| DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Trilogy International Partners LLC, a Washington limited liability
company, together with its consolidated subsidiaries in New Zealand
and Bolivia (the “Company”, “Trilogy”,
“we”, and “our”) is a provider of wireless
voice and data communications including local, international long
distance and roaming services, for both customers and international
visitors roaming on its networks. The Company’s services are
provided under Global System for Mobile Communications
(“GSM” or “2G”), Universal Mobile
Telecommunication Service, a GSM-based third generation mobile
service for mobile communications networks (“3G”), and
Long Term Evolution (“LTE”), a widely deployed fourth
generation service (“4G”), technologies. The Company
also provides fixed broadband communications to business and
residential customers.
Below is a brief summary of each of Trilogy’s operations:
New Zealand:
Two Degrees Mobile Limited (“2degrees”) was formed
under the laws of New Zealand on February 15, 2001. 2degrees
is licensed through November 2022, and has secured additional
spectrum through November 2031, to provide nationwide wireless
communication services. 2degrees launched commercial operations in
2009 as the third operator in New Zealand. 2degrees provides voice,
data and long distance services to its customers over a 2G, 3G and
4G network. 2degrees also maintains inbound visitor roaming and
international outbound roaming agreements with various
international carriers. Additionally, with the acquisition of Snap
Limited (“Snap”) on April 30, 2015, 2degrees began
offering fixed broadband communications services to residential and
enterprise customers (see Note 2 – Snap Acquisition for more
details).
As of December 31, 2016, through its consolidated
subsidiaries, Trilogy’s voting ownership interest in 2degrees
was 62.9% and the remaining 37.1% was held by four different
parties (including a trustee holding employee shares pursuant to
the terms of the 2degrees Option Plan, as defined in Note 13
– Equity-Based Compensation and Payments).
Bolivia:
In November 1999, Empresa de Telecomunicaciones NuevaTel (PCS de
Bolivia), S.A. (“NuevaTel”) was formed to engage in
Personal Communication Systems (“PCS”) operations.
NuevaTel was awarded its first PCS license in 1999 and commenced
commercial service in November 2000 under the brand name Viva.
NuevaTel provides voice and data services, including an array of
services delivered via a short message service-based platform, to
its mobile customers in Bolivia over the existing GSM network.
NuevaTel’s 2G, 3G and 4G networks provide a variety of data
services, including high-speed Internet, messaging services and
application and content downloads. NuevaTel offers its mobile
communications services through both prepaid and postpaid payment
plans, although the majority of NuevaTel’s subscribers pay on
a prepaid basis. In addition to basic voice and data services,
NuevaTel offers public telephony services. NuevaTel’s public
telephony service utilizes wireless pay telephones located in
stores and call centers that are owned and managed by NuevaTel
resellers.
As of December 31, 2016, Trilogy, through its consolidated
subsidiaries, owned 71.5% of NuevaTel’s stock and the
remaining 28.5% was owned by a third-party limited liability
cooperative organized under the laws of the Republic of
Bolivia.
Basis of Presentation and Principles of
Consolidation
The Company’s Consolidated Financial Statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). The
Company consolidates majority-owned subsidiaries over which it
exercises control, as well as variable interest entities
(“VIEs”) where it is deemed to be the primary
beneficiary and thus VIEs are required to be consolidated in our
financial statements. All significant intercompany transactions and
accounts have been eliminated in consolidation for all periods
presented.
The Company has two reportable segments, New Zealand and Bolivia.
Unallocated corporate operating expenses, which pertain primarily
to corporate administrative functions that support the operating
segments, but are not specifically attributable to or managed by
any segment, are presented as a reconciling item between total
segment operating results and consolidated financial results.
Additional details on our reportable segments are included in Note
19 – Segment Information, of these Consolidated Financial
Statements.
Significant Accounting Policies
Use of Estimates:
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the reported
amounts of revenues and expenses for the reporting periods
presented. Certain estimates require difficult, subjective or
complex judgments about matters that are inherently uncertain.
Actual results could differ from those estimates.
Examples of significant estimates include the allowance for
doubtful accounts, the useful lives of property and equipment,
amortization periods for intangible assets, fair value of financial
instruments and equity-based compensation, imputed interest on
equipment installment receivables, cost estimates for asset
retirement obligations, deferred income taxes, fair value
measurements related to goodwill, spectrum licenses and
intangibles, projections used in impairment analysis, evaluation of
minimum operating lease terms, the allocation of purchase price in
connection with business combinations and the period for
recognizing prepaid and postpaid revenue based on breakage.
The Company records estimated revenue for rollover services (unused
credit carried from month to month for up to 12 billing cycles)
that is not expected to be used by its customers. These estimates
are based primarily on rate plans in effect and our historical
usage and billing patterns. In 2016, as a result of changes in rate
plans and offerings and the related impacts on vendor-specific
objective evidence as used for values applied to rollover balances
(primarily for data services), the Company recorded a $1.7 million
increase in Wireless service revenues offset by a reduction to
Customer deposits and unearned revenue, as a change in
estimate.
Cash and Cash Equivalents:
Cash and cash equivalents consist of highly liquid investments with
original maturities of three months or less at the acquisition date
or with a variable rate which can be liquidated on demand. The
balance of cash and cash equivalents held by our foreign
consolidated subsidiaries was $18.7 million and $30.1 million as of
December 31, 2016 and 2015, respectively.
Restricted Cash:
The Company classifies cash as restricted when the cash is
unavailable for use in general operations. These balances are
reclassified to Cash and cash equivalents when the underlying
obligation is satisfied, or in accordance with the governing
agreement. Restricted cash expected to become unrestricted during
the next twelve months is recorded in current assets. The Company
had $1.7 million and $9.3 million of restricted cash included in
Prepaid expenses and other current assets and Other assets within
the Consolidated Balance Sheets as of December 31, 2016 and
2015, respectively. The restricted cash balances consisted
primarily of cash balances held as collateral for derivative
instruments and cash received from divestures for which all the
conditions of sale had not yet been achieved.
Accounts Receivable, net:
Accounts receivable consist primarily of amounts billed and due
from customers, other wireless service providers, and dealers
(“third party retail channels”) and are generally
unsecured. Local interconnection and telecom cooperative
receivables due from other wireless service providers represent
$29.6 million and $28.8 million of Accounts receivable, net at
December 31, 2016 and 2015, respectively. Interconnection
receivables and payables are reported on a gross basis on the
Consolidated Balance Sheets and on the Consolidated Statements of
Cash Flows as the amounts do not have a legal right to offset,
consistent with the presentation of related interconnection
revenues and expenses on the Consolidated Statements of Operations
and Comprehensive Loss.
Management makes estimates of the uncollectability of its accounts
receivable. In determining the adequacy of the allowance of
doubtful accounts, management analyzes historical experience and
current collection trends, known troubled accounts, receivable
aging and current economic trends. The Company writes off account
balances against the allowance for doubtful accounts when
collection efforts are unsuccessful. Provisions for uncollectible
receivables are included in General and administrative expenses.
The allowance for doubtful accounts was $5.1 million and $4.6
million as of December 31, 2016 and 2015, respectively.
Equipment Installment Plan (“EIP”)
Receivable:
In New Zealand, the Company offers certain wireless customers the
option to pay for their handset in installments over a period of up
to 24 months using an EIP. The amounts recorded as EIP receivables
at the end of each period represent the receivables for which
invoices were not yet generated for the customer
(“unbilled”). Invoiced EIP receivables
(“billed”) are recorded in the Accounts receivable, net
balance, consistent with other outstanding customer trade
receivables. The Company assesses the credit quality of each EIP
applicant and applicants representing the greatest risk of default
are declined from participation. Customers considered to be high
risk must participate in a risk mitigation program which includes
paying a deposit and allowing for automatic payments. All EIP
customers are required to make a down payment for handsets financed
through an EIP. The current portion of the EIP receivables is
included in Equipment installment plan receivables, net and the
long-term portion of the EIP receivables is included in Long-term
equipment installment plan receivables on our Consolidated Balance
Sheets.
At the time of sale, we impute risk adjusted interest on the
receivables associated with EIPs. We record the imputed interest as
a reduction of equipment sales, and the deferred interest is
included within Equipment installment plan receivables, net on the
Consolidated Balance Sheets. The balance of the unamortized imputed
interest recorded as of December 31, 2016 and 2015 was
$2.3 million and $2.0 million, respectively .
The Company establishes an allowance for EIP receivables to cover
probable and reasonably estimated losses. The estimate of allowance
for doubtful accounts considers a number of factors, including
collection experience, receivable aging, customer credit quality
and other qualitative factors including macro-economic factors. The
Company monitors the EIP receivable balances and writes off account
balances if collection efforts are unsuccessful and future
collection is unlikely. See Note 6 – EIP Receivables for
additional information as it relates to the allowance for doubtful
accounts specifically attributable to the EIP receivables.
Inventories:
Inventory consists primarily of wireless devices and accessories,
which are valued at the lower of cost or market. Cost is determined
by the first-in, first-out (“FIFO”) method and weighted
average cost method which has historically approximated the FIFO
method. Market value is determined using current replacement cost.
The Company records inventory write-downs to net realizable value
for obsolete and slow-moving items based on inventory turnover
trends and historical experience.
Handset costs in excess of the revenues generated from handset
sales, or handset subsidies, are expensed at the time of sale. The
Company does not recognize the expected handset subsidies prior to
the time of sale because the promotional discount decision is made
at the point of sale and/or because the Company expects to recover
the handset subsidies through service revenues.
The Company also records inventories on our Consolidated Balance
Sheets, with a corresponding increase to Other current liabilities
and accrued expenses, for inventories held by a third-party
distribution and logistics company located in New Zealand. The
third-party distribution and logistics company purchases the
inventory from various equipment manufacturers on behalf of and at
the directions of 2degrees specifying the purchase price, timing of
purchase, and type and quantity of handsets. Therefore, the Company
records the inventory once risk of loss is assumed in connection
with the transfer from the manufactures to the third-party
distribution and logistics company.
Property and Equipment:
Property and equipment is recorded at cost or fair value for assets
acquired as part of business combinations and depreciation is
calculated on a straight-line method over the estimated useful
lives of the assets. Estimated useful lives are generally as
follows: (i) buildings range from 28 to 50 years;
(ii) wireless communications systems range from 2 to 20 years;
and (iii) furniture, equipment, vehicles and software range
from 2 to 17 years. Leasehold improvements are recorded at cost and
depreciated over the lesser of the term of the lease or the
estimated useful life. Costs of additions and major replacements
and improvements are capitalized. Repair and maintenance
expenditures which do not enhance the asset’s functionality
or extend the asset’s useful life are charged to operating
expenses as incurred. Construction costs, labor and overhead
incurred in the expansion or enhancement of the Company’s
networks are capitalized. Capitalization commences with
pre-construction period administrative and technical activities,
which may include obtaining leases, zoning approvals and building
permits, and ceases at the point at which the asset is ready for
its intended use and placed in service. Upon sale or retirement of
an asset, the related costs and accumulated depreciation are
removed from the balance sheet accounts and any gain or loss is
recognized. Assets under construction are not depreciated until
placed in service.
Interest expense incurred during the construction phase of the
Company’s wireless networks is capitalized as part of
property and equipment until the projects are ready for its
intended use and the assets are placed into service. Capitalized
interest costs are amortized over the estimated useful lives of the
related assets. Interest capitalized for the years ended
December 31, 2016, 2015 and 2014 was $1.7 million, $1.1
million and $1.6 million, respectively.
The Company capitalizes certain costs incurred in connection with
developing or acquiring internal use software. Capitalization of
software costs commences once selection of a specific software
project has been made and the Company approves and commits to
funding the project. Capitalized costs include direct development
costs associated with internal use software, including internal
direct labor costs and external costs of materials and services.
Capitalized software costs are included in Property and equipment,
net and amortized on a straight-line basis over the estimated
useful life of the asset. Costs incurred during the preliminary
project stage, as well as maintenance and training costs, are
expensed as incurred.
The Company records an asset retirement obligation
(“ARO”) for the fair value of legal obligations
associated with the retirement of tangible long-lived assets and a
corresponding increase in the carrying amount of the related asset
in the period in which the obligation is incurred. These
obligations primarily pertain to the Company’s legal
obligations related to the network infrastructure, principally
tower and related assets. These obligations include obligations to
remediate leased land on which the Company’s network
infrastructure assets are located. The liability is accreted to its
present value each period, and the capitalized cost is depreciated
over the estimated useful life of the related asset. Upon
settlement of the liability, any difference between the recorded
ARO liability and the actual retirement costs incurred is
recognized as an operating gain or loss in the Consolidated
Statement of Operations and Comprehensive Loss.
The significant assumptions used in estimating the Company’s
ARO include the following: a probability that the Company’s
leases with ARO will be remediated at the lessor’s directive;
expected settlement dates that coincide with lease expiration dates
plus estimated lease extensions; remediation costs that are
indicative of what third party vendors would charge the Company to
remediate the sites; expected inflation rates that are consistent
with historical inflation rates; and credit-adjusted risk-free
interest rates which approximate the Company’s incremental
borrowing rates.
License Costs and Other Intangible Assets:
Intangible assets consist primarily of wireless spectrum licenses
in foreign markets, tradenames and subscriber relationships.
License costs primarily represent costs incurred to acquire
wireless spectrum licenses in foreign markets, which are recorded
at cost, and the value attributed to wireless spectrum licenses
acquired in business combinations. Amortization begins with the
commencement of service to customers using the straight-line
method. The license costs are amortized over 7 to 20 years, which
correspond with the expiration dates of the licenses as issued by
the regulators. Licenses held, subject to certain conditions, are
usually renewable and are generally non-exclusive. When determining
the useful life of the licenses, management generally does not
consider renewal periods since there is no certainty that a license
will be renewed without significant cost (or at no cost).
Subscriber relationships were acquired as part of the Snap
acquisition (see Note 2 – Snap Acquisition) and relate to
established relationships with residential and enterprise customers
through contracts. Subscriber relationships are amortized over the
estimated useful life of 7 years using an accelerated method, which
we believe best reflects the estimated pattern in which the
economic benefits of the assets will be consumed.
Impairment of Long-Lived Assets:
The Company evaluates its long-lived assets, including intangible
assets subject to amortization, for impairment whenever events or
changes in circumstances indicate that the carrying amount of the
asset group may not be recoverable. Asset groups are determined at
the lowest level for which identifiable cash flows are largely
independent of cash flows of other groups of assets and
liabilities. When the carrying amount of a long-lived asset group
is not recoverable and exceeds its fair value, an impairment loss
is recognized equal to the excess of the asset group’s
carrying value over the estimated fair value. We determine fair
values by using a combination of comparable market values,
estimated future discounted cash flows and appraisals, as
appropriate. There were no events or changes in circumstances that
indicated impairment would be recorded for long-lived assets for
the fiscal years ended December 31, 2016, 2015 and 2014.
Goodwill:
Goodwill is the excess of the cost of an acquisition over the fair
value of the net identifiable assets acquired as of the acquisition
date. The Company reviews goodwill for impairment annually on
December 31, the last day of the fiscal fourth quarter and
also if events or changes in circumstances indicate the occurrence
of a triggering event. We may elect to first perform a qualitative
assessment to determine whether it is more likely than not the fair
value of the reporting unit is less than its carrying amount as a
basis for determining whether it is necessary to perform the
two-step goodwill impairment test. If we do not perform a
qualitative assessment, or if the qualitative assessment indicates
it is more likely than not that the fair value of the single
reporting unit is less than its carrying amount, goodwill is tested
for impairment based on a two-step test. In the first step, if
required, the Company determines if the fair value of the reporting
unit is less than the book value. If the Company concludes that the
fair value of a reporting unit is less than its book value, the
Company must perform step two in which it calculates the implied
fair value of goodwill. If the implied fair value is less than book
value, then a goodwill impairment loss is recognized for the
difference. If the Company concludes that the fair value of a
reporting unit is greater than its book value, step two is not
performed, and the Company concludes that there is no goodwill
impairment. Determining the fair value of a reporting unit involves
the use of significant estimates and assumptions. Generally fair
value is determined by a multiple of earnings based on the
guideline publicly traded business method or discounting projected
future cash flows based on management’s expectations of the
current and future operating environment. There were no goodwill
impairment charges required for any periods presented.
Derivative Instruments and Hedging Activities:
We employ risk management strategies, which may include the use of
interest rate swaps, cross-currency swaps and forward exchange
contracts. We do not hold or issue derivative instruments for
trading or speculative purposes.
Derivatives are recognized in the Consolidated Balance Sheets at
fair value. Changes in the fair values of derivative instruments
designated as “cash flow” hedges, to the extent the
hedges are highly effective, are recorded in Other comprehensive
loss. Derivative instruments not qualifying for hedge accounting or
ineffective portions of cash flow hedges, if any, are recognized in
current period earnings. The Company assesses, both at inception of
the hedge and on an ongoing basis, whether derivatives used as
hedging instruments are highly effective in offsetting the changes
in the fair value or cash flow of the hedged items. If it is
determined that a derivative is not highly effective as a hedge or
ceases to be highly effective, the Company discontinues hedge
accounting prospectively. As of December 31, 2016 and 2015, no
derivative instruments were designated for hedge accounting.
Fair Value Measurements:
The Company applies fair value accounting for all financial assets
and liabilities and non-financial assets and liabilities that are
recognized or disclosed at fair value in the financial statements
on a recurring basis. The Company defines fair value as the price
that would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements
for assets and liabilities, which are required to be recorded at
fair value, the Company considers the principal or most
advantageous market in which the Company would transact and the
market-based risk measurements or assumptions that market
participants would use in pricing the asset or liability, such as
inherent risk, transfer restrictions and credit risk.
Required Distributions:
The Company is required to make quarterly distributions to its
members on a pro rata basis in accordance with each member’s
ownership interest in amounts sufficient to permit members to pay
the tax liabilities resulting from allocations of income tax items
from the Company. The Company was in a net taxable loss position
for the years ended December 31, 2016, 2015 and 2014;
therefore, no tax distributions were made to its members related to
these tax years.
Revenue Recognition:
Wireless service revenues are primarily derived from providing
access to and usage of the Company’s wireless networks. In
general, access revenues from wireless postpaid customers are
billed in arrears and recognized over the period that the
corresponding services are rendered to customers. Wireless service
revenues derived from usage of the Company’s networks,
including voice, data, roaming and long-distance revenues, are
recognized when the services are provided. As a result of the
cutoff times of our multiple billing cycles each month, we are
required to estimate the amount of subscriber revenues earned but
not billed from the end of each billing cycle to the end of each
reporting period. The Company also records estimated wireless
service revenue for rollover services, unused credit carried from
month to month for up to 12 billing cycles, not expected to be
used. These estimates are based primarily on rate plans in effect
and our historical usage and billing patterns.
Prepaid wireless services sold to customers are recorded as
unearned revenue prior to the commencement of services and is
recognized when the services are used or expire. When prepaid
services are not subject to expiration, the Company estimates
breakage, cash consideration received for prepaid services but
never expected to be redeemed by customers, based upon historical
usage trends. The Company’s policy is to recognize revenue
for estimated breakage when there is a remote likelihood the
balance of prepaid services will be redeemed.
Interconnection revenues are generated when calls from other
operators terminate on the Company’s networks and are
recognized in the period the termination occurs.
Equipment sales consist principally of revenues from the sale of
wireless handsets and accessories to subscribers and dealers.
Equipment sales, including those on an EIP, are recognized when the
products are delivered to the customer or dealer. The revenues and
related expenses associated with the sale of wireless handsets and
accessories through our indirect sales channels are recognized when
the products are delivered and accepted by the dealer, including
when products are provided by the third-party distribution company,
as this is considered to be a separate earnings process from the
sale of wireless services and probability of collection is
likely.
The Company has determined that the sale of wireless services
through its direct sales channels with an accompanying handset
constitutes a revenue arrangement with multiple deliverables. The
Company accounts for these arrangements as separate units of
accounting, including the wireless service and handset. For these
multiple element arrangements, the Company must: (1) determine
whether and when each element has been delivered;
(2) determine relative selling price of each element using the
selling price hierarchy of vendor-specific objective evidence of
selling price, third party evidence, or the Company’s best
estimate of selling price, as applicable, and; (3) allocate
the total price among the various elements based on the relative
selling price method. The revenue allocated to the multiple revenue
streams is based on the relative selling price to the total
consideration from the sale. Consideration allocated to the handset
is recognized as equipment sales when the handset is delivered and
accepted by the subscriber. Consideration allocated to the wireless
service is recognized as service is rendered.
We also earn revenues from our wireline subscribers. These revenues
are based upon usage of its network and facilities, contract fees
and equipment sales. In general, fixed monthly fees for services
are billed one month in advance and are recognized when earned.
Revenues from services that are not fixed in amount and are based
on usage are generally billed in arrears and recognized when
service is rendered. We sell each of these services separately and
each product or service has a standalone selling price. When
equipment is sold separately from services, revenue is recognized
upon delivery to the customer. When equipment is sold as part of a
managed service, revenue is recognized over the contract
period.
Customer Sales Incentives
The Company periodically provides incentive offers to its customers
to encourage purchases. Such offers include current discount offers
(e.g., percentage discounts off current purchases), inducement
offers (e.g., offers for future discounts subject to a minimum
current purchase), and commissions. Current discount offers, when
accepted by customers, are treated as a reduction to the purchase
price of the related transaction, while inducement offers, when
accepted by customers, are treated as a reduction to purchase price
based on estimated future redemption rates. Redemption rates are
estimated using the Company’s historical experience for
similar inducement offers. Current discount offers and commissions
are presented as a reduction to revenue unless the Company
receives, or will receive, an identifiable benefit in exchange for
the consideration, and the fair value of such benefit can be
reasonably estimated.
Pass Through Taxes:
The Company presents taxes imposed by governmental authorities on
revenue-producing transactions between us and our customers on a
net basis.
Advertising Costs:
The Company expenses the cost of advertising as incurred.
Advertising expense for the years ended December 31, 2016,
2015 and 2014 were $19.0 million, $21.3 million and $23.1 million,
respectively.
Operating Leases:
The Company’s cell sites are typically situated on leased
property including land, towers and rooftop locations. The
Company’s retail stores, distribution facilities, office
spaces and certain of its customer service centers are also leased.
The Company’s lease contracts expire on various dates through
2043 and generally provide for renewal options of up to an
additional ten years exercisable at our option. For scheduled rent
escalation clauses during the lease terms, the Company records
minimum rental payments on a straight-line basis over the fixed
non-cancelable terms of the leases, including those periods for
which failure to renew the lease imposes a significant economic
penalty. If failure to exercise a renewal option imposes an
economic penalty, the Company may determine at the inception of the
lease that renewal is reasonably assured and include the renewal
option period(s) in addition to the fixed non-cancelable term of
the lease in the determination of the appropriate estimated lease
term, up to the estimated economic life of the underlying
asset.
Defined Contribution Plan:
The Company has a defined contribution plan whereby participants
may contribute a portion of their eligible pay to the plan through
payroll withholdings. The Company provides matching contributions
based on the amount of eligible compensation contributed by the
employees. Total contributions by the Company were $0.1 million,
$0.1 million and $0.1 million for the years ended December 31,
2016, 2015 and 2014, respectively.
Equity-Based Compensation:
The Company measures compensation costs for all equity-based
payment awards made to employees based on the estimated fair values
at the either the grant date for equity classified awards or
quarterly for liability classified awards. The expense, net of
estimated forfeitures, is recognized over the requisite service
period, which is generally the vesting period of the award. The
fair value of the equity-based payment awards is estimated using
the Black-Scholes option valuation model.
Net (Loss) Earnings Per Unit (“EPU”):
The Company has two classes of common units: Member units and
Profit interest units. Member units include Class A and B
units which are issued in exchange for capital contributions
(hereafter the “Member group”). Profit interest units
consist of Class C units which are issued to employees or
independent contractors in exchange for performing services
(hereafter the “Profit group”). EPU is calculated
separately for the Member group and for the Profit group using the
two-class method.
Basic (loss) income per unit (“Basic EPU”) is computed
by dividing net (loss) income attributable to the Member group
unitholders and Profit group unitholders by the weighted average
number of Member group and Profit group units outstanding,
respectively, for the period. The Profit group is not included in
the basic EPU calculation when the Company operates at a loss due
to the anti-dilutive effect.
Diluted (loss) income per unit (“Diluted EPU”) gives
effect to all dilutive potential Member units and Profit interest
units outstanding during the period using the treasury stock
method. Diluted EPU excludes all potentially dilutive units if the
effect of their inclusion is anti-dilutive. Diluted EPU is computed
by dividing net (loss) income attributable to the Member group
unitholders and the Profit group unitholders by the weighted
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