Exhibit 99.1
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Unaudited
The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of NII Holdings, Inc., which we refer to as NII Holdings or the Company, including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of NII Holdings' entry into a stock purchase agreement, collectively with its wholly-owned subsidiaries NII Mercosur Telecom, S.L. and NII Mercosur Moviles, S.L. pursuant to which Empresa Nacional de Telecomunicaciones, S.A. and one of its subsidiaries, Entel Invesiones, S.A., collectively known as Entel, purchased all of the outstanding equity interest of its wholly-owned subsidiary Nextel del Peru, S.A., or Nextel Peru.
This unaudited pro forma condensed consolidated financial information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Peru as if it had occurred as of the beginning of the earliest period presented in the pro forma statements of operations and comprehensive income for the years ended December 31, 2012, 2011 and 2010 and as of June 30, 2013 in the pro forma balance sheet. Since we reported Nextel Peru's results of operations as discontinued operations in the unaudited condensed consolidated financial statements and notes thereto that were included in our quarterly report on Form 10-Q for the quarterly period ended June 30, 2013, we have not included a pro forma statement of operations for the six months ended June 30, 2013 herein.
The unaudited pro forma condensed consolidated financial information contained herein has been prepared based upon available information and management estimates. Actual amounts may differ from these estimated amounts. In addition, this unaudited pro forma condensed consolidated financial information is not necessarily indicative of the financial position or results of operations that might have occurred had the sale of Nextel Peru occurred as of January 1, 2010 or June 30, 2013, respectively.
This unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements, notes to the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our annual report on Form 10-K for the year ended December 31, 2012 and our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2013 and June 30, 2013.
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2013
(in thousands, except par values)
Unaudited
|
| | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments for Activity of Business and Net Assets Disposed | | Unaudited Pro Forma |
| | | | | | |
| ASSETS |
| Current assets | |
| | |
| | |
| Cash and cash equivalents | $ | 1,463,254 |
| | $ | 356,962 |
| (a) | $ | 1,820,216 |
|
| Short-term investments | 318,436 |
| | — |
| | 318,436 |
|
| Accounts receivable, less allowance for doubtful accounts of $75,799 | 644,922 |
| | — |
| | 644,922 |
|
| Handset and accessory inventory | 304,382 |
| | — |
| | 304,382 |
|
| Deferred income taxes, net | 134,019 |
| | — |
| | 134,019 |
|
| Assets held for sale | 491,422 |
| | (491,422 | ) | (b) | — |
|
| Prepaid expenses and other | 435,047 |
| | — |
| | 435,047 |
|
| Total current assets | 3,791,482 |
| | (134,460 | ) | | 3,657,022 |
|
| Property, plant and equipment, net | 3,308,898 |
| | — |
| | 3,308,898 |
|
| Intangible assets, net | 1,048,974 |
| | — |
| | 1,048,974 |
|
| Deferred income taxes, net | 363,687 |
| | — |
| | 363,687 |
|
| Other assets | 468,762 |
| | 50,000 |
| (c) | 518,762 |
|
| Total assets | $ | 8,981,803 |
| | $ | (84,460 | ) | | $ | 8,897,343 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current liabilities | |
| | |
| | |
| Accounts payable | $ | 297,410 |
| | $ | — |
| | $ | 297,410 |
|
| Accrued expenses and other | 812,270 |
| | — |
| | 812,270 |
|
| Deferred revenues | 131,816 |
| | — |
| | 131,816 |
|
| Current portion of long-term debt | 81,404 |
| | — |
| | 81,404 |
|
| Liabilities held for sale | 94,288 |
| | (94,288 | ) | (b) | — |
|
| Total current liabilities | 1,417,188 |
| | (94,288 | ) | | 1,322,900 |
|
| Long-term debt | 5,653,055 |
| | — |
| | 5,653,055 |
|
| Deferred revenues | 12,480 |
| | — |
| | 12,480 |
|
| Deferred tax liabilities | 69,090 |
| | — |
| | 69,090 |
|
| Other long-term liabilities | 306,063 |
| | — |
| | 306,063 |
|
| Total liabilities | 7,457,876 |
| | (94,288 | ) | | 7,363,588 |
|
| Stockholders’ equity | |
| | |
| | |
| Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding | — |
| | — |
| | — |
|
Common stock, par value $0.001, 600,000 shares authorized, 172,437 shares issued and outstanding | 172 |
| | — |
| | 172 |
|
| Paid-in capital | 1,494,965 |
| | — |
| | 1,494,965 |
|
| Retained earnings | 854,201 |
| | 8,163 |
| (d) | 862,364 |
|
| Accumulated other comprehensive loss | (825,411 | ) | | 1,665 |
| (b) | (823,746 | ) |
| Total stockholders’ equity | 1,523,927 |
| | 9,828 |
| | 1,533,755 |
|
| Total liabilities and stockholders’ equity | $ | 8,981,803 |
| | $ | (84,460 | ) | | $ | 8,897,343 |
|
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(in thousands, except per share amounts)
Unaudited
|
| | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments for Activity of Business and Net Assets Disposed | | Unaudited Pro Forma |
| Operating revenues | |
| | |
| | |
| Service and other revenues | $ | 5,779,159 |
| | $ | (314,039 | ) | (e) | $ | 5,465,120 |
|
| Handset and accessory revenues | 307,304 |
| | (29,302 | ) | (e) | 278,002 |
|
| | 6,086,463 |
| | (343,341 | ) | | 5,743,122 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,690,464 |
| | (116,137 | ) | (f) | 1,574,327 |
|
| Cost of handsets and accessories | 915,120 |
| | (85,261 | ) | (f) | 829,859 |
|
| Selling, general and administrative | 2,324,422 |
| | (156,734 | ) | (g) | 2,167,688 |
|
| Provision for doubtful accounts | 220,597 |
| | (3,282 | ) | (f) | 217,315 |
|
| Impairment and restructuring charges | 330,340 |
| | (573 | ) | (f) | 329,767 |
|
| Depreciation | 678,191 |
| | (76,422 | ) | (f) | 601,769 |
|
| Amortization | 50,589 |
| | (2,813 | ) | (f) | 47,776 |
|
| | 6,209,723 |
| | (441,222 | ) | | 5,768,501 |
|
| Operating (loss) income | (123,260 | ) | | 97,881 |
| | (25,379 | ) |
| Other expense | |
| | |
| | |
| Interest expense, net | (373,253 | ) | | 7,732 |
| (h) | (365,521 | ) |
| Interest income | 34,143 |
| | (281 | ) | (e) | 33,862 |
|
| Foreign currency transaction losses, net | (53,415 | ) | | (542 | ) | (e) | (53,957 | ) |
| Other expense, net | (27,355 | ) | | (985 | ) | (e) | (28,340 | ) |
| | (419,880 | ) | | 5,924 |
| | (413,956 | ) |
| (Loss) income before income tax provision | (543,140 | ) | | 103,805 |
| | (439,335 | ) |
| Income tax (provision) benefit | (222,109 | ) | | 63,968 |
| (i) | (158,141 | ) |
| Net (loss) income | $ | (765,249 | ) | | $ | 167,773 |
| | $ | (597,476 | ) |
| | | | | | |
| Net (loss) income, per common share, basic | $ | (4.46 | ) | | $ | 0.98 |
| (j) | $ | (3.48 | ) |
| Net (loss) income, per common share, diluted | $ | (4.46 | ) | | $ | 0.98 |
| (j) | $ | (3.48 | ) |
| Weighted average number of common shares outstanding, basic | 171,499 |
| | — |
| | 171,499 |
|
| Weighted average number of common shares outstanding, diluted | 171,499 |
| | — |
| | 171,499 |
|
| | | | | | |
| Comprehensive (loss) income, net of income taxes | | | | | |
| Foreign currency translation adjustment | $ | (97,589 | ) | | $ | — |
| | $ | (97,589 | ) |
| Other | (1,802 | ) | | (356 | ) | (k) | (2,158 | ) |
| Other comprehensive loss | (99,391 | ) | | (356 | ) | | (99,747 | ) |
| Net (loss) income | (765,249 | ) | | 167,773 |
| | (597,476 | ) |
| Total comprehensive (loss) income | $ | (864,640 | ) | | $ | 167,417 |
| | $ | (697,223 | ) |
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
(in thousands, except per share amounts)
Unaudited
|
| | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments for Activity of Business and Net Assets Disposed | | Unaudited Pro Forma |
| Operating revenues | |
| | |
| | |
| Service and other revenues | $ | 6,403,519 |
| | $ | (321,942 | ) | (e) | $ | 6,081,577 |
|
| Handset and accessory revenues | 331,427 |
| | (32,187 | ) | (e) | 299,240 |
|
| | 6,734,946 |
| | (354,129 | ) | | 6,380,817 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,789,402 |
| | (107,710 | ) | (f) | 1,681,692 |
|
| Cost of handsets and accessories | 855,929 |
| | (71,857 | ) | (f) | 784,072 |
|
| Selling, general and administrative | 2,343,123 |
| | (142,022 | ) | (g) | 2,201,101 |
|
| Provision for doubtful accounts | 161,853 |
| | (2,651 | ) | (f) | 159,202 |
|
| Depreciation | 614,158 |
| | (62,695 | ) | (f) | 551,463 |
|
| Amortization | 38,929 |
| | (2,228 | ) | (f) | 36,701 |
|
| | 5,803,394 |
| | (389,163 | ) | | 5,414,231 |
|
| Operating income | 931,552 |
| | 35,034 |
| | 966,586 |
|
| Other expense | |
| | |
| | |
| Interest expense, net | (322,111 | ) | | 10,376 |
| (h) | (311,735 | ) |
| Interest income | 34,224 |
| | (128 | ) | (e) | 34,096 |
|
| Foreign currency transaction losses, net | (36,975 | ) | | (322 | ) | (e) | (37,297 | ) |
| Other expense, net | (37,305 | ) | | (445 | ) | (e) | (37,750 | ) |
| | (362,167 | ) | | 9,481 |
| | (352,686 | ) |
| Income before income tax provision | 569,385 |
| | 44,515 |
| | 613,900 |
|
| Income tax provision | (344,189 | ) | | (7,015 | ) | (i) | (351,204 | ) |
| Net income | $ | 225,196 |
| | $ | 37,500 |
| | $ | 262,696 |
|
| | | | | | |
| Net income, per common share, basic | $ | 1.31 |
| | $ | 0.22 |
| (j) | $ | 1.53 |
|
| Net income, per common share, diluted | $ | 1.30 |
| | $ | 0.22 |
| (j) | $ | 1.52 |
|
| Weighted average number of common shares outstanding, basic | 170,601 |
| | — |
| | 170,601 |
|
| Weighted average number of common shares outstanding, diluted | 172,781 |
| | — |
| | 172,781 |
|
| | | | | | |
| Comprehensive (loss) income, net of income taxes | | | | | |
| Foreign currency translation adjustment | $ | (462,457 | ) | | $ | — |
| | $ | (462,457 | ) |
| Other | (342 | ) | | (78 | ) | (k) | (420 | ) |
| Other comprehensive loss | (462,799 | ) | | (78 | ) | | (462,877 | ) |
| Net income | 225,196 |
| | 37,500 |
| | 262,696 |
|
| Total comprehensive (loss) income | $ | (237,603 | ) | | $ | 37,422 |
| | $ | (200,181 | ) |
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2010
(in thousands, except per share amounts)
Unaudited
|
| | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments for Activity of Business and Net Assets Disposed | | Unaudited Pro Forma |
| Operating revenues | |
| | |
| | |
| Service and other revenues | $ | 5,348,400 |
| | $ | (281,996 | ) | (e) | $ | 5,066,404 |
|
| Handset and accessory revenues | 257,407 |
| | (30,020 | ) | (e) | 227,387 |
|
| | 5,605,807 |
| | (312,016 | ) | | 5,293,791 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,504,603 |
| | (100,048 | ) | (f) | 1,404,555 |
|
| Cost of handsets and accessories | 719,219 |
| | (62,810 | ) | (f) | 656,409 |
|
| Selling, general and administrative | 1,870,802 |
| | (130,692 | ) | (g) | 1,740,110 |
|
| Provision for doubtful accounts | 75,904 |
| | (2,407 | ) | (f) | 73,497 |
|
| Depreciation | 520,680 |
| | (50,748 | ) | (f) | 469,932 |
|
| Amortization | 34,206 |
| | (1,935 | ) | (f) | 32,271 |
|
| | 4,725,414 |
| | (348,640 | ) | | 4,376,774 |
|
| Operating income | 880,393 |
| | 36,624 |
| | 917,017 |
|
| Other expense | |
| | |
| | |
| Interest expense, net | (344,999 | ) | | 9,081 |
| (h) | (335,918 | ) |
| Interest income | 28,841 |
| | (507 | ) | (e) | 28,334 |
|
| Foreign currency transaction gains, net | 52,374 |
| | 38 |
| (e) | 52,412 |
|
| Other expense, net | (18,686 | ) | | — |
| | (18,686 | ) |
| | (282,470 | ) | | 8,612 |
| | (273,858 | ) |
| Income before income tax provision | 597,923 |
| | 45,236 |
| | 643,159 |
|
| Income tax provision | (259,465 | ) | | (10,404 | ) | (i) | (269,869 | ) |
| Net income | $ | 338,458 |
| | $ | 34,832 |
| | $ | 373,290 |
|
| | | | | | |
| Net income, per common share, basic | $ | 2.01 |
| | $ | 0.21 |
| (j) | $ | 2.22 |
|
| Net income, per common share, diluted | $ | 1.97 |
| | $ | 0.20 |
| (j) | $ | 2.17 |
|
| Weighted average number of common shares outstanding, basic | 168,160 |
| | — |
| | 168,160 |
|
| Weighted average number of common shares outstanding, diluted | 175,709 |
| | — |
| | 175,709 |
|
| | | | | | |
| Comprehensive income, net of income taxes | | | | | |
| Foreign currency translation adjustment | $ | 109,411 |
| | $ | — |
| | $ | 109,411 |
|
| Other | (2,894 | ) | | — |
| | (2,894 | ) |
| Other comprehensive income | 106,517 |
| | — |
| | 106,517 |
|
| Net income | 338,458 |
| | 34,832 |
| | 373,290 |
|
| Total comprehensive income | $ | 444,975 |
| | $ | 34,832 |
| | $ | 479,807 |
|
| |
| Note 1. | Basis of Presentation |
The accompanying unaudited pro forma consolidated financial statements give effect to the pro forma adjustments necessary to reflect the sale of Nextel Peru as if it had occurred as of the beginning of the earliest period presented in the pro forma statements of operations and comprehensive income for the years ended December 31, 2012, 2011 and 2010 and as of June 30, 2013 in the pro forma balance sheet.
| |
| Note 2. | Pro Forma Adjustments |
The unaudited pro forma condensed consolidated statements of operations and pro forma balance sheet reflect the effect of the following pro forma adjustments:
(a) Reflects the net effect on cash resulting from $410.6 million proceeds received upon completion of the sale of Nextel Peru, subject to certain post-closing working capital adjustments; less $50.0 million cash held in escrow to secure specified obligations as required by the stock purchase agreement governing the sale of this operating company and $3.6 million of estimated transaction costs.
(b) Reflects the elimination of certain assets acquired by Entel and certain liabilities assumed by Entel in connection with the sale of Nextel Peru. Also, these adjustments include the realization of accumulated other comprehensive loss related to the historical operations of Nextel Peru.
(c) Represents $50.0 million of cash held in escrow to secure specified obligations as required by the stock purchase agreement governing the sale of Nextel Peru.
(d) Represents the effect on retained earnings as a result of the estimated $8.2 million gain recognized on the sale of Nextel Peru.
(e) Reflects the elimination of revenue, interest income and other income historically reported by Nextel Peru that the Company would not have recognized if the sale of this operating company had occurred as of January 1, 2010.
(f) Reflects the elimination of expenses as a result of the sale of Nextel Peru. For the indicated line items, all activity historically reported as part of the Nextel Peru business has been eliminated, and no other adjustments or allocations have been assumed.
(g) Reflects the elimination of selling, general and administrative expenses as a result of the sale of Nextel Peru. This adjustment also includes stock-based compensation expense related to Nextel Peru employees that would not have been recognized if the sale of this operating company had occurred as of January 1, 2010.
(h) Reflects the elimination of interest expense as a result of the sale of Nextel Peru. The adjustment does not include allocations of interest expense related to corporate-level debt obligations.
(i) Represents adjustments to the income tax provision to reflect the income tax effect associated with the pro forma adjustments.
(j) Recalculated as the pro forma adjustment to net income divided by the weighted average number of basic and diluted shares outstanding for the respective period.
(k) Reflects the elimination of other comprehensive income as a result of the sale of Nextel Peru that would not have been recognized if the sale of this operating company had occurred as of January 1, 2010.
