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 consolidated 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 the Company's entry into a stock purchase agreement, collectively with its wholly-owned subsidiaries NII Mercosur Telecom, S.L., NII Mercosur Móviles, S.L. and NII International Telecom S.C.A., pursuant to which Fucata S.A., a sociedad anónima existing under the Oriental Republic of Uruguay, a venture comprised of Grupo Veintitrés, Optimum Advisors and ISM Capital, collectively known as Fucata, purchased all of the outstanding equity interests of its wholly-owned subsidiary Nextel Chile S.A., or Nextel Chile.
This unaudited pro forma condensed consolidated financial information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Chile as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for the six months ended June 30, 2014 and for each of the years ended December 31, 2013, 2012 and 2011, and as of June 30, 2014 in the pro forma condensed consolidated balance sheet.
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 Chile occurred as of January 1, 2011 or June 30, 2014, 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, 2013 and our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2014 and June 30, 2014.
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014
(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 | $ | 814,023 |
| | $ | (10,210 | ) | (a) | $ | 803,813 |
|
| Short-term investments | 132,590 |
| | — |
| | 132,590 |
|
| Accounts receivable, less allowance for doubtful accounts of $66,200 | 485,185 |
| | (10,712 | ) | (b) | 474,473 |
|
| Handset and accessory inventory | 373,565 |
| | — |
| | 373,565 |
|
| Deferred income taxes, net | 98,671 |
| | — |
| | 98,671 |
|
| Prepaid expenses and other | 668,943 |
| | (8,240 | ) | (b) | 660,703 |
|
| Total current assets | 2,572,977 |
| | (29,162 | ) | | 2,543,815 |
|
| Property, plant and equipment, net | 3,259,529 |
| | (4,553 | ) | (b) | 3,254,976 |
|
| Intangible assets, net | 1,019,548 |
| | — |
| | 1,019,548 |
|
| Deferred income taxes, net | 9,514 |
| | — |
| | 9,514 |
|
| Other assets | 577,218 |
| | — |
| | 577,218 |
|
| Total assets | $ | 7,438,786 |
| | $ | (33,715 | ) | | $ | 7,405,071 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current liabilities | |
| | |
| | |
| Accounts payable | $ | 264,508 |
| | $ | (15,099 | ) | (b) | $ | 249,409 |
|
| Accrued expenses and other | 804,483 |
| | (12,609 | ) | (b) | 791,874 |
|
| Deferred revenues | 111,728 |
| | (395 | ) | (b) | 111,333 |
|
| Current portion of long-term debt | 5,555,298 |
| | — |
| | 5,555,298 |
|
| Deposits related to 2013 sale of towers | 725,611 |
| | — |
| | 725,611 |
|
| Total current liabilities | 7,461,628 |
| | (28,103 | ) | | 7,433,525 |
|
| Long-term debt | 221,598 |
| | — |
| | 221,598 |
|
| Deferred revenues | 9,923 |
| | — |
| | 9,923 |
|
| Deferred income tax liabilities | 89,285 |
| | — |
| | 89,285 |
|
| Other long-term liabilities | 239,899 |
| | (5,239 | ) | (b) | 234,660 |
|
| Total liabilities | 8,022,333 |
| | (33,342 | ) | | 7,988,991 |
|
| Stockholders’ deficit | |
| | |
| | |
| 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, 172,362 shares issued and outstanding | 172 |
| | — |
| | 172 |
|
| Paid-in capital | 1,511,845 |
| | — |
| | 1,511,845 |
|
| Accumulated deficit | (1,192,356 | ) | | 29,072 |
| (c) | (1,163,284 | ) |
| Accumulated other comprehensive loss | (903,208 | ) | | (29,445 | ) | (b) | (932,653 | ) |
| Total stockholders’ deficit | (583,547 | ) | | (373 | ) | | (583,920 | ) |
| Total liabilities and stockholders’ deficit | $ | 7,438,786 |
| | $ | (33,715 | ) | | $ | 7,405,071 |
|
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(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 | $ | 1,807,030 |
| | $ | (29,793 | ) | (d) | $ | 1,777,237 |
|
| Handset and accessory revenues | 131,936 |
| | (1,410 | ) | (d) | 130,526 |
|
| | 1,938,966 |
| | (31,203 | ) | | 1,907,763 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 704,492 |
| | (36,137 | ) | (e) | 668,355 |
|
| Cost of handsets and accessories | 539,864 |
| | (9,823 | ) | (e) | 530,041 |
|
| Selling, general and administrative | 934,272 |
| | (35,017 | ) | (f) | 899,255 |
|
| Impairment and restructuring charges | 157,743 |
| | (127,515 | ) | (e) | 30,228 |
|
| Depreciation | 310,890 |
| | (3,281 | ) | (e) | 307,609 |
|
| Amortization | 35,167 |
| | (369 | ) | (e) | 34,798 |
|
| | 2,682,428 |
| | (212,142 | ) | | 2,470,286 |
|
| Operating loss | (743,462 | ) | | 180,939 |
| | (562,523 | ) |
| Other expense | |
| | |
| | |
| Interest expense, net | (260,606 | ) | | 40 |
| (g) | (260,566 | ) |
| Interest income | 32,870 |
| | (32 | ) | (d) | 32,838 |
|
| Foreign currency transaction gains, net | 2,537 |
| | 11,489 |
| (d) | 14,026 |
|
| Other expense, net | (2,970 | ) | | (26 | ) | (e) | (2,996 | ) |
| | (228,169 | ) | | 11,471 |
| | (216,698 | ) |
| Loss from continuing operations before income tax provision | (971,631 | ) | | 192,410 |
| | (779,221 | ) |
| Income tax provision | (33,711 | ) | | — |
| | (33,711 | ) |
| Net loss from continuing operations | $ | (1,005,342 | ) | | $ | 192,410 |
| | $ | (812,932 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (5.84 | ) | | $ | 1.11 |
| (h) | $ | (4.73 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 172,201 |
| | — |
| | 172,201 |
|
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(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 | $ | 4,573,879 |
| | $ | (56,726 | ) | (d) | $ | 4,517,153 |
|
| Handset and accessory revenues | 198,685 |
| | (15,952 | ) | (d) | 182,733 |
|
| | 4,772,564 |
| | (72,678 | ) | | 4,699,886 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,472,320 |
| | (80,180 | ) | (e) | 1,392,140 |
|
| Cost of handsets and accessories | 911,635 |
| | (39,694 | ) | (e) | 871,941 |
|
| Selling, general and administrative | 1,913,454 |
| | (83,143 | ) | (f) | 1,830,311 |
|
| Provision for doubtful accounts | 116,619 |
| | (5,159 | ) | (e) | 111,460 |
|
| Impairment and restructuring charges | 171,047 |
| | (36,004 | ) | (e) | 135,043 |
|
| Depreciation | 634,199 |
| | (4,596 | ) | (e) | 629,603 |
|
| Amortization | 64,148 |
| | (824 | ) | (e) | 63,324 |
|
| | 5,283,422 |
| | (249,600 | ) | | 5,033,822 |
|
| Operating loss | (510,858 | ) | | 176,922 |
| | (333,936 | ) |
| Other expense | |
| | |
| | |
| Interest expense, net | (539,159 | ) | | 12,629 |
| (g) | (526,530 | ) |
| Interest income | 43,379 |
| | (52 | ) | (d) | 43,327 |
|
| Foreign currency transaction losses, net | (143,745 | ) | | 20,376 |
| (d) | (123,369 | ) |
| Other expense, net | (12,982 | ) | | 124 |
| (e) | (12,858 | ) |
| | (652,507 | ) | | 33,077 |
| | (619,430 | ) |
| Loss from continuing operations before income tax provision | (1,163,365 | ) | | 209,999 |
| | (953,366 | ) |
| Income tax provision | (446,052 | ) | | — |
| | (446,052 | ) |
| Net loss from continuing operations | $ | (1,609,417 | ) | | $ | 209,999 |
| | $ | (1,399,418 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (9.36 | ) | | $ | 1.23 |
| (h) | $ | (8.13 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 171,912 |
| | — |
| | 171,912 |
|
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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 | $ | 5,465,120 |
| | $ | (40,354 | ) | (d) | $ | 5,424,766 |
|
| Handset and accessory revenues | 278,002 |
| | (9,532 | ) | (d) | 268,470 |
|
| | 5,743,122 |
| | (49,886 | ) | | 5,693,236 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,574,327 |
| | (64,785 | ) | (e) | 1,509,542 |
|
| Cost of handsets and accessories | 829,859 |
| | (37,392 | ) | (e) | 792,467 |
|
| Selling, general and administrative | 2,167,688 |
| | (120,220 | ) | (f) | 2,047,468 |
|
| Provision for doubtful accounts | 217,315 |
| | (2,861 | ) | (e) | 214,454 |
|
| Impairment and restructuring charges | 329,767 |
| | (299,366 | ) | (e) | 30,401 |
|
| Depreciation | 601,769 |
| | (43,545 | ) | (e) | 558,224 |
|
| Amortization | 47,776 |
| | (838 | ) | (e) | 46,938 |
|
| | 5,768,501 |
| | (569,007 | ) | | 5,199,494 |
|
| Operating (loss) income | (25,379 | ) | | 519,121 |
| | 493,742 |
|
| Other expense | |
| | |
| | |
| Interest expense, net | (365,521 | ) | | 5,727 |
| (g) | (359,794 | ) |
| Interest income | 33,862 |
| | (77 | ) | (d) | 33,785 |
|
| Foreign currency transaction losses, net | (53,957 | ) | | (9,372 | ) | (d) | (63,329 | ) |
| Other expense, net | (28,340 | ) | | 242 |
| (e) | (28,098 | ) |
| | (413,956 | ) | | (3,480 | ) | | (417,436 | ) |
| (Loss) income from continuing operations before income tax provision | (439,335 | ) | | 515,641 |
| | 76,306 |
|
| Income tax provision | (158,144 | ) | | — |
| | (158,144 | ) |
| Net loss from continuing operations | $ | (597,479 | ) | | $ | 515,641 |
| | $ | (81,838 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (3.48 | ) | | $ | 3.00 |
| (h) | $ | (0.48 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 171,499 |
| | — |
| | 171,499 |
|
NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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 | $ | 6,081,577 |
| | $ | (26,933 | ) | (d) | $ | 6,054,644 |
|
| Handset and accessory revenues | 299,240 |
| | (171 | ) | (d) | 299,069 |
|
| | 6,380,817 |
| | (27,104 | ) | | 6,353,713 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,681,692 |
| | (35,714 | ) | (e) | 1,645,978 |
|
| Cost of handsets and accessories | 784,072 |
| | (4,837 | ) | (e) | 779,235 |
|
| Selling, general and administrative | 2,201,102 |
| | (61,336 | ) | (f) | 2,139,766 |
|
| Provision for doubtful accounts | 159,201 |
| | (1,671 | ) | (e) | 157,530 |
|
| Depreciation | 551,463 |
| | (24,467 | ) | (e) | 526,996 |
|
| Amortization | 36,701 |
| | (712 | ) | (e) | 35,989 |
|
| | 5,414,231 |
| | (128,737 | ) | | 5,285,494 |
|
| Operating income | 966,586 |
| | 101,633 |
| | 1,068,219 |
|
| Other expense | |
| | |
| | |
| Interest expense, net | (311,735 | ) | | 2,456 |
| (g) | (309,279 | ) |
| Interest income | 34,096 |
| | (268 | ) | (d) | 33,828 |
|
| Foreign currency transaction losses, net | (37,297 | ) | | 7,177 |
| (d) | (30,120 | ) |
| Other expense, net | (37,750 | ) | | (27 | ) | (e) | (37,777 | ) |
| | (352,686 | ) | | 9,338 |
| | (343,348 | ) |
| Income from continuing operations before income tax provision | 613,900 |
| | 110,971 |
| | 724,871 |
|
| Income tax provision | (351,206 | ) | | — |
| | (351,206 | ) |
| Net income from continuing operations | $ | 262,694 |
| | $ | 110,971 |
| | $ | 373,665 |
|
| | | | | | |
| Net income from continuing operations per common share, basic | $ | 1.53 |
| | $ | 0.65 |
| (h) | $ | 2.18 |
|
| | | | | | |
| Net income from continuing operations per common share, diluted | $ | 1.52 |
| | $ | 0.64 |
| (h) | $ | 2.16 |
|
| | | | | | |
| Weighted average number of common shares outstanding, basic | 170,601 |
| | — |
| | 170,601 |
|
| Weighted average number of common shares outstanding, diluted | 172,781 |
| | — |
| | 172,781 |
|
| |
| 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 Chile as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for the six months ended June 30, 2014 and for each of the years ended December 31, 2013, 2012 and 2011, and as of June 30, 2014 in the pro forma condensed consolidated balance sheet.
| |
| Note 2. | Pro Forma Adjustments |
The unaudited pro forma condensed consolidated statements of operations and pro forma condensed consolidated balance sheet reflect the effect of the following pro forma adjustments:
| |
| (a) | Reflects the net effect of the elimination of cash and cash equivalents, a de minimus amount of proceeds received upon completion of the sale of Nextel Chile and an immaterial amount of estimated transaction costs. |
| |
| (b) | Reflects the elimination of certain of Nextel Chile's assets and liabilities. These adjustments also include the realization of foreign currency translation adjustments related to the historical operations of Nextel Chile. |
| |
(c) | Represents the effect on retained earnings as a result of the estimated $29.1 million gain recognized on the sale of Nextel Chile. |
| |
| (d) | Reflects the elimination of revenue, interest income and other income historically reported by Nextel Chile that the Company would not have recognized if the sale of this operating company had occurred on January 1, 2011. |
| |
| (e) | Reflects the elimination of expenses as a result of the sale of Nextel Chile. For the indicated line items, all activity historically reported as part of the Nextel Chile business has been eliminated, and no other adjustments or allocations have been assumed. |
| |
(f) | Reflects the elimination of selling, general and administrative expenses as a result of the sale of Nextel Chile. This adjustment also includes stock-based compensation expense related to Nextel Chile employees that would not have been recognized if the sale of this operating company had occurred on January 1, 2011. |
| |
(g) | Reflects the elimination of interest expense as a result of the sale of Nextel Chile. This adjustment does not include allocations of interest expense related to corporate-level debt obligations. |
| |
| (h) | Recalculated as the pro forma adjustment to net (loss) income from continuing operations divided by the weighted average number of basic and diluted shares outstanding for the respective period. |
