deductible dividends | — | | 3 | | (42) | Inflation adjustments | 1 | | 1 | | (17) | Income tax credits | — | | — | | (3) | Local statutory investment loss | — | | 6 | | — | Other nondeductible expenses | (1) | | — | | 6 | Other | 1 | | (1) | | (1) | Effective tax rate | (4)% | | (45)% | | 207% |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of our deferred tax assets and liabilities consist of the following: | | | | | | | | | | December 31, | | 2014 | | 2013 | | (in thousands) | Deferred tax assets: | |
| | |
| Net operating losses and capital loss carryforwards | $ | 4,354,474 |
| | $ | 3,922,944 |
| Allowance for doubtful accounts | 41,724 |
| | 34,587 |
| Accrued expenses | 193,251 |
| | 151,131 |
| Accrual for contingent liabilities | 21,944 |
| | 22,117 |
| Property, plant and equipment | 153,036 |
| | 36,784 |
| Capital lease obligations | 175,498 |
| | 300,141 |
| Deferred revenue | 37,730 |
| | 35,179 |
| Equity compensation | 69,172 |
| | 71,171 |
| Inventory reserve | 25,642 |
| | 22,548 |
| Debt discount | 16,511 |
| | — |
| Other | 52,016 |
| | 41,116 |
| | 5,140,998 |
| | 4,637,718 |
| Valuation allowance | (4,868,504 | ) | | (4,335,913 | ) | Total deferred tax asset | 272,494 |
| | 301,805 |
| Deferred tax liabilities: | |
| | |
| Intangible assets | 42,036 |
| | 48,162 |
| Unremitted foreign earnings | 54,386 |
| | 54,386 |
| Deferred revenue | 39,492 |
| | 44,126 |
| Property, plant and equipment | 33,915 |
| | 96,613 |
| Capital lease obligation | 107,491 |
| | — |
| Other | 2,773 |
| | 15,123 |
| Total deferred tax liability | 280,093 |
| | 258,410 |
| Net deferred tax (liability) asset | $ | (7,599 | ) | | $ | 43,395 |
|
We have not recorded a deferred tax liability on Nextel Brazil’s unrealized foreign currency gain on the intercompany loan from NII Holdings as it is our intention to not subject that unrealized gain to Brazilian tax. If this gain is subject to tax, it could result in an additional income tax liability. As of December 31, 2014 and 2013, the cumulative amount of additional tax liability would have been approximately $35.8 million and $41.4 million, respectively. As of December 31, 2014, we included $54.4 million in deferred tax liabilities for U.S. federal, state and foreign taxes with respect to future remittances of certain undistributed earnings (other than income that has been previously taxed in the U.S. under the subpart F rules) of certain of our foreign subsidiaries. Except for the earnings associated with this accrual and income that has been previously taxed in the U.S. under the subpart F rules and can be remitted to the U.S. without incurring additional income taxes, we currently have no intention to remit any additional undistributed earnings of our foreign subsidiaries in a taxable manner. Should additional amounts of our foreign subsidiaries’ undistributed earnings be remitted to the U.S. as taxable dividends, we may be subject to additional U.S. income taxes (net of allowable foreign tax credits) and foreign withholding taxes. It is not practicable to estimate the amount of any additional taxes that may be payable on the remaining undistributed earnings. As of December 31, 2014, we had $1.3 billion of net operating loss carryforwards for U.S. Federal and state income tax purposes, which expire in various amounts beginning in 2019 through 2034. The timing and manner in which we will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future under the provisions of Internal Revenue Code Section 382 relating to changes in our ownership. We excluded $210.3 million of U.S. net operating loss carryforwards from the calculation of the deferred tax asset presented above because it represents excess stock option deductions that did not reduce
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
taxes payable in the U.S. The tax effect of these unrealized excess stock option deductions, if realized in the future, will result in an increase to paid-in capital. As of December 31, 2014, we had $764.0 million of net operating loss carryforwards in our Mexican subsidiaries. These carryforwards expire in various amounts and at various periods from 2015 to 2024. Our Brazilian subsidiaries had $816.4 million of net operating loss carryforwards that can be carried forward indefinitely, but the amount that we can utilize annually is limited to 30% of Brazilian taxable income before the net operating loss deduction. Our foreign subsidiaries' ability to utilize the foreign tax net operating losses in any single year ultimately depends upon their ability to generate sufficient taxable income. As of December 31, 2014, we had $10.8 billion of net operating loss carryforwards in our holding companies in Luxembourg that can be carried forward indefinitely. Our holding companies in Spain had $844.0 million of net operating loss carryforwards that can be carried forward 18 years, and our holding company in the Netherlands had $0.3 million of net operating loss carryforwards that can be carried forward nine years. Given the nature of activities that are considered taxable in these jurisdictions and the activities engaged in by the holding companies, these net operating loss carryforwards will never be utilized by our holding companies and add no value to the company. The deferred tax asset valuation allowances that our subsidiaries and holding companies had as of December 31, 2014 and 2013 are as follows: | | | | | | | | | | 2014 | | 2013 | | (in millions) | Argentina | $ | 49.1 |
| | $ | — |
| Brazil | 584.1 |
| | 419.1 |
| U.S. | 480.3 |
| | 363.8 |
| Luxembourg | 3,169.2 |
| | 3,131.4 |
| Mexico | 318.2 |
| | 190.7 |
| Spain | 267.6 |
| | 230.9 |
| Total | $ | 4,868.5 |
| | $ | 4,335.9 |
|
Of the $4.9 billion valuation allowance as of December 31, 2014, $281.5 million was classified as current and $4.6 billion was classified as non-current in our consolidated financial statements. The realization of deferred tax assets is dependent on the generation of future taxable income sufficient to realize our tax loss carryforwards and other tax deductions. Valuation allowances are required to be recognized on deferred tax assets unless it is determined that it is “more-likely-than-not” that the asset will be realized. As of December 31, 2014, we recorded full valuation allowances on the deferred tax assets of our foreign operating companies, our U.S. parent company and subsidiaries and our foreign holding companies due to substantial negative evidence, including the recent history of cumulative losses and the projected losses for 2015 and subsequent years. As a result, the valuation allowance on our deferred tax assets increased by $532.6 million during 2014. We do not anticipate that we will recognize significant tax benefits with respect to our deferred tax assets.
We are subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which we operate. Certain of our entities are under examination by the relevant taxing authorities for various tax years. The earliest years that remain subject to examination by jurisdiction are: U.S. - 1999; Argentina and Mexico - 2006; Brazil, Luxembourg, Netherlands and Spain - 2009. We regularly assess the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of our provision for income taxes. We have only recorded financial statement benefits for tax positions which we believe reflect the “more-likely-than-not” criteria incorporated in the FASB’s authoritative guidance on accounting for uncertainty in income taxes, and we have established income tax reserves in accordance with this authoritative guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, we adjust it only when there is more information available or when an event occurs necessitating a change. While we believe that the amounts of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on the financial statements or may exceed the current income tax reserves in amounts that could be material.
Unrecognized tax benefits are classified as non-current liabilities. The following table shows a reconciliation of our beginning and ending unrecognized tax benefits for 2014, 2013 and 2012 (in thousands):
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Unrecognized tax benefits at January 1 | $ | 8,686 |
| | $ | 35,639 |
| | $ | 35,572 |
| Additions for current year tax positions | — |
| | — |
| | 3,118 |
| Reductions for current year tax positions | — |
| | — |
| | (551 | ) | Reductions for prior year tax positions | — |
| | (26,519 | ) | | (2,197 | ) | Foreign currency translation adjustment | (350 | ) | | (434 | ) | | (303 | ) | Unrecognized tax benefits at December 31 | $ | 8,336 |
| | $ | 8,686 |
| | $ | 35,639 |
|
As of December 31, 2014, 2013 and 2012, the unrecognized tax benefits that could potentially reduce our future effective tax rate, if recognized, were $1.8 million , $2.1 million and $4.8 million, respectively. In addition, unrecognized tax benefits will decrease by approximately $4.8 million over the next twelve months due to the expiration of certain statutes of limitations. We record interest and penalties associated with uncertain tax positions as a component of our income tax provision. During the years ended December 31, 2014, 2013 and 2012, we recognized $0.2 million, $0.2 million and $0.3 million, respectively, of interest and penalties in our current income tax provision. Unrecognized tax benefits (including penalties and interest) were reduced by $26.5 million in 2013 due to the effective resolution of a tax position with the Internal Revenue Service and $2.7 million in 2012 due to a change in estimates. As of December 31, 2014 and 2013, we had accrued $2.4 million and $2.3 million, respectively for the payment of interest and penalties. Effective January 1, 2014, the Mexican government passed legislation to keep the corporate income tax rate fixed at 30%, which repealed the scheduled tax rate reduction previously approved in December 2012.
14. Employee Stock and Benefit Plans In May 2012, our stockholders adopted the 2012 Incentive Compensation Plan, which replaced our prior incentive compensation plans. The 2012 Incentive Compensation Plan provides us with the ability to award stock options, restricted stock, restricted stock units, and cash-based incentives to our employees, directors and consultants. The 2012 Incentive Compensation Plan incorporated the outstanding equity grants and remaining shares available for grant under our prior plans. Our stockholders previously authorized the Company to grant equity and equity-related incentives up to a maximum of 64,933,332 shares of common stock, subject to adjustments. At the time of adoption of the 2012 Incentive Compensation Plan, there were 9,731,179 shares authorized, unissued and available for grant under the 2012 Incentive Compensation Plan. All grants or awards made under the 2012 Incentive Compensation Plan are governed by written agreements between us and the participants and have a maximum term of ten years. Historically, our Board of Directors has granted equity-related incentives consisting of stock options, restricted stock awards and restricted stock units to employees on an annual basis near the end of April. On April 30, 2014, our Board of Directors granted 1,752,921 stock options, 2,271,555 restricted stock awards and 358,373 restricted stock units to certain of our employees and directors in connection with this annual grant of equity-related incentives. Stock options, restricted stock awards, and restricted stock units are also granted to certain new employees on the later of their date of hire or the date that the grant is approved. In addition, under the provisions outlined in the 2012 Incentive Compensation Plan, our chief executive officer may grant, under authority delegated to him by the Compensation Committee of our Board of Directors, a limited number of stock options (not to exceed 1,000,000 shares in the aggregate for the plan year) and restricted stock/restricted stock unit awards (not to exceed 500,000 shares in the aggregate for the plan year) to employees who are not executive officers. Prior to April 2014, upon the exercise of a stock option award or vesting of a restricted stock award or restricted stock units, we issued shares of our common stock from an available pool of shares that were authorized but not yet issued. Beginning in April 2014, our practice is to settle awards in cash upon vesting. As a result of this change, we changed the classification of outstanding awards from equity-classified to liability-classified and recorded an immaterial liability in our consolidated balance sheet as of December 31, 2014. There was no incremental compensation cost that resulted from this change in practice. For the years ended December 31, 2014, 2013 and 2012, we recognized $4.0 million, $9.0 million and $20.3 million, respectively, in share-based compensation expense related to stock options. For the years ended December 31, 2014, 2013 and 2012, we recognized $10.4 million, $20.0 million and $22.2 million, respectively, in share-based compensation expense related to restricted stock and restricted stock units. Amounts recognized in the income statement for tax benefits related to share-based
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
payment arrangements in 2014, 2013 and 2012 were not material. We include substantially all share-based compensation expense, including restricted stock expense, as a component of selling, general and administrative expenses based on classification of the compensation expense for the applicable grantee. We classify tax benefits resulting from tax deductions in excess of the compensation cost recognized for share-based awards as financing cash flows. As of December 31, 2014, there was approximately $5.2 million in unrecognized compensation cost related to non-vested employee stock option awards. We expect this cost to be recognized over a weighted average period of 1.27 years. Cash paid for exercises under all share-based payment arrangements was $0.1 million for 2014, $1.0 million for 2013 and $2.0 million for 2012. Stock Option Awards The following table summarizes stock option activity for the year ended December 31, 2014: | | | | | | | | | | | | | | | | Number of Options | | Weighted Average Exercise Price per Option | | Weighted Average Remaining Life | | Aggregate Intrinsic Value | Outstanding, December 31, 2013 | 11,259,868 |
| | $ | 36.20 |
| | |
| | |
| Granted | 1,752,921 |
| | 0.86 |
| | |
| | |
| Exercised | — |
| | — |
| | |
| | |
| Forfeited | (6,978,638 | ) | | 35.63 |
| | |
| | |
| Outstanding, December 31, 2014 | 6,034,151 |
| | 26.57 |
| | 5.71 |
| | $ | — |
| Exercisable, December 31, 2014 | 3,996,673 |
| | 38.55 |
| | 4.04 |
| | — |
|
There were no options exercised during the year ended December 31, 2014. The total fair value of vested options was $16.4 million, $39.1 million and $54.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. Generally, our stock options are non-transferable, except by will or laws of descent or distribution, and the actual value of the stock options that a recipient may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. As a result of our Chapter 11 filing and the proposals for reorganization, which do not contemplate any recoveries with respect to equity interests, the holders of these stock option awards will not realize any value or receive any recovery from the long-term incentives granted during 2014 or in prior years. The weighted average fair value of the stock option awards on their grant dates using the Black-Scholes-Merton option-pricing model was less than $0.01 for each option granted during the year ended December 31, 2014, $4.64 for each option granted during the year ended December 31, 2013 and $7.31 for each option granted during the year ended December 31, 2012 based on the following assumptions: | | | | | | | | 2014 | | 2013 | | 2012 | Risk free interest rate | 1.60% - 1.63% | | 0.63% - 1.49% | | 0.62% - 0.95% | Expected stock price volatility | 69.53% - 96.99% | | 56.56% - 69.53% | | 50.00% - 56.56% | Expected term in years | 4.78 - 4.81 | | 4.78 - 4.81 | | 4.65 - 4.78 | Expected dividend yield | — | | — | | — |
The expected term of stock option awards granted represents the period that we expect our stock option awards will be outstanding and was determined based on (1) historical data on employee exercise and post-vesting employment termination behavior, (2) the contractual terms of the stock option awards, (3) vesting schedules and (4) expectations of future employee behavior. The risk-free interest rate for periods consistent with the contractual life of the stock option award is based on the yield curve of U.S. Treasury strip securities in effect at the time of the grant. Expected volatility takes into consideration historical volatility and the implied volatility from traded options on our stock. Restricted Stock and Restricted Stock Unit Awards Restricted stock includes both non-vested restricted stock awards and restricted stock units. Following is a summary of our restricted stock:
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | Number of Shares | | Weighted Average Grant Date Fair Value Per Share | Restricted stock awards as of December 31, 2013 | 3,919,485 |
| | $12.99 | Granted | 3,605,538 |
| | 0.85 | Vested | (1,140,667 | ) | | 16.80 | Forfeited | (2,294,608 | ) | | 7.69 | Restricted stock awards as of December 31, 2014 | 4,089,748 |
| | 3.75 |
If a participant terminates employment prior to the vesting dates, the unvested shares are forfeited and available for reissuance under the terms of the 2012 Incentive Compensation Plan. The fair value of our restricted stock is determined based on the quoted price of our common stock at the grant date. As of December 31, 2014, there was approximately $7.8 million in unrecognized compensation cost related to restricted stock. We expect this cost to be recognized over a weighted average period of 1.52 years. The total fair value of restricted stock awards vested was $1.2 million during 2014 and $7.7 million during 2013. During 2014, we paid an immaterial amount to settle vested restricted stock awards. The weighted average grant date fair value of restricted stock awards granted during 2014 was $0.85 per unit compared to $8.69 per unit for 2013 and $16.97 per unit for 2012. As a result of our Chapter 11 filing and the proposals for reorganization, which do not contemplate any recoveries with respect to equity interests, the holders of these restricted stock awards will not realize any value or receive any recovery from the long-term incentives granted during 2014 or in prior years.
15. Segment Information We have determined our reportable segments based on our method of internal reporting, which disaggregates our business by geographic location. We evaluate performance of these segments and provide resources to them based on operating income before depreciation, amortization and impairment and restructuring charges, which we refer to as segment earnings. Our reportable segments are: (1) Brazil, (2) Mexico and (3) Argentina.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | Brazil | | Mexico | | Argentina | | Corporate and Eliminations | | Consolidated | | (in thousands) | Year Ended December 31, 2014 | |
| | |
| | |
| | |
| | |
| Operating revenues | $ | 1,848,918 |
| | $ | 1,417,163 |
| | $ | 424,972 |
| | $ | (2,333 | ) | | $ | 3,688,720 |
| Segment (losses) earnings | $ | (133,691 | ) | | $ | (90,481 | ) | | $ | 76,241 |
| | $ | (144,733 | ) | | $ | (292,664 | ) | Less: | |
| | |
| | |
| | |
| | |
| Impairment and restructuring charges | | | | | | | | | (220,742 | ) | Gain on sale of towers | | | | | | | | | 74,631 |
| Depreciation and amortization | |
| | |
| | |
| | |
| | (672,705 | ) | Foreign currency transaction losses, net | |
| | |
| | |
| | |
| | (130,499 | ) | Interest expense and other, net | |
| | |
| | |
| | |
| | (389,641 | ) | Loss from continuing operations before reorganization items and income tax provision | |
| | |
| | |
| | |
| | $ | (1,631,620 | ) | Capital expenditures | $ | 218,855 |
| | $ | 168,750 |
| | $ | 26,308 |
| | $ | 14,507 |
| | $ | 428,420 |
| Year Ended December 31, 2013 | |
| | |
| | |
| | |
| | |
| Operating revenues | $ | 2,208,034 |
| | $ | 1,872,697 |
| | $ | 636,448 |
| | $ | (5,612 | ) | | $ | 4,711,567 |
| Segment earnings (losses) | $ | 311,129 |
| | $ | 179,896 |
| | $ | 179,418 |
| | $ | (177,578 | ) | | $ | 492,865 |
| Less: | |
| | |
| | |
| | |
| | |
| Impairment and restructuring charges | | | | | | | | | (168,543 | ) | Depreciation and amortization | |
| | |
| | |
| | |
| | (692,927 | ) | Foreign currency transaction losses, net | |
| | |
| | |
| | |
| | (123,369 | ) | Interest expense and other, net | |
| | |
| | |
| | |
| | (496,062 | ) | Loss from continuing operations before income tax provision | |
| | |
| | |
| | |
| | $ | (988,036 | ) | Capital expenditures | $ | 461,458 |
| | $ | 375,522 |
| | $ | 21,183 |
| | $ | 13,931 |
| | $ | 872,094 |
| Year Ended December 31, 2012 | |
| | |
| | |
| | |
| | |
| Operating revenues | $ | 2,902,350 |
| | $ | 2,109,573 |
| | $ | 685,201 |
| | $ | (3,889 | ) | | $ | 5,693,235 |
| Segment earnings (losses) | $ | 674,632 |
| | $ | 561,059 |
| | $ | 180,956 |
| | $ | (287,343 | ) | | $ | 1,129,304 |
| Less: | |
| | |
| | |
| | |
| | |
| Impairment and restructuring charges | | | | | | | | | (30,401 | ) | Depreciation and amortization | |
| | |
| | |
| | |
| | (605,161 | ) | Foreign currency transaction losses, net | |
| | |
| | |
| | |
| | (63,330 | ) | Interest expense and other, net | |
| | |
| | |
| | |
| | (354,107 | ) | Income from continuing operations before income tax provision | |
| | |
| | |
| | |
| | $ | 76,305 |
| Capital expenditures | $ | 632,796 |
| | $ | 523,555 |
| | $ | 56,825 |
| | $ | 92,520 |
| | $ | 1,305,696 |
| December 31, 2014 | |
| | |
| | |
| | |
| | |
| Identifiable assets | $ | 2,991,959 |
| | $ | 1,721,710 |
| | $ | 279,714 |
| | $ | 437,208 |
| | $ | 5,430,591 |
| December 31, 2013 | |
| | |
| | |
| | |
| | |
| Identifiable assets | $ | 3,705,642 |
| | $ | 2,695,091 |
| | $ | 451,041 |
| | $ | 1,828,180 |
| (1) | $ | 8,679,954 |
|
__________________________ (1) As of December 31, 2013, identifiable assets in the "Corporate and Eliminations" column include $168.9 million of total assets related to discontinued operations as a result of the sale of Nextel Chile. See Note 5 for more information.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Quarterly Financial Data (Unaudited) | | | | | | | | | | | | | | | | | | First | | Second | | Third | | Fourth | | (in thousands, except per share amounts) | 2014 | |
| | |
| | |
| | |
| Operating revenues | $ | 955,781 |
| | $ | 951,981 |
| | $ | 926,727 |
| | $ | 854,231 |
| Operating loss | (212,290 | ) | | (350,553 | ) | | (212,900 | ) | | (335,737 | ) | Net loss from continuing operations | (338,270 | ) | | (474,983 | ) | | (456,753 | ) | | (507,306 | ) | Net (loss) income from discontinued operations | (37,808 | ) | | (148,329 | ) | | 13,306 |
| | (7,555 | ) | Net loss from continuing operations, per common share, basic and diluted | $ | (1.97 | ) | | $ | (2.76 | ) | | $ | (2.65 | ) | | $ | (2.95 | ) | Net (loss) income from discontinued operations, per common share, basic and diluted | $ | (0.22 | ) | | $ | (0.86 | ) | | $ | 0.08 |
| | $ | (0.04 | ) |
| | | | | | | | | | | | | | | | | | First | | Second | | Third | | Fourth | | (in thousands, except per share amounts) | 2013 | |
| | |
| | |
| | |
| Operating revenues | $ | 1,316,716 |
| | $ | 1,245,451 |
| | $ | 1,085,633 |
| | $ | 1,063,767 |
| Operating loss | (44,397 | ) | | (40,653 | ) | | (127,889 | ) | | (155,666 | ) | Net loss from continuing operations | (153,103 | ) | | (316,018 | ) | | (259,507 | ) | | (705,460 | ) | Net loss from discontinued operations | (54,400 | ) | | (80,334 | ) | | (40,434 | ) | | (40,343 | ) | Net loss from continuing operations, per common share, basic and diluted | $ | (0.89 | ) | | $ | (1.83 | ) | | $ | (1.51 | ) | | $ | (4.10 | ) | Net loss from discontinued operations, per common share, basic and diluted | $ | (0.32 | ) | | $ | (0.47 | ) | | $ | (0.23 | ) | | $ | (0.23 | ) |
The sum of the per share amounts do not equal the annual amounts due to changes in the number of weighted average common shares outstanding during the year. In August 2014, we completed the sale of all of the outstanding equity interests of our wholly-owned subsidiary, Nextel Chile, to Fucata. As a result of the sale of Nextel Chile, the quarterly amounts included above differ from the amounts originally included in our quarterly reports on Form 10-Q for each of the quarterly periods in 2013, as well as in the quarterly reports on Form 10-Q for the three months ended March 31, 2014 and June 30, 2014.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Condensed Consolidating Financial Statements In 2011, we issued $1.45 billion in aggregate principal amount of our 7.625% senior notes due in 2021. In addition, during 2009, we issued senior notes totaling $1.3 billion in aggregate principal amount comprised of our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019. We refer to the senior notes issued in 2011 and 2009 collectively as the "notes." All of these notes are senior unsecured obligations of NII Capital Corp., our wholly-owned domestic subsidiary, and are guaranteed on a senior unsecured basis by NII Holdings and all of its current and future first tier and domestic restricted subsidiaries, other than NII Capital Corp. No foreign subsidiaries will guarantee the notes unless they are first tier subsidiaries of NII Holdings. These guarantees are full and unconditional, as well as joint and several. In connection with the issuance of the notes and the guarantees thereof, we are required to provide certain condensed consolidating financial information. Included in the tables below are condensed consolidating balance sheets as of December 31, 2014 and 2013, as well as condensed consolidating statements of comprehensive (loss) income for the years ended December 31, 2014, 2013 and 2012 and condensed consolidating statements of cash flows for the years ended December 31, 2014, 2013 and 2012, of: (a) the parent company, NII Holdings, Inc.; (b) the subsidiary issuer, NII Capital Corp.; (c) the guarantor subsidiaries on a combined basis; (d) the non-guarantor subsidiaries on a combined basis; (e) consolidating adjustments; and (f) NII Holdings, Inc. and subsidiaries on a consolidated basis.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer)(1) | | Guarantor Subsidiaries(2) | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | ASSETS | Current assets | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | 106,747 |
| | $ | 25,170 |
| | $ | 14,505 |
| | $ | 427,178 |
| | $ | — |
| | $ | 573,600 |
| Short-term investments | — |
| | — |
| | — |
| | 153,612 |
| | — |
| | 153,612 |
| Accounts receivable, net | — |
| | — |
| | 290 |
| | 398,388 |
| | — |
| | 398,678 |
| Short-term intercompany receivables | 27,803 |
| | 65,130 |
| | 99,459 |
| | 7,030 |
| | (199,422 | ) | | — |
| Handset and accessory inventory | — |
| | — |
| | — |
| | 207,633 |
| | — |
| | 207,633 |
| Deferred income taxes, net | — |
| | — |
| | 857 |
| | 49,835 |
| | — |
| | 50,692 |
| Prepaid expenses and other | 7,942 |
| | — |
| | 8,352 |
| | 312,903 |
| | — |
| | 329,197 |
| Total current assets | 142,492 |
| | 90,300 |
| | 123,463 |
| | 1,556,579 |
| | (199,422 | ) | | 1,713,412 |
| Property, plant and equipment, net | — |
| | — |
| | 48,168 |
| | 2,384,765 |
| | — |
| | 2,432,933 |
| Intangible assets, net | 18,000 |
| | — |
| | — |
| | 804,124 |
| | — |
| | 822,124 |
| Deferred income taxes, net | — |
| | 13,561 |
| | — |
| | 5,772 |
| | (13,566 | ) | | 5,767 |
| Long-term intercompany receivables | 1,393,109 |
| | 3,488,284 |
| | 342,883 |
| | 1,354 |
| | (5,225,630 | ) | | — |
| Other assets | 947 |
| | — |
| | 392 |
| | 455,016 |
| | — |
| | 456,355 |
| Total assets | $ | 1,554,548 |
| | $ | 3,592,145 |
| | $ | 514,906 |
| | $ | 5,207,610 |
| | $ | (5,438,618 | ) | | $ | 5,430,591 |
| | | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | Liabilities not subject to compromise | | | | | | | | | | | | Current liabilities | |
| | |
| | |
| | |
| | |
| | |
| Accounts payable | $ | — |
| | $ | — |
| | $ | 1,995 |
| | $ | 277,809 |
| | $ | — |
| | $ | 279,804 |
| Short-term intercompany payables | — |
| | 9,764 |
| | 4,958 |
| | 182,239 |
| | (196,961 | ) | | — |
| Accrued expenses and other | — |
| | — |
| | 18,993 |
| | 544,528 |
| | (533 | ) | | 562,988 |
| Deferred revenues | — |
| | — |
| | — |
| | 89,019 |
| | — |
| | 89,019 |
| Current portion of long-term debt | — |
| | — |
| | — |
| | 777,569 |
| | — |
| | 777,569 |
| Total current liabilities | — |
| | 9,764 |
| | 25,946 |
| | 1,871,164 |
| | (197,494 | ) | | 1,709,380 |
| Long-term debt | — |
| | — |
| | — |
| | 734,823 |
| | — |
| | 734,823 |
| Deferred income tax liabilities | 1,529 |
| | — |
| | 14,524 |
| | 55,601 |
| | (13,566 | ) | | 58,088 |
| Long-term intercompany payables | — |
| | — |
| | — |
| | 139,206 |
| | (139,206 | ) | | — |
| Other long-term liabilities | 100 |
| | — |
| | 2,217 |
| | 297,254 |
| | — |
| | 299,571 |
| Total liabilities not subject to compromise | 1,629 |
| | 9,764 |
| | 42,687 |
| | 3,098,048 |
| | (350,266 | ) | | 2,801,862 |
| Liabilities subject to compromise | 30,584 |
| | 2,858,128 |
| | 9,899 |
| | 1,694,882 |
| | — |
| | 4,593,493 |
| Intercompany liabilities subject to compromise | 3,487,099 |
| | 115,458 |
| | 1,492,946 |
| | 709,392 |
| | (5,804,895 | ) | | — |
| Total liabilities subject to compromise | 3,517,683 |
| | 2,973,586 |
| | 1,502,845 |
| | 2,404,274 |
| | (5,804,895 | ) | | 4,593,493 |
| Total stockholders’ (deficit) equity | (1,964,764 | ) | | 608,795 |
| | (1,030,626 | ) | | (294,712 | ) | | 716,543 |
| | (1,964,764 | ) | Total liabilities and stockholders’ (deficit) equity | $ | 1,554,548 |
| | $ | 3,592,145 |
| | $ | 514,906 |
| | $ | 5,207,610 |
| | $ | (5,438,618 | ) | | $ | 5,430,591 |
|
| | (1) | NII Capital Corp. is the issuer of our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019. |
| | (2) | Represents our subsidiaries that have provided guarantees of the obligations of NII Capital Corp. under our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% notes due 2019. |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | | ASSETS | Current assets | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | 356,314 |
| | $ | — |
| | $ | 5,586 |
| | $ | 1,368,435 |
| | $ | — |
| | $ | 1,730,335 |
| Short-term investments | — |
| | — |
| | — |
| | 585,760 |
| | — |
| | 585,760 |
| Accounts receivable, net | — |
| | — |
| | 627 |
| | 510,779 |
| | — |
| | 511,406 |
| Short-term intercompany receivables | 31,803 |
| | 129,810 |
| | 72,595 |
| | 4,779 |
| | (238,987 | ) | | — |
| Handset and accessory inventory | — |
| | — |
| | — |
| | 336,620 |
| | — |
| | 336,620 |
| Deferred income taxes, net | — |
| | — |
| | 1,145 |
| | 126,250 |
| | — |
| | 127,395 |
| Prepaid expenses and other | 6,832 |
| | — |
| | 7,914 |
| | 382,828 |
| | — |
| | 397,574 |
| Assets related to discontinued operations | — |
| | — |
| | — |
| | 59,096 |
| | — |
| | 59,096 |
| Total current assets | 394,949 |
| | 129,810 |
| | 87,867 |
| | 3,374,547 |
| | (238,987 | ) | | 3,748,186 |
| Property, plant and equipment, net | — |
| | — |
| | 130,729 |
| | 3,207,103 |
| | (287 | ) | | 3,337,545 |
| Investments in and advances to affiliates | 1,867,753 |
| | 1,503,202 |
| | 1,562,080 |
| | — |
| | (4,933,035 | ) | | — |
| Intangible assets, net | 18,000 |
| | — |
| | — |
| | 962,369 |
| | — |
| | 980,369 |
| Deferred income taxes, net | 16,025 |
| | — |
| | — |
| | 26,716 |
| | (16,028 | ) | | 26,713 |
| Long-term intercompany receivables | 1,474,658 |
| | 3,714,760 |
| | 701,680 |
| | 1,354 |
| | (5,892,452 | ) | | — |
| Other assets | 29,381 |
| | 32,556 |
| | 15,383 |
| | 399,986 |
| | — |
| | 477,306 |
| Assets related to discontinued operations | — |
| | — |
| | — |
| | 109,835 |
| | — |
| | 109,835 |
| Total assets | $ | 3,800,766 |
| | $ | 5,380,328 |
| | $ | 2,497,739 |
| | $ | 8,081,910 |
| | $ | (11,080,789 | ) | | $ | 8,679,954 |
| | | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS’ EQUITY | Current liabilities | |
| | |
| | |
| | |
| | |
| | |
| Accounts payable | $ | — |
| | $ | — |
| | $ | 727 |
| | $ | 345,401 |
| | $ | — |
| | $ | 346,128 |
| Short-term intercompany payables | 464,798 |
| | 132,007 |
| | 1,485,835 |
| | 159,322 |
| | (2,241,962 | ) | | — |
| Accrued expenses and other | — |
| | 59,490 |
| | 26,089 |
| | 873,702 |
| | (222 | ) | | 959,059 |
| Deferred revenues | — |
| | — |
| | — |
| | 127,782 |
| | — |
| | 127,782 |
| Current portion of long-term debt | — |
| | — |
| | 1,871 |
| | 94,968 |
| | — |
| | 96,839 |
| Deposits related to 2013 sale of towers | — |
| | — |
| | — |
| | 720,013 |
| | — |
| | 720,013 |
| Liabilities related to discontinued operations | — |
| | — |
| | — |
| | 36,769 |
| | — |
| | 36,769 |
| Total current liabilities | 464,798 |
| | 191,497 |
| | 1,514,522 |
| | 2,357,957 |
| | (2,242,184 | ) | | 2,286,590 |
| Long-term debt | 23 |
| | 2,729,321 |
| | 33,864 |
| | 2,933,424 |
| | — |
| | 5,696,632 |
| Deferred income tax liabilities | 3 |
| | 2,950 |
| | 15,384 |
| | 106,682 |
| | (16,028 | ) | | 108,991 |
| Long-term intercompany payables | 2,950,226 |
| | — |
| | 10,390 |
| | 929,990 |
| | (3,890,606 | ) | | — |
| Other long-term liabilities | 30,329 |
| | — |
| | 10,248 |
| | 186,451 |
| | — |
| | 227,028 |
| Liabilities related to discontinued operations | — |
| | — |
| | — |
| | 5,326 |
| | — |
| | 5,326 |
| Total liabilities | 3,445,379 |
| | 2,923,768 |
| | 1,584,408 |
| | 6,519,830 |
| | (6,148,818 | ) | | 8,324,567 |
| Total stockholders’ equity | 355,387 |
| | 2,456,560 |
| | 913,331 |
| | 1,562,080 |
| | (4,931,971 | ) | | 355,387 |
| Total liabilities and stockholders’ equity | $ | 3,800,766 |
| | $ | 5,380,328 |
| | $ | 2,497,739 |
| | $ | 8,081,910 |
| | $ | (11,080,789 | ) | | $ | 8,679,954 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS For the Year Ended December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Operating revenues | $ | — |
| | $ | — |
| | $ | 2,143 |
| | $ | 3,688,369 |
| | $ | (1,792 | ) | | $ | 3,688,720 |
| Operating expenses | |
| | |
| | |
| | |
| | |
| | |
| Cost of revenues (exclusive of depreciation and amortization included below) | — |
| | — |
| | — |
| | 2,282,326 |
| | — |
| | 2,282,326 |
| Selling, general and administrative | 2,145 |
| | 2,567 |
| | 140,119 |
| | 1,561,410 |
| | (7,183 | ) | | 1,699,058 |
| Impairment and restructuring charges | — |
| | — |
| | 63,393 |
| | 157,349 |
| | — |
| | 220,742 |
| Gain on sale of towers | — |
| | — |
| | — |
| | (74,631 | ) | | — |
| | (74,631 | ) | Management fee and other | — |
| | — |
| | (48,852 | ) | | 51,672 |
| | (2,820 | ) | | — |
| Depreciation and amortization | — |
| | — |
| | 19,309 |
| | 653,396 |
| | — |
| | 672,705 |
| | 2,145 |
| | 2,567 |
| | 173,969 |
| | 4,631,522 |
| | (10,003 | ) | | 4,800,200 |
| Operating loss | (2,145 | ) | | (2,567 | ) | | (171,826 | ) | | (943,153 | ) | | 8,211 |
| | (1,111,480 | ) | Other (expense) income | |
| | |
| | |
| | |
| | |
| | |
| Interest expense, net | (570 | ) | | (171,646 | ) | | (543 | ) | | (478,784 | ) | | 202,198 |
| | (449,345 | ) | Intercompany interest expense | (165,324 | ) | | — |
| | (50 | ) | | 165,374 |
| | — |
| | — |
| Interest income | 280 |
| | 1 |
| | 9 |
| | 66,135 |
| | — |
| | 66,425 |
| Intercompany interest income | 411 |
| | 200,467 |
| | 1,317 |
| | 3 |
| | (202,198 | ) | | — |
| Foreign currency transaction losses, net | — |
| | — |
| | — |
| | (130,499 | ) | | — |
| | (130,499 | ) | Equity in loss of affiliates | (1,805,438 | ) | | (1,593,607 | ) | | (1,589,367 | ) | | — |
| | 4,988,412 |
| | — |
| Other income (expense), net | 8,212 |
| | — |
| | (2 | ) | | (7,706 | ) | | (7,225 | ) | | (6,721 | ) | | (1,962,429 | ) | | (1,564,785 | ) | | (1,588,636 | ) | | (385,477 | ) | | 4,981,187 |
| | (520,140 | ) | Loss from continuing operations before reorganization items and income tax benefit (provision) | (1,964,574 | ) | | (1,567,352 | ) | | (1,760,462 | ) | | (1,328,630 | ) | | 4,989,398 |
| | (1,631,620 | ) | Reorganization items | (291 | ) | | (45,652 | ) | | (13,932 | ) | | (11,726 | ) | | — |
| | (71,601 | ) | Income tax benefit (provision) | 7,167 |
| | 6,747 |
| | (18,678 | ) | | (69,327 | ) | | — |
| | (74,091 | ) | Net loss from continuing operations | (1,957,698 | ) | | (1,606,257 | ) | | (1,793,072 | ) | | (1,409,683 | ) | | 4,989,398 |
| | (1,777,312 | ) | Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (179,686 | ) | | (700 | ) | | (180,386 | ) | Net loss | $ | (1,957,698 | ) | | $ | (1,606,257 | ) | | $ | (1,793,072 | ) | | $ | (1,589,369 | ) | | $ | 4,988,698 |
| | $ | (1,957,698 | ) | | | | | | | | | | | | | Comprehensive loss, net of income taxes | | | | | | | | | | | | Foreign currency translation adjustment | $ | (340,847 | ) | | $ | (342,432 | ) | | $ | (342,432 | ) | | $ | (342,432 | ) | | $ | 1,027,296 |
| | $ | (340,847 | ) | Reclassification adjustment for sale of Nextel Chile | (33,885 | ) | | (33,885 | ) | | (33,885 | ) | | (33,885 | ) | | 101,655 |
| | (33,885 | ) | Other | (544 | ) | | (544 | ) | | (544 | ) | | (544 | ) | | 1,632 |
| | (544 | ) | Other comprehensive loss | (375,276 | ) | | (376,861 | ) | | (376,861 | ) | | (376,861 | ) | | 1,130,583 |
| | (375,276 | ) | Net loss | (1,957,698 | ) | | (1,606,257 | ) | | (1,793,072 | ) | | (1,589,369 | ) | | 4,988,698 |
| | (1,957,698 | ) | Total comprehensive loss | $ | (2,332,974 | ) | | $ | (1,983,118 | ) | | $ | (2,169,933 | ) | | $ | (1,966,230 | ) | | $ | 6,119,281 |
| | $ | (2,332,974 | ) |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS For the Year Ended December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Operating revenues | $ | — |
| | $ | — |
| | $ | 3,114 |
| | $ | 4,711,525 |
| | $ | (3,072 | ) | | $ | 4,711,567 |
| Operating expenses | |
| | |
| | |
| | |
| | |
| | |
| Cost of revenues (exclusive of depreciation and amortization included below) | — |
| | — |
| | — |
| | 2,276,929 |
| | — |
| | 2,276,929 |
| Selling, general and administrative | 3,136 |
| | — |
| | 167,180 |
| | 1,779,719 |
| | (8,262 | ) | | 1,941,773 |
| Impairments and restructuring charges | — |
| | — |
| | 97,063 |
| | 71,480 |
| | — |
| | 168,543 |
| Management fee and other | — |
| | — |
| | (75,116 | ) | | 106,264 |
| | (31,148 | ) | | — |
| Depreciation and amortization | — |
| | — |
| | 28,055 |
| | 664,872 |
| | — |
| | 692,927 |
| | 3,136 |
| | — |
| | 217,182 |
| | 4,899,264 |
| | (39,410 | ) | | 5,080,172 |
| Operating loss | (3,136 | ) | | — |
| | (214,068 | ) | | (187,739 | ) | | 36,338 |
| | (368,605 | ) | Other (expense) income | |
| | |
| | |
| | |
| | |
| | |
| Interest expense, net | (562 | ) | | (240,132 | ) | | (1,379 | ) | | (284,457 | ) | | — |
| | (526,530 | ) | Intercompany interest expense | (234,799 | ) | | — |
| | (59 | ) | | (51,740 | ) | | 286,598 |
| | — |
| Interest income | 913 |
| | — |
| | 9 |
| | 42,405 |
| | — |
| | 43,327 |
| Intercompany interest income | 1,340 |
| | 284,709 |
| | 549 |
| | — |
| | (286,598 | ) | | — |
| Foreign currency transaction losses, net | — |
| | — |
| | — |
| | (123,369 | ) | | — |
| | (123,369 | ) | Equity in loss of affiliates | (1,473,856 | ) | | (1,274,274 | ) | | (1,269,438 | ) | | — |
| | 4,017,568 |
| | — |
| Other income (expense), net | 36,017 |
| | — |
| | 612 |
| | (13,150 | ) | | (36,338 | ) | | (12,859 | ) | | (1,670,947 | ) | | (1,229,697 | ) | | (1,269,706 | ) | | (430,311 | ) | | 3,981,230 |
| | (619,431 | ) | Loss from continuing operations before income tax benefit (provision) | (1,674,083 | ) | | (1,229,697 | ) | | (1,483,774 | ) | | (618,050 | ) | | 4,017,568 |
| | (988,036 | ) | Income tax benefit (provision) | 24,484 |
| | (16,548 | ) | | (18,111 | ) | | (435,877 | ) | | — |
| | (446,052 | ) | Net loss from continuing operations | (1,649,599 | ) | | (1,246,245 | ) | | (1,501,885 | ) | | (1,053,927 | ) | | 4,017,568 |
| | (1,434,088 | ) | Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (215,511 | ) | | — |
| | (215,511 | ) | Net loss | $ | (1,649,599 | ) | | $ | (1,246,245 | ) | | $ | (1,501,885 | ) | | $ | (1,269,438 | ) | | $ | 4,017,568 |
| | $ | (1,649,599 | ) | | | | | | | | | | | | | Comprehensive loss, net of income taxes | | | | | | | | | | | | Foreign currency translation adjustment | $ | (334,893 | ) | | $ | (335,183 | ) | | $ | (335,183 | ) | | $ | (335,183 | ) | | $ | 1,005,549 |
| | $ | (334,893 | ) | Other | 2,257 |
| | 2,257 |
| | 2,257 |
| | 2,257 |
| | (6,771 | ) | | 2,257 |
| Other comprehensive loss | (332,636 | ) | | (332,926 | ) | | (332,926 | ) | | (332,926 | ) | | 998,778 |
| | (332,636 | ) | Net loss | (1,649,599 | ) | | (1,246,245 | ) | | (1,501,885 | ) | | (1,269,438 | ) | | 4,017,568 |
| | (1,649,599 | ) | Total comprehensive loss | $ | (1,982,235 | ) | | $ | (1,579,171 | ) | | $ | (1,834,811 | ) | | $ | (1,602,364 | ) | | $ | 5,016,346 |
| | $ | (1,982,235 | ) |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME For the Year Ended December 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Operating revenues | $ | — |
| | $ | — |
| | $ | 3,071 |
| | $ | 5,694,718 |
| | $ | (4,554 | ) | | $ | 5,693,235 |
| Operating expenses | |
| | |
| | |
| | |
| | |
| | |
| Cost of revenues (exclusive of depreciation and amortization included below) | — |
| | — |
| | 73 |
| | 2,303,419 |
| | (1,483 | ) | | 2,302,009 |
| Selling, general and administrative | 3,180 |
| | 2 |
| | 309,680 |
| | 1,962,033 |
| | (12,973 | ) | | 2,261,922 |
| Impairment and restructuring charges | — |
| | — |
| | — |
| | 30,401 |
| | — |
| | 30,401 |
| Management fee and other | — |
| | — |
| | (126,971 | ) | | 225,202 |
| | (98,231 | ) | | — |
| Depreciation and amortization | — |
| | — |
| | 36,079 |
| | 569,082 |
| | — |
| | 605,161 |
| | 3,180 |
| | 2 |
| | 218,861 |
| | 5,090,137 |
| | (112,687 | ) | | 5,199,493 |
| Operating (loss) income | (3,180 | ) | | (2 | ) | | (215,790 | ) | | 604,581 |
| | 108,133 |
| | 493,742 |
| Other (expense) income | |
| | |
| | |
| | |
| | |
| | |
| Interest expense, net | (23,646 | ) | | (229,652 | ) | | (2,072 | ) | | (104,425 | ) | | — |
| | (359,795 | ) | Intercompany interest expense | (215,501 | ) | | — |
| | — |
| | (84,202 | ) | | 299,703 |
| | — |
| Interest income | 15,292 |
| | 24,181 |
| | 801 |
| | (6,489 | ) | | — |
| | 33,785 |
| Intercompany interest income | 1 |
| | 261,352 |
| | 186 |
| | 38,164 |
| | (299,703 | ) | | — |
| Foreign currency transaction losses | — |
| | — |
| | — |
| | (63,330 | ) | | — |
| | (63,330 | ) | Equity in loss of affiliates | (639,902 | ) | | (443,294 | ) | | (434,443 | ) | | — |
| | 1,517,639 |
| | — |
| Other income (expense), net | 86,324 |
| | — |
| | 101 |
| | (6,389 | ) | | (108,133 | ) | | (28,097 | ) | | (777,432 | ) | | (387,413 | ) | | (435,427 | ) | | (226,671 | ) | | 1,409,506 |
| | (417,437 | ) | (Loss) income before income tax benefit (provision) | (780,612 | ) | | (387,415 | ) | | (651,217 | ) | | 377,910 |
| | 1,517,639 |
| | 76,305 |
| Income tax benefit (provision) | 15,363 |
| | (19,731 | ) | | (24,833 | ) | | (128,943 | ) | | — |
| | (158,144 | ) | Net (loss) income from continuing operations | (765,249 | ) | | (407,146 | ) | | (676,050 | ) | | 248,967 |
| | 1,517,639 |
| | (81,839 | ) | Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (683,410 | ) | | — |
| | (683,410 | ) | Net loss | $ | (765,249 | ) | | $ | (407,146 | ) | | $ | (676,050 | ) | | $ | (434,443 | ) | | $ | 1,517,639 |
| | $ | (765,249 | ) | | | | | | | | | | | | | Comprehensive loss, net of income taxes | | | | | | | | | | | | Foreign currency translation adjustment | $ | (97,589 | ) | | $ | (96,593 | ) | | $ | (96,593 | ) | | $ | (96,593 | ) | | $ | 289,779 |
| | $ | (97,589 | ) | Other | (1,802 | ) | | (1,802 | ) | | (1,802 | ) | | (1,802 | ) | | 5,406 |
| | (1,802 | ) | Other comprehensive loss | (99,391 | ) | | (98,395 | ) | | (98,395 | ) | | (98,395 | ) | | 295,185 |
| | (99,391 | ) | Net loss | (765,249 | ) | | (407,146 | ) | | (676,050 | ) | | (434,443 | ) | | 1,517,639 |
| | (765,249 | ) | Total comprehensive loss | $ | (864,640 | ) | | $ | (505,541 | ) | | $ | (774,445 | ) | | $ | (532,838 | ) | | $ | 1,812,824 |
| | $ | (864,640 | ) |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Cash flows from operating activities: | |
| | |
| | |
| | |
| | |
| | |
| Net loss | $ | (1,957,698 | ) | | $ | (1,606,257 | ) | | $ | (1,793,072 | ) | | $ | (1,589,369 | ) | | $ | 4,988,698 |
| | $ | (1,957,698 | ) | Adjustments to reconcile net loss to net cash (used in) provided by operating activities | 1,861,773 |
| | 1,631,873 |
| | 1,640,357 |
| | 1,246,260 |
| | (4,988,698 | ) | | 1,391,565 |
| Total operating cash (used in) provided by continuing operations | (95,925 | ) | | 25,616 |
| | (152,715 | ) | | (343,109 | ) | | — |
| | (566,133 | ) | Total operating cash used in discontinued operations | — |
| | — |
| | — |
| | (62,583 | ) | | — |
| | (62,583 | ) | Net cash (used in) provided by operating activities | (95,925 | ) | | 25,616 |
| | (152,715 | ) | | (405,692 | ) | | — |
| | (628,716 | ) | Cash flows from investing activities: | |
| | |
| | |
| | |
| | |
| | |
| Capital expenditures | — |
| | — |
| | (7,012 | ) | | (605,149 | ) | | — |
| | (612,161 | ) | Purchases of investments | — |
| | — |
| | — |
| | (1,637,913 | ) | | — |
| | (1,637,913 | ) | Proceeds from sales of investments | — |
| | — |
| | — |
| | 2,092,459 |
| | — |
| | 2,092,459 |
| Changes in restricted cash and escrow accounts | 25,300 |
| | — |
| | — |
| | (163,127 | ) | | — |
| | (137,827 | ) | Investment in subsidiaries | (180,712 | ) | | (446 | ) | | — |
| | — |
| | 181,158 |
| | — |
| Other, net | 1,856 |
| | — |
| | 32,390 |
| | (70,488 | ) | | (1,856 | ) | | (38,098 | ) | Total investing cash (used in) provided by continuing operations | (153,556 | ) | | (446 | ) | | 25,378 |
| | (384,218 | ) | | 179,302 |
| | (333,540 | ) | Total investing cash used in discontinued operations | — |
| | — |
| | — |
| | (13,998 | ) | | — |
| | (13,998 | ) | Net cash (used in) provided by investing activities | (153,556 | ) | | (446 | ) | | 25,378 |
| | (398,216 | ) | | 179,302 |
| | (347,538 | ) | Cash flows from financing activities: | |
| | |
| | |
| | |
| | |
| | |
| Borrowings under equipment financing and other | — |
| | — |
| | — |
| | 14,590 |
| | — |
| | 14,590 |
| Repayments under capital leases | — |
| | — |
| | (42,414 | ) | | (6,506 | ) | | — |
| | (48,920 | ) | Repayments under equipment financing and other borrowings | — |
| | — |
| | — |
| | (39,243 | ) | | — |
| | (39,243 | ) | Payment of line of credit | — |
| | — |
| | — |
| | (54,067 | ) | | — |
| | (54,067 | ) | Capital contributions | — |
| | 20 |
| | 180,525 |
| | 613 |
| | (181,158 | ) | | — |
| Other, net | (86 | ) | | (20 | ) | | (1,855 | ) | | (527 | ) | | 1,856 |
| | (632 | ) | Net cash (used in) provided by financing activities | (86 | ) | | — |
| | 136,256 |
| | (85,140 | ) | | (179,302 | ) | | (128,272 | ) | Effect of exchange rate changes on cash and cash equivalents | — |
| | — |
| | — |
| | (55,657 | ) | | — |
| | (55,657 | ) | Change in cash and cash equivalents related to discontinued operations | — |
| | — |
| | — |
| | 3,448 |
| | — |
| | 3,448 |
| Net (decrease) increase in cash and cash equivalents | (249,567 | ) | | 25,170 |
| | 8,919 |
| | (941,257 | ) | | — |
| | (1,156,735 | ) | Cash and cash equivalents, beginning of year | 356,314 |
| | — |
| | 5,586 |
| | 1,368,435 |
| | — |
| | 1,730,335 |
| Cash and cash equivalents, end of year | $ | 106,747 |
| | $ | 25,170 |
| | $ | 14,505 |
| | $ | 427,178 |
| | $ | — |
| | $ | 573,600 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Cash flows from operating activities: | |
| | |
| | |
| | |
| | |
| | |
| Net loss | $ | (1,649,599 | ) | | $ | (1,246,245 | ) | | $ | (1,501,885 | ) | | $ | (1,269,438 | ) | | $ | 4,017,568 |
| | $ | (1,649,599 | ) | Adjustments to reconcile net loss to net cash (used in) provided by operating activities | 1,477,932 |
| | 1,298,129 |
| | 1,340,701 |
| | 1,571,997 |
| | (4,067,478 | ) | | 1,621,281 |
| Total operating cash (used in) provided by continuing operations | (171,667 | ) | | 51,884 |
| | (161,184 | ) | | 302,559 |
| | (49,910 | ) | | (28,318 | ) | Total operating cash provided by (used in) discontinued operations | — |
| | — |
| | 1,440 |
| | (165,573 | ) | | — |
| | (164,133 | ) | Net cash (used in) provided by operating activities | (171,667 | ) | | 51,884 |
| | (159,744 | ) | | 136,986 |
| | (49,910 | ) | | (192,451 | ) | Cash flows from investing activities: | |
| | |
| | |
| | |
| | |
| | |
| Capital expenditures | — |
| | — |
| | (14,232 | ) | | (606,663 | ) | | — |
| | (620,895 | ) | Purchases of licenses | — |
| | — |
| | — |
| | (53,066 | ) | | — |
| | (53,066 | ) | Purchases of investments | — |
| | — |
| | — |
| | (2,360,529 | ) | | — |
| | (2,360,529 | ) | Proceeds from sales of investments | — |
| | — |
| | — |
| | 1,942,886 |
| | — |
| | 1,942,886 |
| Proceeds from 2013 sale of towers, net | — |
| | — |
| | — |
| | 721,404 |
| | — |
| | 721,404 |
| Transfers to restricted cash | (15,050 | ) | | — |
| | — |
| | (26,659 | ) | | — |
| | (41,709 | ) | Transfers from restricted cash | — |
| | — |
| | — |
| | 2,273 |
| | — |
| | 2,273 |
| Investment in subsidiaries | (191,526 | ) | | (1,974 | ) | | (1,260 | ) | | — |
| | 194,760 |
| | — |
| Other, net | 545 |
| | — |
| | — |
| | 191 |
| | (529 | ) | | 207 |
| Total investing cash used in continuing operations | (206,031 | ) | | (1,974 | ) | | (15,492 | ) | | (380,163 | ) | | 194,231 |
| | (409,429 | ) | Total investing cash provided by discontinued operations | — |
| | — |
| | — |
| | 231,817 |
| | — |
| | 231,817 |
| Net cash used in investing activities | (206,031 | ) | | (1,974 | ) | | (15,492 | ) | | (148,346 | ) | | 194,231 |
| | (177,612 | ) | Cash flows from financing activities: | |
| | |
| | |
| | |
| | |
| | |
| Gross proceeds from issuance of senior notes | — |
| | — |
| | — |
| | 1,600,000 |
| | — |
| | 1,600,000 |
| Borrowings under equipment financing and other | — |
| | — |
| | — |
| | 145,077 |
| | — |
| | 145,077 |
| Repayments under syndicated loan facilities | — |
| | — |
| | — |
| | (323,919 | ) | | — |
| | (323,919 | ) | Repayments of import financing | — |
| | — |
| | — |
| | (37,422 | ) | | — |
| | (37,422 | ) | Repayments under tower financing and other borrowings | — |
| | — |
| | (16,608 | ) | | (46,887 | ) | | — |
| | (63,495 | ) | Payment of line of credit | — |
| | — |
| | — |
| | (362,735 | ) | | — |
| | (362,735 | ) | Intercompany dividends | — |
| | (49,910 | ) | | — |
| | — |
| | 49,910 |
| | — |
| Capital contributions | — |
| | 20 |
| | 191,506 |
| | 3,234 |
| | (194,760 | ) | | — |
| Other, net | (1,010 | ) | | (20 | ) | | (545 | ) | | (26,904 | ) | | 529 |
| | (27,950 | ) | Total financing cash (used in) provided by continuing operations | (1,010 | ) | | (49,910 | ) | | 174,353 |
| | 950,444 |
| | (144,321 | ) | | 929,556 |
| Total financing cash used in discontinued operations | — |
| | — |
| | — |
| | (152,965 | ) | | — |
| | (152,965 | ) | Net cash (used in) provided by financing activities | (1,010 | ) | | (49,910 | ) | | 174,353 |
| | 797,479 |
| | (144,321 | ) | | 776,591 |
| Effect of exchange rate changes on cash and cash equivalents | — |
| | — |
| | — |
| | (56,236 | ) | | — |
| | (56,236 | ) | Change in cash and cash equivalents related to discontinued operations | — |
| | — |
| | — |
| | 15,090 |
| | — |
| | 15,090 |
| Net (decrease) increase in cash and cash equivalents | (378,708 | ) | | — |
| | (883 | ) | | 744,973 |
| | — |
| | 365,382 |
| Cash and cash equivalents, beginning of year | 735,022 |
| | — |
| | 6,469 |
| | 623,462 |
| | — |
| | 1,364,953 |
| Cash and cash equivalents, end of year | $ | 356,314 |
| | $ | — |
| | $ | 5,586 |
| | $ | 1,368,435 |
| | $ | — |
| | $ | 1,730,335 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | NII Holdings, Inc. (Parent and Guarantor) | | NII Capital Corp. (Issuer) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated | | (in thousands) | Cash flows from operating activities: | |
| | |
| | |
| | |
| | |
| | |
| Net loss | $ | (765,249 | ) | | $ | (407,146 | ) | | $ | (676,050 | ) | | $ | (434,443 | ) | | $ | 1,517,639 |
| | $ | (765,249 | ) | Adjustments to reconcile net loss to net cash provided by (used in) operating activities | 768,542 |
| | 567,599 |
| | 564,974 |
| | 1,296,998 |
| | (1,869,145 | ) | | 1,328,968 |
| Total operating cash provided by (used in) continuing operations | 3,293 |
| | 160,453 |
| | (111,076 | ) | | 862,555 |
| | (351,506 | ) | | 563,719 |
| Total operating cash provided by (used in) discontinued operations | — |
| | — |
| | 2,142 |
| | (212,678 | ) | | — |
| | (210,536 | ) | Net cash provided by (used in) operating activities | 3,293 |
| | 160,453 |
| | (108,934 | ) | | 649,877 |
| | (351,506 | ) | | 353,183 |
| Cash flows from investing activities: | |
| | |
| | |
| | |
| | |
| | |
| Capital expenditures | — |
| | — |
| | (92,574 | ) | | (861,308 | ) | | — |
| | (953,882 | ) | Purchases of licenses | — |
| | — |
| | — |
| | (100,185 | ) | | — |
| | (100,185 | ) | Purchases of investments | — |
| | — |
| | — |
| | (1,678,918 | ) | | — |
| | (1,678,918 | ) | Proceeds from sales of investments | 224,330 |
| | — |
| | — |
| | 1,589,453 |
| | — |
| | 1,813,783 |
| Transfers to restricted cash | — |
| | — |
| | — |
| | (11,969 | ) | | — |
| | (11,969 | ) | Transfers from restricted cash | — |
| | — |
| | — |
| | 7,882 |
| | — |
| | 7,882 |
| Intercompany borrowings | — |
| | — |
| | — |
| | (300 | ) | | 300 |
| | — |
| Investment in subsidiaries | (318,949 | ) | | (9,445 | ) | | — |
| | — |
| | 328,394 |
| | — |
| Other, net | — |
| | — |
| | — |
| | 1,018 |
| | — |
| | 1,018 |
| Total investing cash used in continuing operations | (94,619 | ) | | (9,445 | ) | | (92,574 | ) | | (1,054,327 | ) | | 328,694 |
| | (922,271 | ) | Total investing cash used in discontinued operations | — |
| | — |
| | — |
| | (132,889 | ) | | — |
| | (132,889 | ) | Net cash used in investing activities | (94,619 | ) | | (9,445 | ) | | (92,574 | ) | | (1,187,216 | ) | | 328,694 |
| | (1,055,160 | ) | Cash flows from financing activities: | |
| | |
| | |
| | |
| | |
| | |
| Borrowings under line of credit | — |
| | — |
| | — |
| | 212,770 |
| | — |
| | 212,770 |
| Borrowings under equipment financing | — |
| | — |
| | — |
| | 233,776 |
| | — |
| | 233,776 |
| Repayments under syndicated loan facilities | — |
| | — |
| | — |
| | (97,403 | ) | | — |
| | (97,403 | ) | Repayments of import financing | — |
| | — |
| | — |
| | (175,923 | ) | | — |
| | (175,923 | ) | Capital contributions | — |
| | — |
| | 318,949 |
| | 9,445 |
| | (328,394 | ) | | — |
| Proceeds from intercompany long-term loan | — |
| | — |
| | 300 |
| | — |
| | (300 | ) | | — |
| Purchases of convertible notes | (212,782 | ) | | — |
| | — |
| | — |
| | — |
| | (212,782 | ) | Intercompany dividends | — |
| | (151,186 | ) | | (100,320 | ) | | (100,000 | ) | | 351,506 |
| | — |
| Other, net | (3,228 | ) | | (778 | ) | | (19,368 | ) | | (101,349 | ) | | — |
| | (124,723 | ) | Total financing cash (used in) provided by continuing operations | (216,010 | ) | | (151,964 | ) | | 199,561 |
| | (18,684 | ) | | 22,812 |
| | (164,285 | ) | Total financing cash used in discontinued operations | — |
| | — |
| | — |
| | (74,010 | ) | | — |
| | (74,010 | ) | Net cash (used in) provided by financing activities | (216,010 | ) | | (151,964 | ) | | 199,561 |
| | (92,694 | ) | | 22,812 |
| | (238,295 | ) | Effect of exchange rate changes on cash and cash equivalents | — |
| | — |
| | — |
| | 844 |
| | — |
| | 844 |
| Change in cash and cash equivalents related to discontinued operations | — |
| | — |
| | — |
| | 22,226 |
| | — |
| | 22,226 |
| Net decrease in cash and cash equivalents | (307,336 | ) | | (956 | ) | | (1,947 | ) | | (606,963 | ) | | — |
| | (917,202 | ) | Cash and cash equivalents, beginning of year | 1,042,358 |
| | 956 |
| | 8,416 |
| | 1,230,425 |
| | — |
| | 2,282,155 |
| Cash and cash equivalents, end of year | $ | 735,022 |
| | $ | — |
| | $ | 6,469 |
| | $ | 623,462 |
| | $ | — |
| | $ | 1,364,953 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Subsequent Event
On January 26, 2015, NII Holdings, Inc. and certain of its subsidiaries entered into a purchase and sale agreement with an indirect subsidiary of AT&T for the sale of Nextel Mexico. The purchase agreement provides for a purchase price of $1.875 billion in cash, less Nextel Mexico's outstanding debt, net of its cash balances, on the closing date and subject to other specified adjustments.
The purchase agreement provides that approximately $32.0 million of the purchase price will be deposited and held in escrow to secure specified obligations of AT&T under the purchase agreement. The purchase agreement also provides that $187.5 million of the purchase price will be held in escrow for two years in case of breaches by Nextel Mexico of representations, warranties and covenants.
The sale transaction is being implemented pursuant to Section 363 of the Bankruptcy Code and is subject to higher or better offers in accordance with bidding procedures approved by, and under the supervision of, the Bankruptcy Court. AT&T may terminate the purchase agreement if the hearing before the Bankruptcy Court with respect to the sale does not occur by March 23, 2015. The successful bidder in the auction process contemplated by the bidding procedures will be required to complete the transactions contemplated by the purchase agreement in accordance with its terms. In addition, if AT&T is not the successful bidder, NII Holdings will be required to pay AT&T a termination fee equal to approximately $32.0 million, reimburse up to $10.0 million of AT&T's expenses and return the deposit.
Completion of the sale is subject to several conditions, including: (i) the Bankruptcy Court having entered all appropriate orders; (ii) obtaining all required governmental approvals; (iii) the absence of a material adverse effect on Nextel Mexico; and (iv) certain other customary conditions. Assuming the successful sale of Nextel Mexico, we plan to focus our financial and other resources on our core operation in Brazil. We expect the sale transaction to be completed by mid-2015.
Pending completion of the transactions contemplated by the purchase agreement, Nextel Mexico has agreed to (i) conduct its business in the ordinary course consistent with past practice; and (ii) use commercially reasonable efforts to maintain and preserve intact its business organization and preserve intact certain business relationships and relationships with applicable regulatory authorities.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NII HOLDINGS, INC. CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) (in thousands)
| | | | | | | | | | December 31, 2014 | | December 31, 2013 | ASSETS | Current assets | | | | Cash and cash equivalents | $ | 106,747 |
| | $ | 356,314 |
| Short-term intercompany receivables | 27,803 |
| | 31,803 |
| Prepaid expenses and other | 7,942 |
| | 6,832 |
| Total current assets | 142,492 |
| | 394,949 |
| Investments in and advances to affiliates | — |
| | 1,867,753 |
| Intangible assets, net | 18,000 |
| | 18,000 |
| Deferred income taxes, net | — |
| | 16,025 |
| Long-term intercompany receivables | 1,393,109 |
| | 1,474,658 |
| Other assets | 947 |
| | 29,381 |
| Total assets | $ | 1,554,548 |
| | $ | 3,800,766 |
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | | | | | Liabilities not subject to compromise | | | | Current liabilities | | | | Short-term intercompany payables | $ | — |
| | $ | 464,798 |
| Total current liabilities | — |
| | 464,798 |
| Long-term intercompany payables | — |
| | 2,950,226 |
| Other long-term liabilities | 1,629 |
| | 30,355 |
| Total liabilities not subject to compromise | 1,629 |
| | 3,445,379 |
| Liabilities subject to compromise | 30,584 |
| | — |
| Intercompany liabilities subject to compromise | 3,487,099 |
| | — |
| Total liabilities subject to compromise | 3,517,683 |
| | — |
| Total stockholders’ (deficit) equity | (1,964,764 | ) | | 355,387 |
| Total liabilities and stockholders’ (deficit) equity | $ | 1,554,548 |
| | $ | 3,800,766 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NII HOLDINGS, INC. CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (PARENT COMPANY ONLY) (in thousands)
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Operating revenues | $ | — |
| | $ | — |
| | $ | — |
| Operating expenses | | | | | | Selling, general and administrative | 2,145 |
| | 3,136 |
| | 3,180 |
| | 2,145 |
| | 3,136 |
| | 3,180 |
| Operating loss | (2,145 | ) | | (3,136 | ) | | (3,180 | ) | Other (expense) income | |
| | |
| | |
| Interest expense, net | (570 | ) | | (562 | ) | | (23,646 | ) | Intercompany interest expense | (165,324 | ) | | (234,799 | ) | | (215,501 | ) | Interest income | 280 |
| | 913 |
| | 15,292 |
| Intercompany interest income | 411 |
| | 1,340 |
| | 1 |
| Equity in loss of affiliates | (1,805,438 | ) | | (1,473,856 | ) | | (639,902 | ) | Other income, net | 8,212 |
| | 36,017 |
| | 86,324 |
| | (1,962,429 | ) | | (1,670,947 | ) | | (777,432 | ) | Loss before reorganization items and income tax benefit | (1,964,574 | ) | | (1,674,083 | ) | | (780,612 | ) | Reorganization items | (291 | ) | | — |
| | — |
| Income tax benefit | 7,167 |
| | 24,484 |
| | 15,363 |
| Net loss | $ | (1,957,698 | ) | | $ | (1,649,599 | ) | | $ | (765,249 | ) | | | | | | | Comprehensive loss, net of income taxes | | | | | | Foreign currency translation adjustment | $ | (340,847 | ) | | $ | (334,893 | ) | | $ | (97,589 | ) | Reclassification adjustment for sale of Nextel Chile | (33,885 | ) | | — |
| | — |
| Other | (544 | ) | | 2,257 |
| | (1,802 | ) | Other comprehensive loss | (375,276 | ) | | (332,636 | ) | | (99,391 | ) | Net loss | (1,957,698 | ) | | (1,649,599 | ) | | (765,249 | ) | Total comprehensive loss | $ | (2,332,974 | ) | | $ | (1,982,235 | ) | | $ | (864,640 | ) |
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NII HOLDINGS, INC. CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in thousands)
| | | | | | | | | | | | | | Year Ended December 31, | | 2014 | | 2013 | | 2012 | Cash flows from operating activities: | |
| | | | |
| Net loss | $ | (1,957,698 | ) | | $ | (1,649,599 | ) | | $ | (765,249 | ) | Adjustments to reconcile net loss to net cash (used in) provided by operating activities | 1,861,773 |
| | 1,477,932 |
| | 768,542 |
| Net cash (used in) provided by operating activities | (95,925 | ) | | (171,667 | ) | | 3,293 |
| Cash flows from investing activities: | |
| | |
| | |
| Proceeds from sales of long-term and short-term investments | — |
| | — |
| | 224,330 |
| Changes in restricted cash and escrow accounts | 25,300 |
| | (15,050 | ) | | — |
| Investments in subsidiaries | (180,712 | ) | | (191,526 | ) | | (318,949 | ) | Other, net | 1,856 |
| | 545 |
| | — |
| Net cash used in investing activities | (153,556 | ) | | (206,031 | ) | | (94,619 | ) | Cash flows from financing activities: | |
| | |
| | |
| Purchases of convertible notes | — |
| | — |
| | (212,782 | ) | Other, net | (86 | ) | | (1,010 | ) | | (3,228 | ) | Net cash used in financing activities | (86 | ) | | (1,010 | ) | | (216,010 | ) | Net decrease in cash and cash equivalents | (249,567 | ) | | (378,708 | ) | | (307,336 | ) | Cash and cash equivalents, beginning of year | 356,314 |
| | 735,022 |
| | 1,042,358 |
| Cash and cash equivalents, end of year | $ | 106,747 |
| | $ | 356,314 |
| | $ | 735,022 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES SCHEDULE I — NOTES TO CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
1. Basis of Presentation
NII Holdings, Inc., or NII Holdings, our parent company, is a holding company that conducts substantially all of its business operations through its operating subsidiaries. See Note 1 to our consolidated financial statements for more information. As specified in the indenture surrounding our NIIT senior notes and in certain of our operating companies' local financing agreements, there are restrictions on the parent company's ability to obtain funds from certain of its subsidiaries through dividends, loans or advances. Substantially all of the consolidated net assets of NII Holdings and its subsidiaries are restricted. See Note 9 to our consolidated financial statements for more information. These condensed financial statements have been presented on a "parent company only" basis. In accordance with this parent company only presentation, we have presented our parent company's investments in consolidated subsidiaries under the equity method. These condensed parent company only financial statements should be read in conjunction with our consolidated financial statements included elsewhere herein.
2. Dividends From Subsidiaries
NII Holdings' consolidated subsidiaries did not declare any dividends to the parent company during the year ended December 31, 2014. For the years ended December 31, 2013 and 2012, NII Holdings' consolidated subsidiaries declared and paid $49.9 million and $151.2 million, respectively, in cash dividends to the parent company.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (in thousands) | | | | | | | | | | | | | | | | | | Balance at Beginning of Period | | Charged to Costs and Expenses | | Deductions and Other Adjustments (1) | | Balance at End of Period | Year Ended December 31, 2014 | |
| | |
| | |
| | |
| Allowance for doubtful accounts | $ | 54,531 |
| | $ | 114,784 |
| | $ | (114,300 | ) | | $ | 55,015 |
| Valuation allowance for deferred tax assets | $ | 4,335,913 |
| | $ | 610,467 |
| | $ | (77,876 | ) | | $ | 4,868,504 |
| Year Ended December 31, 2013 | |
| | |
| | |
| | |
| Allowance for doubtful accounts | $ | 104,897 |
| | $ | 111,460 |
| | $ | (161,826 | ) | | $ | 54,531 |
| Valuation allowance for deferred tax assets | $ | 330,739 |
| | $ | 4,052,410 |
| | $ | (47,236 | ) | | $ | 4,335,913 |
| Year Ended December 31, 2012 | |
| | |
| | |
| | |
| Allowance for doubtful accounts | $ | 62,030 |
| | $ | 214,454 |
| | $ | (171,587 | ) | | $ | 104,897 |
| Valuation allowance for deferred tax assets | $ | 180,545 |
| | $ | 151,286 |
| | $ | (1,092 | ) | | $ | 330,739 |
|
| | (1) | Includes the impact of foreign currency translation adjustments. |
EXHIBIT INDEX For periods before December 21, 2001, references to NII Holdings refer to Nextel International, Inc. the former name of NII Holdings. All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by NII Holdings, file number 0-32421, unless otherwise indicated. | | | | | | | | | | | | Exhibit Number | | Exhibit Description | | Form | | Exhibit | | Incorporated by Reference Filing Date | | Filed Herewith | 3.1 | | Amended and Restated Certificate of Incorporation of NII Holdings | | 8-K | | 3.1 | | 05/23/13 | | | 3.2 | | Fourth Amended and Restated Bylaws of NII Holdings | | 8-K | | 3.2 | | 05/23/13 | | | 4.1 | | Indenture governing our 10% senior notes due 2016, dated as of August 18, 2009, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 08/18/09 | | | 4.2 | | Indenture governing our 8.875% senior notes due 2019, dated as of December 15, 2009, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 12/15/09 | | | 4.3 | | Indenture governing our 7.625% senior notes due 2021, dated as of March 29, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 03/29/11 | | | 4.4 | | First Supplemental Indenture to the Indenture governing our 7.625% senior notes due 2021, dated as of December 8, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.2 | | 12/08/11 | | | 4.5 | | Indenture governing our 11.375% senior notes due 2019, dated as of February 19, 2013, by and between NII International Telecom S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.1 | | 02/19/13 | | | 4.6 | | Registration Rights Agreement related to our 11.375% senior notes due 2019, dated as of February 19, 2013, among NII International Telecom S.C.A., NII Holdings, Inc. and the initial purchasers | | 8-K | | 4.2 | | 02/19/13 | | | 4.7 | | First Supplemental Indenture governing our 11.375% senior notes due 2019, dated April 15, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.2 | | 04/15/13 | | | 4.8 | | Registration Rights Agreement related to our 11.375% senior notes due 2019, dated April 15, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and J.P. Morgan Securities LLC | | 8-K | | 4.3 | | 04/15/13 | | | 4.9 | | Indenture governing our 7.875% senior notes due 2019, dated May 23, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.1 | | 05/23/13 | | | 4.10 | | Registration Rights Agreement related to our 7.875% senior notes due 2019, dated May 23, 2013, among NII International Telecom S.C.A., NII Holdings, Inc. and the initial purchasers named therein | | 8-K | | 4.2 | | 05/23/13 | | | 10.1 | | Subscriber Unit Purchase Agreement, dated as of January 1, 2005, by and between NII Holdings and Motorola, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-K | | 10.1 | | 03/22/06 | | | 10.2 | | Amendment Number Three to the Subscriber Unit Purchase Agreement, dated September 28, 2006, by and between NII Holdings and Motorola, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-Q | | 10.1 | | 11/06/06 | | | 10.3 | | Form of iDEN Infrastructure Installation Services Agreement, effective June 30, 2000, by and between NII Holdings, Motorola, Inc. and each of Nextel, Telecomunicações Ltda., Nextel Argentina S.R.L., Nextel de Mexico, S.A. de C.V., Nextel del Peru, S.A. and Nextel Communications Philippines, Inc. | | 8-K | | 10.1 | | 12/22/00 | | | 10.4 | | Form of iDEN Infrastructure Equipment Supply Agreement, effective June 30, 2000, by and between NII Holdings, Motorola, Inc. and each of Nextel Telecomunicações Ltda., Nextel Argentina S.R.L., Nextel de Mexico, S.A. de C.V., Nextel del Peru, S.A. and Nextel Communications Philippines, Inc. | | 8-K | | 10.2 | | 12/22/00 | | |
| | | | | | | | | | | | Exhibit Number | | Exhibit Description | | Form | | Exhibit | | Incorporated by Reference Filing Date | | Filed Herewith | 3.1 | | Amended and Restated Certificate of Incorporation of NII Holdings | | 8-K | | 3.1 | | 05/23/13 | | | 3.2 | | Fourth Amended and Restated Bylaws of NII Holdings | | 8-K | | 3.2 | | 05/23/13 | | | 4.1 | | Indenture governing our 10% senior notes due 2016, dated as of August 18, 2009, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 08/18/09 | | | 4.2 | | Indenture governing our 8.875% senior notes due 2019, dated as of December 15, 2009, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 12/15/09 | | | 4.3 | | Indenture governing our 7.625% senior notes due 2021, dated as of March 29, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.1 | | 03/29/11 | | | 4.4 | | First Supplemental Indenture to the Indenture governing our 7.625% senior notes due 2021, dated as of December 8, 2011, by and between NII Holdings and Wilmington Trust Company, as Indenture Trustee | | 8-K | | 4.2 | | 12/08/11 | | | 4.5 | | Indenture governing our 11.375% senior notes due 2019, dated as of February 19, 2013, by and between NII International Telecom S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.1 | | 02/19/13 | | | 4.6 | | Registration Rights Agreement related to our 11.375% senior notes due 2019, dated as of February 19, 2013, among NII International Telecom S.C.A., NII Holdings, Inc. and the initial purchasers | | 8-K | | 4.2 | | 02/19/13 | | | 4.7 | | First Supplemental Indenture governing our 11.375% senior notes due 2019, dated April 15, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.2 | | 04/15/13 | | | 4.8 | | Registration Rights Agreement related to our 11.375% senior notes due 2019, dated April 15, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and J.P. Morgan Securities LLC | | 8-K | | 4.3 | | 04/15/13 | | | 4.9 | | Indenture governing our 7.875% senior notes due 2019, dated May 23, 2013, among NII International Telecom, S.C.A., NII Holdings, Inc. and Wilmington Trust National Association, as Indenture Trustee | | 8-K | | 4.1 | | 05/23/13 | | | 4.10 | | Registration Rights Agreement related to our 7.875% senior notes due 2019, dated May 23, 2013, among NII International Telecom S.C.A., NII Holdings, Inc. and the initial purchasers named therein | | 8-K | | 4.2 | | 05/23/13 | | | 10.1 | | Subscriber Unit Purchase Agreement, dated as of January 1, 2005, by and between NII Holdings and Motorola, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-K | | 10.1 | | 03/22/06 | | | 10.2 | | Amendment Number Three to the Subscriber Unit Purchase Agreement, dated September 28, 2006, by and between NII Holdings and Motorola, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-Q | | 10.1 | | 11/06/06 | | | 10.3 | | Form of iDEN Infrastructure Installation Services Agreement, effective June 30, 2000, by and between NII Holdings, Motorola, Inc. and each of Nextel, Telecomunicações Ltda., Nextel Argentina S.R.L., Nextel de Mexico, S.A. de C.V., Nextel del Peru, S.A. and Nextel Communications Philippines, Inc. | | 8-K | | 10.1 | | 12/22/00 | | |
| | 10.4 | | | Form of iDEN Infrastructure Equipment Supply Agreement, effective June 30, 2000, by and between NII Holdings, Motorola, Inc. and each of Nextel Telecomunicações Ltda., Nextel Argentina S.R.L., Nextel de Mexico, S.A. de C.V., Nextel del Peru, S.A. and Nextel Communications Philippines, Inc. | | 8-K | | 10.2 | | 12/22/00 | | | 10.5 | | Amendment 003 to iDEN Infrastructure Equipment Supply Agreement, dated December 7, 2001, between NII Holdings, Motorola, Inc., Nextel Communications Argentina, S.A., Nextel Telecomunicações Ltda., Comunicaciones Nextel de Mexico, S.A. de C.V., Nextel del Peru S.A. and Nextel Communications Philippines, Inc. | | 10-K | | 10.48 | | 03/29/02 | | | | Amendment 003 to iDEN Infrastructure Equipment Supply Agreement, dated December 7, 2001, between NII Holdings, Motorola, Inc., Nextel Communications Argentina, S.A., Nextel Telecomunicações Ltda., Comunicaciones Nextel de Mexico, S.A. de C.V., Nextel del Peru S.A. and Nextel Communications Philippines, Inc. | | 10-K | | 10.48 | | 03/29/02 | | | 10.6 | | Form of Amendment 007A to the iDEN Infrastructure Equipment Supply Agreement, dated September 28, 2006, between NII Holdings, Motorola, Inc. and each of Nextel Communications Argentina, S.A., Nextel Telecomunicações Ltda., Centennial Cayman Corp. Chile, S.A., Comunicaciones Nextel de Mexico, S.A. de C.V. and Nextel del Peru, S.A. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-Q | | 10.2 | | 11/06/06 | | | | Form of Amendment 007A to the iDEN Infrastructure Equipment Supply Agreement, dated September 28, 2006, between NII Holdings, Motorola, Inc. and each of Nextel Communications Argentina, S.A., Nextel Telecomunicações Ltda., Centennial Cayman Corp. Chile, S.A., Comunicaciones Nextel de Mexico, S.A. de C.V. and Nextel del Peru, S.A. (portions of this exhibit have been omitted pursuant to a request for confidential treatment) | | 10-Q | | 10.2 | | 11/06/06 | | | 10.7 | | Fourth Amended and Restated Trademark License Agreement, dated July 27, 2011, between Nextel Communications, Inc. and NII Holdings | | 10-Q | | 10.1 | | 11/08/11 | | | | Fourth Amended and Restated Trademark License Agreement, dated July 27, 2011, between Nextel Communications, Inc. and NII Holdings | | 10-Q | | 10.1 | | 11/08/11 | | | 10.8 | | Spectrum Use and Build Out Agreement, dated as of November 12, 2002 | | 10-K | | 10.2 | | 03/27/03 | | | | Spectrum Use and Build Out Agreement, dated as of November 12, 2002 | | 10-K | | 10.2 | | 03/27/03 | | | 10.9 | | Stock Purchase Agreement by and among Entel Inversiones, S.A., Empresa Nacional de Telecomunicaciones S.A., NII Mercosur Telecom, S.L., NII Mercosur Moviles, S.L. and NII Holdings, Inc., dated as of April 4, 2013 | | 8-K | | 10.1 | | 04/04/13 | | | Stock Purchase Agreement by and among Entel Inversiones, S.A., Empresa Nacional de Telecomunicaciones S.A., NII Mercosur Telecom, S.L., NII Mercosur Moviles, S.L. and NII Holdings, Inc., dated as of April 4, 2013 | | 8-K | | 10.1 | | 04/04/13 | | 10.10(+) | | Form of NII Holdings Change of Control Severance Plan | | 10-K | | 10.9 | | 02/28/13 | | | Form of NII Holdings Change of Control Severance Plan | | 10-K | | 10.9 | | 02/28/13 | | 10.11(+) | | 2012 Incentive Compensation Plan | | Def 14A | | A | | 03/30/12 | | | | 2012 Incentive Compensation Plan | | Def 14A | | A | | 03/30/12 | | | 10.12(+) | | Form of Executive Officer Restricted Stock Award Agreement | | 10-K | | 10.11 | | 02/28/13 | | | Form of Executive Officer Restricted Stock Award Agreement | | 10-K | | 10.11 | | 02/28/13 | | 10.13(+) | | Form of Executive Officer Nonqualified Stock Option Agreement | | 10-K | | 10.12 | | 02/28/13 | | | Form of Executive Officer Nonqualified Stock Option Agreement | | 10-K | | 10.12 | | 02/28/13 | | 10.14(+) | | Form of Executive Officer Performance Share Unit Agreement | | 8-K | | 10.2 | | 05/02/13 | | | Form of Executive Officer Performance Share Unit Agreement | | 8-K | | 10.2 | | 05/02/13 | | 10.15(+) | | Form of Non-Employee Director Restricted Stock Award Agreement | | 10-K | | 10.13 | | 02/28/13 | | | Form of Non-Employee Director Restricted Stock Award Agreement | | 10-K | | 10.13 | | 02/28/13 | | 10.16(+) | | Form of Non-Employee Director Nonqualified Stock Option Agreement | | 8-K | | 10.4 | | 05/02/06 | | | Form of Non-Employee Director Nonqualified Stock Option Agreement | | 8-K | | 10.4 | | 05/02/06 | | 10.17(+) | | Outside Directors Deferral Plan | | 10-K | | 10.3 | | 02/27/08 | | | | Severance Plan | | 10-K | | 10.16 | | 02/28/13 | | 10.18(+) | | Severance Plan | | 10-K | | 10.16 | | 02/28/13 | | | Offer Letter for Steven M. Shindler, dated April 30, 2013 | | 8-K | | 10.1 | | 05/02/13 | | | 10.19(+) | | Executive Voluntary Deferral Plan | | 8-K | | 10.3 | | 12/16/08 | | | | Offer Letter for Peter A. Foyo, dated December 16, 2013 | | 8-K | | 10.1 | | 12/19/13 | | 10.20(+) | | Offer Letter for Steven M. Shindler, dated April 30, 2013 | | 8-K | | 10.1 | | 05/02/13 | | | | International Assignment Agreement between NII Holdings, Inc. and Gokul Hemmady | | 8-K | | 10.1 | | 07/12/13 | | 10.21(+) | | Offer Letter for Peter A. Foyo, dated December 16, 2013 | | 8-K | | 10.1 | | 12/19/13 | | | 10.21 | | | Form of Director and Executive Officer Indemnification Agreement | | 10-K | | 10.2 | | 02/28/14 | | 10.22(+) | | International Assignment Agreement between NII Holdings, Inc. and Gokul Hemmady | | 8-K | | 10.1 | | 07/12/13 | | | Employment Agreement between Comunicaciones Nextel de Mexico, S.A. de C.V. and Salvador Alvarez Valdes, dated as of July 3, 2014. | | * | 10.23 | | Form of Director and Executive Officer Indemnification Agreement | | 10-K | | 10.2 | | 02/28/14 | | | 12.1 | | Computation of Ratio of Earnings (Loss) to Fixed Charges | | 10-K | | 12.1 | | 02/28/14 | | | 21.1 | | Subsidiaries of NII Holdings | | 10-K | | 21.1 | | 02/28/14 | | | 23.1 | | Consent of PricewaterhouseCoopers LLP | | 10-K | | 23.1 | | 02/28/14 | | | 31.1 | | Statement of Chief Executive Officer Pursuant to Rule 13a-14(a) | | * | | 31.2 | | Statement of Chief Financial Officer Pursuant to Rule 13a-14(a) | | * | | 32.1 | | Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 | | 10-K | | 32.1 | | 02/28/14 | | | 32.2 | | Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 10-K | | 32.2 | | 02/28/14 | | | | 99.1 | | Credit Agreement, dated July 12, 2011, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K | | 99.1 | | 02/28/14 | | | 99.2 | | Credit Agreement, dated July 12, 2011, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K | | 99.2 | | 02/28/14 | | | 10.23(+) | | | Amendment No. 1 to the Employment Agreement, dated February 23, 2015, between Comunicaciones Nextel de Mexico, S.A. de C.V. and Salvador Alvarez Valdes. | | * | 10.24 | | | Purchase and Sale Agreement, dated as of January 26, 2015, between New Cingular Wireless Services, Inc., NIHD Telecom Holdings, B.V., NIU Holdings LLC, Nextel International (Uruguay) LLC, NII International Telecom S.C.A., NII International Holdings S.à r.l., NII Global Holdings, Inc., NII Capital Corp. and NII Holdings, Inc. | | 8-K | | 2.1 | | 01/26/15 | |
| | 10.25 | | | Plan Support Agreement, dated March 5, 2015, by and among NII Holdings, Inc., NII Capital Corp., NII Funding Corp., NII Aviation, Inc., Nextel International (Services), Ltd., NII Global Holdings, Inc., NII International Holdings S.a.r.l., NII International Telecom S.C.A., NII Mercosur, LLC, McCaw International (Brazil), LLC, Airfone Holdings, LLC, and NIU Holdings LLC, entities managed by Aurelius Capital Management, LP, entities managed by Capital Research and Management Company, members of the Ad Hoc Committee of Luxco Holders, and the Official Committee of Unsecured Creditors of NII Holdings, Inc., et al. | | 8-K | | 10.1 | | 03/06/15 | | 12.1 | | | Computation of Ratio of Earnings to Fixed Charges | | | | | | | | * | 16.1 | | | PricewaterhouseCoopers LLP Letter of Concurrence, dated March 4, 2014 | | 8-K | | 16.1 | | 03/05/14 | | 21.1 | | | Subsidiaries of NII Holdings | | * | 23.1 | | | Consent of KPMG LLP | | | | | | | | * | 23.2 | | | Consent of PricewaterhouseCoopers LLP | | * | 31.1 | | | Statement of Chief Executive Officer Pursuant to Rule 13a-14(a) | | | | | | | | * | 31.2 | | | Statement of Chief Financial Officer Pursuant to Rule 13a-14(a) | | | | | | | | * | 32.1 | | | Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 | | | | | | | | * | 32.2 | | | Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 | | | | | | * | 99.1 | | | Credit Agreement, dated July 12, 2011, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K | | 99.1 | | 02/28/14 | | 99.2 | | | Credit Agreement, dated July 12, 2011, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K | | 99.2 | | 02/28/14 | | 99.3 | | Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K | | 99.3 | | 02/28/14 | | | Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K | | 99.3 | | 02/28/14 | | 99.4 | | Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K | | 99.4 | | 02/28/14 | | | Credit Agreement, dated April 20, 2012, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K | | 99.4 | | 02/28/14 | | 99.5 | | Bank Credit Certificate, dated November 8, 2011, between Nextel Telecomunicações Ltda., and Caixa Econômica Federal | | 10-K | | 99.5 | | 02/28/14 | | | Bank Credit Certificate, dated November 8, 2011, between Nextel Telecomunicações Ltda., and Caixa Econômica Federal | | 10-K | | 99.5 | | 02/28/14 | | 99.6 | | Bank Credit Certificate, dated October 31, 2012, between Nextel Telecomunicações Ltda., and Banco do Brasil, S.A. | | 10-K | | 99.6 | | 02/28/14 | | | Bank Credit Certificate, dated October 31, 2012, between Nextel Telecomunicações Ltda., and Banco do Brasil, S.A. | | 10-K | | 99.6 | | 02/28/14 | | 99.7 | | Amendment Agreement No. 1 to the Credit Agreement, dated September 25, 2013, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K/A | | 99.7 | | 02/28/14 | | | Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K/A | | 99.7 | | 02/28/14 | | 99.8 | | Amendment Agreement No. 1 to the Credit Agreement, dated September 25, 2013, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K/A | | 99.8 | | 02/28/14 | | | Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K/A | | 99.8 | | 02/28/14 | | 99.9 | | Amendment Agreement No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K/A | | 99.9 | | 02/28/14 | | | Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | 10-K/A | | 99.9 | | 02/28/14 | | 99.10 | | Amendment Agreement No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K/A | | 99.10 | | 02/28/14 | | | Amendment No. 1 to the Credit Agreement, dated September 25, 2013, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | 10-K/A | | 99.10 | | 02/28/14 | | 101 | | The following materials from the NII Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2013 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements | | 10-K | | 101 | | 02/28/14 | | | |
| | | | | | | | | | | | 99.11 | | Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | | | | | | | * | 99.12 | | Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Comunicaciones Nextel de Mexico, S.A. de C.V., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | | | | | | | * | 99.13 | | Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Non-Sinosure) | | | | | | | | * | 99.14 | | Amendment No. 2 to the Credit Agreement, dated December 5, 2014, among Nextel Telecomunicações Ltda., the Guarantors and China Development Bank Corporation, as Lender, Administrative Agent and Arranger (Sinosure) | | | | | | | | * | 99.15 | | Amendment No. 1 to Bank Credit Certificate, dated February 13, 2015, between Nextel Telecomunicações Ltda. and Caixa Econômica Federal | | | | | | | | * | 99.16 | | Amendment No. 1 to Bank Credit Certificate, dated February 13, 2015, between Nextel Telecomunicações Ltda. and Banco do Brasil, S.A. | | | | | | | | * | 99.17 | | Mutual Standstill Agreement, dated February 13, 2015, between Nextel Telecomunicações Ltda., Nextel Telecomunicações S.A., Caixa Econômica Federal and Banco do Brasil, S.A. | | | | | | | | * | 101 | | The following materials from the NII Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2014 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Consolidated Statements of Changes in Stockholders’ (Deficit) Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements | | | | | | | | * |
| | + | Indicates Management Compensatory Plan, Contract or Arrangement. |
|