Exhibit 99.1
NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(in millions, except per share amounts, and unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(in millions, except per share amounts, and unaudited)
Nine Months Ended | Three Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Service and other revenues | $ | 3,857.7 | $ | 2,980.8 | $ | 1,359.4 | $ | 1,078.3 | ||||||||
Digital handset and accessory revenues | 223.5 | 181.8 | 86.7 | 64.1 | ||||||||||||
4,081.2 | 3,162.6 | 1,446.1 | 1,142.4 | |||||||||||||
Operating expenses | ||||||||||||||||
Cost of service (exclusive of depreciation and amortization included below) | 1,090.7 | 862.0 | 394.8 | 316.8 | ||||||||||||
Cost of digital handset and accessory sales | 541.7 | 472.7 | 186.8 | 161.7 | ||||||||||||
Selling, general and administrative | 1,397.0 | 1,015.9 | 502.3 | 363.9 | ||||||||||||
Depreciation | 380.0 | 289.0 | 132.2 | 106.1 | ||||||||||||
Amortization | 23.6 | 21.3 | 7.5 | 7.6 | ||||||||||||
3,433.0 | 2,660.9 | 1,223.6 | 956.1 | |||||||||||||
Operating income | 648.2 | 501.7 | 222.5 | 186.3 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (262.5 | ) | (145.3 | ) | (83.5 | ) | (58.6 | ) | ||||||||
Interest income | 23.8 | 19.7 | 9.9 | 3.3 | ||||||||||||
Foreign currency transaction gains, net | 27.4 | 101.3 | 28.4 | 45.1 | ||||||||||||
Other (expense) income, net | (11.4 | ) | 4.3 | (3.5 | ) | (1.3 | ) | |||||||||
(222.7 | ) | (20.0 | ) | (48.7 | ) | (11.5 | ) | |||||||||
Income before income tax provision | 425.5 | 481.7 | 173.8 | 174.8 | ||||||||||||
Income tax provision | (183.0 | ) | (159.8 | ) | (55.3 | ) | (57.8 | ) | ||||||||
Net income | $ | 242.5 | $ | 321.9 | $ | 118.5 | $ | 117.0 | ||||||||
Net income per common share, basic | $ | 1.45 | $ | 1.94 | $ | 0.70 | $ | 0.70 | ||||||||
Net income per common share, diluted | $ | 1.42 | $ | 1.91 | $ | 0.68 | $ | 0.69 | ||||||||
Weighted average number of common shares outstanding, basic | 167.8 | 165.9 | 168.6 | 166.1 | ||||||||||||
Weighted average number of common shares outstanding, diluted | 176.9 | 173.5 | 175.3 | 174.2 | ||||||||||||
CONSOLIDATED BALANCE SHEET DATA
(in millions)
(in millions)
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
(unaudited) | ||||||||
Cash and cash equivalents | $ | 1,666.1 | $ | 2,504.1 | ||||
Short-term investments | 559.1 | 116.3 | ||||||
Accounts receivable, less allowance for doubtful accounts of $38.5 and $35.1 | 740.0 | 613.6 | ||||||
Property, plant and equipment, net | 2,727.8 | 2,502.2 | ||||||
Intangible assets, net | 408.8 | 337.2 | ||||||
Total assets | 7,763.7 | 7,554.7 | ||||||
Long-term debt, including current portion | 3,223.9 | 3,580.8 | ||||||
Total liabilities | 4,600.6 | 4,807.9 | ||||||
Stockholders’ equity | 3,163.1 | 2,746.8 |
NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
OPERATING RESULTS AND METRICS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
NII Holdings, Inc.
(subscribers in thousands)
(subscribers in thousands)
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Total digital subscribers (as of September 30) | 8,591.4 | 7,037.5 | ||||||
Net subscriber additions | 435.8 | 329.5 | ||||||
Churn (%) | 1.64 | % | 1.93 | % | ||||
Average monthly revenue per handset/unit in service (ARPU) (1) | $ | 47 | $ | 46 | ||||
Cost per gross add (CPGA) (1) | $ | 267 | $ | 268 |
Nextel Mexico
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Nine Months Ended | Three Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Service and other revenues | $ | 1,494.0 | $ | 1,328.7 | $ | 503.3 | $ | 451.0 | ||||||||
Digital handset and accessory revenues | 69.7 | 58.1 | 26.8 | 19.8 | ||||||||||||
1,563.7 | 1,386.8 | 530.1 | 470.8 | |||||||||||||
Operating expenses | ||||||||||||||||
Cost of service (exclusive of depreciation and amortization included below) | 269.9 | 262.3 | 108.0 | 90.2 | ||||||||||||
Cost of digital handset and accessory sales | 303.9 | 267.2 | 103.0 | 87.9 | ||||||||||||
Selling, general and administrative | 417.9 | 359.0 | 136.3 | 121.3 | ||||||||||||
Segment earnings | 572.0 | 498.3 | 182.8 | 171.4 | ||||||||||||
Management fee and other | 78.8 | 23.8 | 31.4 | 7.9 | ||||||||||||
Depreciation and amortization | 142.2 | 123.9 | 46.8 | 43.0 | ||||||||||||
Operating income | $ | 351.0 | $ | 350.6 | $ | 104.6 | $ | 120.5 | ||||||||
Total digital subscribers (as of September 30) | 3,271.9 | 2,909.7 | ||||||||||||||
Net subscriber additions | 87.1 | 74.8 | ||||||||||||||
Churn (%) | 1.79 | % | 2.24 | % | ||||||||||||
ARPU (1) | $ | 45 | $ | 47 | ||||||||||||
CPGA (1) | $ | 385 | $ | 362 |
Nextel Brazil
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Nine Months Ended | Three Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Service and other revenues | $ | 1,766.5 | $ | 1,103.4 | $ | 650.0 | $ | 445.9 | ||||||||
Digital handset and accessory revenues | 97.4 | 76.4 | 39.5 | 27.4 | ||||||||||||
1,863.9 | 1,179.8 | 689.5 | 473.3 | |||||||||||||
Operating expenses | ||||||||||||||||
Cost of service (exclusive of depreciation and amortization included below) | 606.1 | 400.2 | 215.4 | 160.4 | ||||||||||||
Cost of digital handset and accessory sales | 132.3 | 113.6 | 46.2 | 39.9 | ||||||||||||
Selling, general and administrative | 560.4 | 344.6 | 213.2 | 135.1 | ||||||||||||
Segment earnings | 565.1 | 321.4 | 214.7 | 137.9 | ||||||||||||
Management fee and other | 24.9 | — | 8.3 | — | ||||||||||||
Depreciation and amortization | 181.4 | 124.3 | 64.9 | 49.6 | ||||||||||||
Operating income | $ | 358.8 | $ | 197.1 | $ | 141.5 | $ | 88.3 | ||||||||
Total digital subscribers (as of September 30) | 3,112.6 | 2,290.9 | ||||||||||||||
Net subscriber additions | 245.4 | 184.8 | ||||||||||||||
Churn (%) | 1.36 | % | 1.38 | % | ||||||||||||
ARPU (1) | $ | 63 | $ | 58 | ||||||||||||
CPGA (1) | $ | 220 | $ | 220 |
Nextel Argentina
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Nine Months Ended | Three Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Service and other revenues | $ | 376.6 | $ | 361.5 | $ | 128.9 | $ | 117.9 | ||||||||
Digital handset and accessory revenues | 34.3 | 27.3 | 13.1 | 10.0 | ||||||||||||
410.9 | 388.8 | 142.0 | 127.9 | |||||||||||||
Operating expenses | ||||||||||||||||
Cost of service (exclusive of depreciation and amortization included below) | 131.6 | 129.8 | 44.0 | 42.0 | ||||||||||||
Cost of digital handset and accessory sales | 56.6 | 47.4 | 20.4 | 18.4 | ||||||||||||
Selling, general and administrative | 115.7 | 93.6 | 39.2 | 32.8 | ||||||||||||
Segment earnings | 107.0 | 118.0 | 38.4 | 34.7 | ||||||||||||
Management fee and other | 14.6 | — | 7.1 | — | ||||||||||||
Depreciation and amortization | 29.5 | 28.9 | 10.0 | 9.4 | ||||||||||||
Operating income | $ | 62.9 | $ | 89.1 | $ | 21.3 | $ | 25.3 | ||||||||
Total digital subscribers (as of September 30) | 1,117.4 | 1,003.7 | ||||||||||||||
Net subscriber additions | 34.3 | 18.0 | ||||||||||||||
Churn (%) | 1.58 | % | 2.17 | % | ||||||||||||
ARPU (1) | $ | 34 | $ | 34 | ||||||||||||
CPGA (1) | $ | 213 | $ | 220 |
Nextel Peru
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Nine Months Ended | Three Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Service and other revenues | $ | 206.2 | $ | 178.3 | $ | 71.7 | $ | 60.0 | ||||||||
Digital handset and accessory revenues | 22.0 | 19.9 | 7.3 | 6.8 | ||||||||||||
228.2 | 198.2 | 79.0 | 66.8 | |||||||||||||
Operating expenses | ||||||||||||||||
Cost of service (exclusive of depreciation and amortization included below) | 74.5 | 64.5 | 24.4 | 22.1 | ||||||||||||
Cost of digital handset and accessory sales | 45.0 | 41.9 | 15.2 | 14.6 | ||||||||||||
Selling, general and administrative | 88.1 | 72.2 | 29.0 | 25.7 | ||||||||||||
Segment earnings | 20.6 | 19.6 | 10.4 | 4.4 | ||||||||||||
Management fee and other | 14.1 | — | 5.8 | — | ||||||||||||
Depreciation and amortization | 38.3 | 23.1 | 13.6 | 8.3 | ||||||||||||
Operating loss | $ | (31.8 | ) | $ | (3.5 | ) | $ | (9.0 | ) | $ | (3.9 | ) | ||||
Total digital subscribers (as of September 30) | 1,028.8 | 795.6 | ||||||||||||||
Net subscriber additions | 62.9 | 47.7 | ||||||||||||||
Churn (%) | 2.06 | % | 2.03 | % | ||||||||||||
ARPU (1) | $ | 22 | $ | 24 | ||||||||||||
CPGA (1) | $ | 150 | $ | 152 |
NON-GAAP RECONCILIATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
Operating Income Before Depreciation and Amortization
Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated OIBDA is not a measurement under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that consolidated OIBDA provides useful information to investors because it is an indicator of operating performance, especially in a capital intensive industry such as ours, since it excludes items that are not directly attributable to ongoing business operations. Our consolidated OIBDA calculations are commonly used as some of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. Consolidated OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):
NII Holdings, Inc.
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Consolidated operating income | $ | 222.5 | $ | 186.3 | ||||
Consolidated depreciation | 132.2 | 106.1 | ||||||
Consolidated amortization | 7.5 | 7.6 | ||||||
Consolidated operating income before depreciation and amortization | $ | 362.2 | $ | 300.0 | ||||
Average Monthly Revenue Per Handset/Unit in Service (ARPU)
Average monthly revenue per handset/unit in service, or ARPU, is an industry term that measures service revenues, which we refer to as subscriber revenues, per period from our customers divided by the weighted average number of handsets in commercial service during that period. ARPU is not a measurement under accounting principles generally accepted in the United States, may not be similar to ARPU measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. Other revenue includes revenues for such services as roaming, handset maintenance, cancellation fees, analog and other. ARPU can be calculated and reconciled to our consolidated statement of operations as follows (in millions, except ARPU):
NII Holdings, Inc.
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Consolidated service and other revenues | $ | 1,359.4 | $ | 1,078.3 | ||||
Less: consolidated analog revenues | (0.5 | ) | (0.5 | ) | ||||
Less: consolidated other revenues | (171.7 | ) | (126.9 | ) | ||||
Total consolidated subscriber revenues | $ | 1,187.2 | $ | 950.9 | ||||
ARPUcalculated with subscriber revenues | $ | 47 | $ | 46 | ||||
ARPUcalculated with service and other revenues | $ | 54 | $ | 52 | ||||
Nextel Mexico
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Service and other revenues | $ | 503.3 | $ | 451.0 | ||||
Less: analog revenues | (0.3 | ) | (0.4 | ) | ||||
Less: other revenues | (61.8 | ) | (43.2 | ) | ||||
Total subscriber revenues | $ | 441.2 | $ | 407.4 | ||||
ARPUcalculated with subscriber revenues | $ | 45 | $ | 47 | ||||
ARPUcalculated with service and other revenues | $ | 52 | $ | 52 | ||||
Nextel Brazil
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Service and other revenues | $ | 650.0 | $ | 445.9 | ||||
Less: analog revenues | (0.1 | ) | (0.1 | ) | ||||
Less: other revenues | (85.3 | ) | (61.2 | ) | ||||
Total subscriber revenues | $ | 564.6 | $ | 384.6 | ||||
ARPUcalculated with subscriber revenues | $ | 63 | $ | 58 | ||||
ARPUcalculated with service and other revenues | $ | 72 | $ | 68 | ||||
Nextel Argentina
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Service and other revenues | $ | 128.9 | $ | 117.9 | ||||
Less: other revenues | (18.2 | ) | (16.9 | ) | ||||
Total subscriber revenues | $ | 110.7 | $ | 101.0 | ||||
ARPUcalculated with subscriber revenues | $ | 34 | $ | 34 | ||||
ARPUcalculated with service and other revenues | $ | 39 | $ | 40 | ||||
Nextel Peru
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Service and other revenues | $ | 71.7 | $ | 60.0 | ||||
Less: other revenues | (5.8 | ) | (5.1 | ) | ||||
Total subscriber revenues | $ | 65.9 | $ | 54.9 | ||||
ARPUcalculated with subscriber revenues | $ | 22 | $ | 24 | ||||
ARPUcalculated with service and other revenues | $ | 24 | $ | 26 | ||||
Cost per Gross Add (CPGA)
Cost per gross add, or CPGA, is an industry term that is calculated by dividing our selling, marketing and handset and accessory subsidy costs, excluding costs unrelated to initial customer acquisition, by our new subscribers during the period, or gross adds. CPGA is not a measurement under accounting principles generally accepted in the United States, may not be similar to CPGA measures of other companies and should be considered in addition, but not as a substitute for, the information contained in our statements of operations. We believe CPGA is a measure of the relative cost of customer acquisition. CPGA can be calculated and reconciled to our consolidated statements of operations as follows (in millions, except CPGA):
NII Holdings, Inc.
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Consolidated digital handset and accessory revenues | $ | 86.7 | $ | 64.1 | ||||
Less: consolidated uninsured replacement revenues | (5.1 | ) | (4.5 | ) | ||||
Consolidated digital handset and accessory revenues, net | 81.6 | 59.6 | ||||||
Less: consolidated cost of handset and accessory sales | 186.6 | 161.7 | ||||||
Consolidated handset subsidy costs | 105.0 | 102.1 | ||||||
Consolidated selling and marketing | 169.3 | 133.1 | ||||||
Costs per statement of operations | 274.3 | 235.2 | ||||||
Less: consolidated costs unrelated to initial customer acquisition | (47.7 | ) | (40.0 | ) | ||||
Customer acquisition costs | $ | 226.6 | $ | 195.2 | ||||
Cost per Gross Add | $ | 267 | $ | 268 | ||||
Nextel Mexico
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Digital handset and accessory revenues | $ | 26.8 | $ | 19.8 | ||||
Less: uninsured replacement revenues | (2.4 | ) | (2.3 | ) | ||||
Digital handset and accessory revenues, net | 24.4 | 17.5 | ||||||
Less: cost of handset and accessory sales | 103.0 | 87.9 | ||||||
Handset subsidy costs | 78.6 | 70.4 | ||||||
Selling and marketing | 65.3 | 59.8 | ||||||
Costs per statement of operations | 143.9 | 130.2 | ||||||
Less: costs unrelated to initial customer acquisition | (43.4 | ) | (33.0 | ) | ||||
Customer acquisition costs | $ | 100.5 | $ | 97.2 | ||||
Cost per Gross Add | $ | 385 | $ | 362 | ||||
Nextel Brazil
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Digital handset and accessory revenues | $ | 39.5 | $ | 27.4 | ||||
Less: uninsured replacement revenues | (2.7 | ) | (2.3 | ) | ||||
Digital handset and accessory revenues, net | 36.8 | 25.1 | ||||||
Less: cost of handset and accessory sales | 46.2 | 39.9 | ||||||
Handset subsidy costs | 9.4 | 14.8 | ||||||
Selling and marketing | 72.4 | 50.4 | ||||||
Costs per statement of operations | 81.8 | 65.2 | ||||||
Less: costs unrelated to initial customer acquisition | (1.1 | ) | (4.4 | ) | ||||
Customer acquisition costs | $ | 80.7 | $ | 60.8 | ||||
Cost per Gross Add | $ | 220 | $ | 220 | ||||
Nextel Argentina
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Digital handset and accessory revenues, net | $ | 13.1 | $ | 10.0 | ||||
Less: cost of handset and accessory sales | 20.4 | 18.4 | ||||||
Handset subsidy costs | 7.3 | 8.4 | ||||||
Selling and marketing | 12.9 | 11.6 | ||||||
Costs per statement of operations | 20.2 | 20.0 | ||||||
Less: costs unrelated to initial customer acquisition | (1.9 | ) | (1.8 | ) | ||||
Customer acquisition costs | $ | 18.3 | $ | 18.2 | ||||
Cost per Gross Add | $ | 213 | $ | 220 | ||||
Nextel Peru
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Digital handset and accessory revenues, net | $ | 7.3 | $ | 6.8 | ||||
Less: cost of handset and accessory sales | 15.2 | 14.6 | ||||||
Handset subsidy costs | 7.9 | 7.8 | ||||||
Selling and marketing | 12.1 | 7.5 | ||||||
Costs per statement of operations | 20.0 | 15.3 | ||||||
Less: costs unrelated to initial customer acquisition | (1.2 | ) | (0.9 | ) | ||||
Customer acquisition costs | $ | 18.8 | $ | 14.4 | ||||
Cost per Gross Add | $ | 150 | $ | 152 | ||||
Net Debt
Net debt represents total long-term debt less cash, cash equivalents, short-term and long-term investments. Net debt to consolidated operating income before depreciation and amortization represents net debt divided by consolidated operating income before depreciation and amortization. Prior to 2008, we calculated net debt as total long-term debt less cash and cash equivalents. In 2008, we added short-term investments to the items subtracted from long-term debt to calculate net debt because we concluded that our short-term investments were similar to cash and cash equivalents in terms of liquidity and should be used similarly in providing the assessment of our overall leverage in the net debt calculation. In the second quarter of 2010, we extended the permissible investment maturity dates for cash investments, which resulted in the classification of some of our cash investments as long term investments. As a result, we now include the cash in long-term investments to the items subtracted from long-term debt to calculate net debt. Net debt is not a measurement under accounting principles generally accepted in the United States, may not be similar to net debt measures of other companies and should be considered in addition to, but not as a substitute for, the information contained in our balance sheets. We believe that net debt and net debt to consolidated operating income before depreciation and amortization provide useful information concerning our liquidity and leverage. Net debt as of September 30, 2010 can be calculated as follows (in millions):
NII Holdings, Inc.
Total long-term debt | $ | 2,806.9 | ||
Add: reduction to long-term debt pursuant to implementation of FSP APB 14-1 | 66.2 | |||
Add: debt discounts | 21.1 | |||
Less: cash and cash equivalents | (1,666.1 | ) | ||
Less: short-term investments | (559.1 | ) | ||
Less: long-term investments | (125.0 | ) | ||
Net debt | $ | 544.0 | ||