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. This financial information has been prepared to illustrate the pro forma effect of the Company's sale of its operations in Mexico, or Nextel Mexico, to an indirect subsidiary of AT&T, Inc., or AT&T, on April 30, 2015. After deducting Nextel Mexico's outstanding indebtedness, net of its cash balances, and applying estimates of other specified purchase price adjustments at closing, we received $1.448 billion in net proceeds, including $187.5 million in proceeds that were placed into escrow to secure specified indemnity obligations.
This unaudited pro forma condensed consolidated financial information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Mexico as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for each of the years ended December 31, 2014, 2013 and 2012, and as of December 31, 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 Mexico occurred as of January 1, 2012 or December 31, 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, 2014.
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 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 | $ | 573,600 |
| | $ | 1,073,467 |
| (a) | $ | 1,647,067 |
|
| Short-term investments | 153,612 |
| | — |
| | 153,612 |
|
| Accounts receivable, net | 398,678 |
| | (96,525 | ) | (b) | 302,153 |
|
| Handset and accessory inventory | 207,633 |
| | (86,379 | ) | (b) | 121,254 |
|
| Deferred income taxes, net | 50,692 |
| | (11,546 | ) | (b) | 39,146 |
|
| Prepaid expenses and other | 329,197 |
| | (113,968 | ) | (b) | 215,229 |
|
| Total current assets | 1,713,412 |
| | 765,049 |
| | 2,478,461 |
|
| Property, plant and equipment, net | 2,432,933 |
| | (1,059,689 | ) | (b) | 1,373,244 |
|
| Intangible assets, net | 822,124 |
| | (128,099 | ) | (b) | 694,025 |
|
| Deferred income taxes, net | 5,767 |
| | (5,727 | ) | (b) | 40 |
|
| Other assets | 456,355 |
| | 105,275 |
| (b) | 561,630 |
|
| Total assets | $ | 5,430,591 |
| | $ | (323,191 | ) | | $ | 5,107,400 |
|
| | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| Liabilities not subject to compromise | | | | | |
| Current liabilities | |
| | |
| | |
| Accounts payable | $ | 279,804 |
| | $ | (112,851 | ) | (b) | $ | 166,953 |
|
| Accrued expenses and other | 562,988 |
| | (153,897 | ) | (b) | 409,091 |
|
| Deferred revenues | 89,019 |
| | (47,062 | ) | (b) | 41,957 |
|
| Current portion of long-term debt | 777,569 |
| | (60,142 | ) | (b) | 717,427 |
|
| Total current liabilities | 1,709,380 |
| | (373,952 | ) | | 1,335,428 |
|
| Long-term debt | 734,823 |
| | (526,979 | ) | (b) | 207,844 |
|
| Deferred income tax liabilities | 58,088 |
| | (17,167 | ) | (b) | 40,921 |
|
| Other long-term liabilities | 299,571 |
| | (86,483 | ) | (b) | 213,088 |
|
| Total liabilities not subject to compromise | 2,801,862 |
| | (1,004,581 | ) | | 1,797,281 |
|
| Liabilities subject to compromise | 4,593,493 |
| | — |
| | 4,593,493 |
|
| 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, 172,363 shares issued and outstanding | 172 |
| | — |
| | 172 |
|
| Paid-in capital | 1,517,081 |
| | — |
| | 1,517,081 |
|
| Accumulated deficit | (2,150,664 | ) | | 276,631 |
| (c) | (1,874,033 | ) |
| Accumulated other comprehensive loss | (1,331,353 | ) | | 404,759 |
| (c) | (926,594 | ) |
| Total stockholders’ deficit | (1,964,764 | ) | | 681,390 |
| | (1,283,374 | ) |
| Total liabilities and stockholders’ deficit | $ | 5,430,591 |
| | $ | (323,191 | ) | | $ | 5,107,400 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 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 | $ | 3,447,167 |
| | $ | (1,375,379 | ) | (d) | $ | 2,071,788 |
|
| Handset and accessory revenues | 241,553 |
| | (39,416 | ) | (d) | 202,137 |
|
| | 3,688,720 |
| | (1,414,795 | ) | | 2,273,925 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,308,835 |
| | (511,069 | ) | (e) | 797,766 |
|
| Cost of handsets and accessories | 973,491 |
| | (488,355 | ) | (e) | 485,136 |
|
| Selling, general and administrative | 1,699,058 |
| | (525,769 | ) | (f) | 1,173,289 |
|
| Impairment and restructuring charges | 220,742 |
| | (26,256 | ) | (e) | 194,486 |
|
| (Gain) loss on sale of towers, net | (74,631 | ) | | 75,410 |
| (g) | 779 |
|
| Depreciation | 592,056 |
| | (224,441 | ) | (e) | 367,615 |
|
| Amortization | 80,649 |
| | (25,875 | ) | (e) | 54,774 |
|
| | 4,800,200 |
| | (1,726,355 | ) | | 3,073,845 |
|
| Operating loss | (1,111,480 | ) | | 311,560 |
| | (799,920 | ) |
| Other expense | |
| | |
| | |
| Interest expense, net | (449,345 | ) | | 75,042 |
| (h) | (374,303 | ) |
| Interest income | 66,425 |
| | (7,315 | ) | (d) | 59,110 |
|
| Foreign currency transaction losses, net | (130,499 | ) | | 64,453 |
| (d) | (66,046 | ) |
| Other expense, net | (6,721 | ) | | 484 |
| (e) | (6,237 | ) |
| | (520,140 | ) | | 132,664 |
| | (387,476 | ) |
| Loss from continuing operations before reorganization items and income tax provision | (1,631,620 | ) | | 444,224 |
| | (1,187,396 | ) |
| Reorganization items | (71,601 | ) | | — |
| | (71,601 | ) |
| Income tax provision | (74,091 | ) | | 23,195 |
| (i) | (50,896 | ) |
| Net loss from continuing operations | $ | (1,777,312 | ) | | $ | 467,419 |
| | $ | (1,309,893 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (10.31 | ) | | $ | 2.71 |
| (j) | $ | (7.60 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 172,283 |
| | — |
| | 172,283 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) 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 | $ | 4,517,154 |
| | $ | (1,832,737 | ) | (d) | $ | 2,684,417 |
|
| Handset and accessory revenues | 194,413 |
| | (39,342 | ) | (d) | 155,071 |
|
| | 4,711,567 |
| | (1,872,079 | ) | | 2,839,488 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,392,140 |
| | (484,366 | ) | (e) | 907,774 |
|
| Cost of handsets and accessories | 884,789 |
| | (530,503 | ) | (e) | 354,286 |
|
| Selling, general and administrative | 1,941,773 |
| | (675,284 | ) | (f) | 1,266,489 |
|
| Impairment and restructuring charges | 168,543 |
| | (39,057 | ) | (e) | 129,486 |
|
| Depreciation | 629,606 |
| | (241,672 | ) | (e) | 387,934 |
|
| Amortization | 63,321 |
| | (26,941 | ) | (e) | 36,380 |
|
| | 5,080,172 |
| | (1,997,823 | ) | | 3,082,349 |
|
| Operating loss | (368,605 | ) | | 125,744 |
| | (242,861 | ) |
| Other expense | |
| | |
| | |
| Interest expense, net | (526,530 | ) | | 68,885 |
| (h) | (457,645 | ) |
| Interest income | 43,327 |
| | (8,429 | ) | (d) | 34,898 |
|
| Foreign currency transaction losses, net | (123,369 | ) | | 5,084 |
| (d) | (118,285 | ) |
| Other expense, net | (12,859 | ) | | 1,215 |
| (e) | (11,644 | ) |
| | (619,431 | ) | | 66,755 |
| | (552,676 | ) |
| Loss from continuing operations before income tax provision | (988,036 | ) | | 192,499 |
| | (795,537 | ) |
| Income tax provision | (446,052 | ) | | 114,104 |
| (i) | (331,948 | ) |
| Net loss from continuing operations | $ | (1,434,088 | ) | | $ | 306,603 |
| | $ | (1,127,485 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (8.34 | ) | | $ | 1.78 |
| (j) | $ | (6.56 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 171,912 |
| | — |
| | 171,912 |
|
NII HOLDINGS, INC. (DEBTOR-IN-POSSESSION) 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 | $ | 5,424,766 |
| | $ | (2,033,255 | ) | (d) | $ | 3,391,511 |
|
| Handset and accessory revenues | 268,469 |
| | (76,317 | ) | (d) | 192,152 |
|
| | 5,693,235 |
| | (2,109,572 | ) | | 3,583,663 |
|
| Operating expenses | |
| | |
| | |
| Cost of service (exclusive of depreciation and amortization included below) | 1,509,543 |
| | (413,457 | ) | (e) | 1,096,086 |
|
| Cost of handsets and accessories | 792,466 |
| | (504,961 | ) | (e) | 287,505 |
|
| Selling, general and administrative | 2,261,922 |
| | (670,675 | ) | (f) | 1,591,247 |
|
| Impairment and restructuring charges | 30,401 |
| | (439 | ) | (e) | 29,962 |
|
| Depreciation | 558,224 |
| | (184,813 | ) | (e) | 373,411 |
|
| Amortization | 46,937 |
| | (24,040 | ) | (e) | 22,897 |
|
| | 5,199,493 |
| | (1,798,385 | ) | | 3,401,108 |
|
| Operating income | 493,742 |
| | (311,187 | ) | | 182,555 |
|
| Other expense | |
| | |
| | |
| Interest expense, net | (359,795 | ) | | 77,052 |
| (h) | (282,743 | ) |
| Interest income | 33,785 |
| | (16,239 | ) | (d) | 17,546 |
|
| Foreign currency transaction losses, net | (63,330 | ) | | 24,891 |
| (d) | (38,439 | ) |
| Other expense, net | (28,097 | ) | | 4,221 |
| (e) | (23,876 | ) |
| | (417,437 | ) | | 89,925 |
| | (327,512 | ) |
| Income (loss) from continuing operations before income tax provision | 76,305 |
| | (221,262 | ) | | (144,957 | ) |
| Income tax provision | (158,144 | ) | | 70,863 |
| (i) | (87,281 | ) |
| Net loss from continuing operations | $ | (81,839 | ) | | $ | (150,399 | ) | | $ | (232,238 | ) |
| | | | | | |
| Net loss from continuing operations per common share, basic and diluted | $ | (0.48 | ) | | $ | (0.87 | ) | (j) | $ | (1.35 | ) |
| | | | | | |
| Weighted average number of common shares outstanding, basic and diluted | 171,499 |
| | — |
| | 171,499 |
|
| |
| Note 1. | Basis of Presentation |
The accompanying unaudited pro forma consolidated information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Mexico as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for each of the years ended December 31, 2014, 2013 and 2012, and as of December 31, 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 proceeds received upon completion of the sale of Nextel Mexico, net of working capital adjustments, the elimination of Nextel Mexico's cash and cash equivalents, the repayment of the outstanding principal and interest related to Nextel Mexico's equipment financing facility, estimated transaction costs and cash placed into escrow to secure specified indemnity obligations. |
|
| | | |
| Net proceeds | $ | 1,447,677 |
|
| Add: Repayment of Nextel Mexico's equipment financing facility | 301,025 |
|
| Less: Principal and interest related to Nextel Mexico's equipment financing facility as of December 31, 2014 | (324,835 | ) |
| Less: Nextel Mexico's cash and cash equivalents as of December 31, 2014 | (153,888 | ) |
| Less: Estimated transaction costs | (9,012 | ) |
| Less: Proceeds placed into escrow | (187,500 | ) |
| Adjustment to consolidated cash and cash equivalents | $ | 1,073,467 |
|
| |
| (b) | Reflects the elimination of certain of Nextel Mexico's assets and liabilities, as well as the elimination of certain corporate assets and liabilities that were designated for use by Nextel Mexico. These adjustments also include a $187.5 million adjustment to other assets, which represents the proceeds that were placed into escrow to secure specified indemnity obligations in connection with the sale of Nextel Mexico. |
| |
(c) | Represents the effect on accumulated deficit of the estimated $276.6 million gain recognized on the sale of Nextel Mexico, which is net of the reclassification of $404.8 million of accumulated other comprehensive loss, primarily related to Nextel Mexico's cumulative translation losses. |
| |
| (d) | Reflects the elimination of revenue, interest income and other income historically reported by Nextel Mexico. For the indicated line items, all activity historically reported as part of the Nextel Mexico business has been eliminated. |
| |
| (e) | Reflects the elimination of expenses as a result of the sale of Nextel Mexico. For the indicated line items, all activity historically reported as part of the Nextel Mexico business has been eliminated. |
| |
(f) | Reflects the elimination of selling, general and administrative expenses as a result of the sale of Nextel Mexico. This adjustment also includes stock-based compensation expense related to Nextel Mexico employees that would not have been recognized if the sale of this operating company had occurred on January 1, 2012. |
| |
(g) | Reflects the elimination of Nextel Mexico's gain related to the completion of the sale of certain communication towers in the third quarter of 2014. |
| |
| (h) | Reflects the elimination of interest expense as a result of the sale of Nextel Mexico. This adjustment does not include allocations of interest expense related to corporate-level debt obligations. |
| |
| (i) | Reflects the elimination of Nextel Mexico's income tax provision. |
| |
| (j) | 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. |
