Attached files
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| 8-K - FORM 8-K - NII HOLDINGS INC | nihd-3312014x8xk.htm |
Exhibit 99.1
NII HOLDINGS ANNOUNCES FIRST QUARTER 2014 RESULTS
• | Net loss of 52,000 subscribers, resulting in an ending subscriber base of 9.4 million subscribers |
• | Consolidated operating revenues of $970 million |
• | Consolidated adjusted operating loss before depreciation and amortization (adjusted OIBDA) of $84 million |
RESTON, Va., May 12, 2014 - NII Holdings, Inc. [NASDAQ: NIHD] today announced its consolidated financial results for the first quarter of 2014. The Company reported a net loss of 52,000 subscribers for the quarter, bringing its quarter-end subscriber base to 9.4 million, a 4 percent decrease from a year ago. Financial results for the first quarter include consolidated operating revenues of $970 million, a 27 percent decrease compared to the first quarter of 2013; consolidated adjusted OIBDA loss, which excludes the impact of non-cash asset impairments, restructuring charges and other unusual items, of $84 million; and a consolidated operating loss of $239 million. For the first quarter 2014, the Company generated a net loss from continuing operations of $376 million, or $2.19 per basic share. Capital expenditures were $118 million for the period.
“Our focus for 2014 is to drive better operational and financial results by stabilizing our operations in Mexico and investing in subscriber growth in Brazil,” said Steve Shindler, NII Holdings’ chief executive officer. “Our 3G net subscriber additions in Brazil more than doubled this quarter from the fourth quarter of 2013, but were not enough to offset the continued subscriber losses in Mexico. We continue to believe that our focus on our core markets in Brazil and Mexico and our high quality networks, combined with aggressive rate plan offers and an increasing portfolio of smartphones, position us to attract customers and improve our results over the long term.”
NII Holdings' consolidated average monthly service revenue per subscriber (ARPU) was $29 for the first quarter of 2014, down from $39 in the prior year. The Company also reported consolidated average monthly churn of 3.42 percent for the period, compared to 2.42 percent in the first quarter of 2013. Consolidated cost per gross add (CPGA) was $290 for the first quarter 2014, a $13 increase from the year ago period.
The Company ended the first quarter with $5.9 billion in total debt and $1.7 billion in consolidated cash and short-term investments, resulting in $4.2 billion of net debt.
“Although our cash use is typically higher in the first half of the year, it was particularly high in the first quarter of 2014 due in part to the required prepayment of $135 million in annual spectrum fees in Mexico that have historically been due in the second quarter of the year. We also increased handset inventories by approximately $68 million, primarily in Mexico and Brazil, as we expanded our portfolio and prepared for the launch of iconic handsets in both markets,” said Juan Figuereo NII Holdings executive vice president and chief financial officer. “With revenue generation falling short of our expectations and the need to continue to invest in subscriber growth, we are increasing the intensity of our focus on balancing investments with preserving liquidity.”
Additional information relating to NII Holdings' first quarter 2014 results will be provided on the Company's earnings call on Monday, May 12, 2014 from 8:30 AM to 9:15 AM EDT. The call is available via webcast, online at www.nii.com on the Investor Relations page or by phone at the numbers below.
Phone:
Domestic
1 800 741 4871 pass-code: NII HOLDINGS
International
+1 212 231 2914 pass-code: NII HOLDINGS
Please click here for additional Global Access Numbers
All participants are asked to dial in 10-15 minutes prior to the start of the conference call. If you are unable to participate, a rebroadcast of the conference call will be available for two weeks following the call. The call will also be available via webcast, online at www.nii.com on the Investor Relations page.
Conference Call Replay:
Domestic
1 800 633 8284 pass-code: 21715400
International
+1 402 977 9140 pass-code: 21715400
In addition to the preliminary results prepared in accordance with accounting principles generally accepted in the United States (GAAP) provided throughout this press release, NII Holdings has presented consolidated adjusted OIBDA, ARPU, CPGA and Net Debt. These measures are non-GAAP financial measures and should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial table. To view these and other reconciliations of non-GAAP financial measures that the Company uses and information about how to access the conference call discussing NII Holdings' first quarter 2014 results, visit the investor relations link at www.nii.com.
About NII Holdings, Inc.
NII Holdings, Inc., a publicly held company based in Reston, Va., is a provider of differentiated mobile communication services for businesses and high value consumers in Latin America. NII Holdings, operating under the Nextel brand in Brazil, Mexico, Argentina and Chile, offers fully integrated wireless communications tools with digital cellular voice services, data services, wireless Internet access and Nextel Direct Connect® and International Direct ConnectSM, a digital two-way radio. NII Holdings is a Fortune 500 and Barron's 500 company, and has also been named one of the best places to work among multinationals in Latin America by the Great Place to Work® Institute. The Company trades on the NASDAQ market under the symbol NIHD. Visit the Company's website at www.nii.com.
Nextel, the Nextel logo and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc.
Visit NII Holdings' news room for news and to access our markets' news centers: nii.com/newsroom.
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding the business outlook, future performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the Company’s ability to meet its business plans and maintain compliance with financial covenants under its existing operating company debt obligations, customer growth and retention, pricing, network usage, operating costs, the timing of various events, the economic and regulatory environment and the foreign exchange rates that will prevail during 2014. Future performance cannot be assured and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include the risks and uncertainties relating to the impact on our financial results, not meeting our business plans or failing to meet our financial covenants on the required testing dates; the impact of more intense competitive conditions and changes in economic conditions in the markets we serve; the risk that our network technologies will not perform properly or support the services our customers want or need; the risk that customers in the markets we serve will not find our services attractive; potential reductions in the recorded value of our assets that may result from fluctuations in foreign currency exchange rates and, in particular, fluctuations in the relative values of the currencies of the countries in which we operate compared to the U.S. dollar; unexpected results of litigation; and the additional risks and uncertainties that are described in NII Holdings' Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as well as in other reports filed from time to time by NII Holdings with the Securities and Exchange Commission. This press release speaks only as of its date, and NII Holdings disclaims any duty to update the information herein.
Media Contacts:
NII Holdings, Inc.
1875 Explorer Street, Suite 1000
Reston, VA. 20190
(703) 390-5100
www.nii.com
Investor Relations: Tahmin Clarke
(703) 390-7174
tahmin.clarke@nii.com
Media Relations: Claudia Restrepo
(786) 251-7020
claudia.restrepo@nii.com
NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(in millions, except per share amounts)
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
(unaudited) | |||||||
Operating revenues Service and other revenues | $ | 913.9 | $ | 1,283.1 | |||
Handset and accessory revenues | 56.3 | 47.7 | |||||
970.2 | 1,330.8 | ||||||
Operating expenses Cost of service (exclusive of depreciation and amortization included below) | 337.6 | 399.1 | |||||
Cost of handset and accessory sales | 265.8 | 206.3 | |||||
Selling, general and administrative | 450.7 | 497.5 | |||||
Impairment and restructuring (benefits) charges | (2.5 | ) | 124.6 | ||||
Depreciation | 140.6 | 167.5 | |||||
Amortization | 17.1 | 15.3 | |||||
1,209.3 | 1,410.3 | ||||||
Operating loss | (239.1 | ) | (79.5 | ) | |||
Other (expense) income Interest expense, net | (140.2 | ) | (109.7 | ) | |||
Interest income | 20.1 | 6.5 | |||||
Foreign currency transaction (losses) gains, net | (7.2 | ) | 23.2 | ||||
Other expense, net | (4.7 | ) | (4.7 | ) | |||
(132.0 | ) | (84.7 | ) | ||||
Loss from continuing operations before income tax provision | (371.1 | ) | (164.2 | ) | |||
Income tax provision | (5.0 | ) | (21.6 | ) | |||
Net loss from continuing operations | (376.1 | ) | (185.8 | ) | |||
Loss from discontinued operations, net of income taxes | — | (21.7 | ) | ||||
Net loss | $ | (376.1 | ) | $ | (207.5 | ) | |
Net loss from continuing operations, per common share, basic and diluted | $ | (2.19 | ) | $ | (1.08 | ) | |
Net loss from discontinued operations, per common share, basic and diluted | — | (0.13 | ) | ||||
Net loss, per common share, basic and diluted | $ | (2.19 | ) | $ | (1.21 | ) | |
Weighted average number of common shares outstanding, basic and diluted | 172.1 | 171.7 | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par values)
March 31, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 1,299.8 | $ | 1,733.8 | |||
Short-term investments | 305.2 | 585.8 | |||||
Accounts receivable, less allowance for doubtful accounts of $65.1 and $61.3 | 501.5 | 522.5 | |||||
Handset and accessory inventory | 411.1 | 342.6 | |||||
Deferred income taxes, net | 110.6 | 127.4 | |||||
Prepaid expenses and other | 562.4 | 436.1 | |||||
Total current assets | 3,190.6 | 3,748.2 | |||||
Property, plant and equipment, net | 3,395.0 | 3,388.1 | |||||
Intangible assets, net | 1,013.1 | 993.7 | |||||
Deferred income taxes, net | 28.2 | 26.7 | |||||
Other assets | 562.8 | 523.3 | |||||
Total assets | $ | 8,189.7 | $ | 8,680.0 | |||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 316.1 | $ | 369.1 | |||
Accrued expenses and other | 857.2 | 972.5 | |||||
Deferred revenues | 119.0 | 128.2 | |||||
Current portion of long-term debt | 103.5 | 96.8 | |||||
Deposits related to 2013 sale of towers | 715.8 | 720.0 | |||||
Total current liabilities | 2,111.6 | 2,286.6 | |||||
Long-term debt | 5,749.3 | 5,696.6 | |||||
Deferred revenues | 10.6 | 11.3 | |||||
Deferred income tax liabilities | 97.3 | 109.0 | |||||
Other long-term liabilities | 229.7 | 221.1 | |||||
Total liabilities | 8,198.5 | 8,324.6 | |||||
Commitments and contingencies | |||||||
Stockholders’ (deficit) equity | |||||||
Undesignated preferred stock, par value $0.001, 10.0 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, par value $0.001, 600.0 shares authorized, 172.1 shares issued and outstanding | 0.2 | 0.2 | |||||
Paid-in capital | 1,508.3 | 1,504.3 | |||||
Accumulated deficit | (569.1 | ) | (193.0 | ) | |||
Accumulated other comprehensive loss | (948.2 | ) | (956.1 | ) | |||
Total stockholders’ (deficit) equity | (8.8 | ) | 355.4 | ||||
Total liabilities and stockholders’ (deficit) equity | $ | 8,189.7 | $ | 8,680.0 | |||
CONDENSED CONSOLIDATED CASH FLOW DATA
(in millions)
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
(unaudited) | |||||||
Cash and cash equivalents, beginning of period | $ | 1,733.8 | $ | 1,371.2 | |||
Net cash used in operating activities | (485.6 | ) | (142.6 | ) | |||
Net cash provided by (used in) investing activities | 90.4 | (121.5 | ) | ||||
Net cash (used in) provided by financing activities | (4.6 | ) | 762.8 | ||||
Effect of exchange rate changes on cash and cash equivalents | (34.2 | ) | 2.2 | ||||
Change in cash and cash equivalents held for sale | — | 4.0 | |||||
Cash and cash equivalents, end of period | $ | 1,299.8 | $ | 1,876.1 | |||
NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(UNAUDITED)
NII Holdings, Inc. | |||||||
(subscribers in thousands) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
iDEN | 7,101.1 | 9,403.1 | |||||
WCDMA | 2,336.2 | 410.7 | |||||
Total subscriber units in commercial service (as of March 31) | 9,437.3 | 9,813.8 | |||||
iDEN | (405.1 | ) | (7.7 | ) | |||
WCDMA | 353.1 | 119.5 | |||||
Total net subscriber (losses) additions | (52.0 | ) | 111.8 | ||||
Migrations from iDEN to WCDMA | 241.0 | 87.0 | |||||
iDEN customer churn | 3.74 | % | 2.38 | % | |||
WCDMA customer churn | 2.24 | % | 4.17 | % | |||
Churn (%) | 3.42 | % | 2.42 | % | |||
Average monthly revenue per handset/unit in service (ARPU) (1) | $ | 29 | $ | 39 | |||
Cost per gross add (CPGA) (1) | $ | 290 | $ | 277 | |||
Nextel Brazil | |||||||
(dollars in millions, except ARPU and CPGA, and subscribers in thousands) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Operating revenues Service and other revenues | $ | 425.8 | $ | 616.6 | |||
Handset and accessory revenues | 35.4 | 19.3 | |||||
461.2 | 635.9 | ||||||
Operating expenses Cost of service (exclusive of depreciation and amortization included below) | 168.2 | 217.4 | |||||
Cost of handset and accessory sales | 111.7 | 50.6 | |||||
Selling, general and administrative | 210.4 | 210.3 | |||||
Segment (losses) earnings | $ | (29.1 | ) | $ | 157.6 | ||
iDEN | 3,484.3 | 3,806.8 | |||||
WCDMA | 645.1 | 77.9 | |||||
Total subscriber units in commercial service (as of March 31) | 4,129.4 | 3,884.7 | |||||
iDEN | (88.3 | ) | (39.5 | ) | |||
WCDMA | 259.5 | 77.9 | |||||
Total net subscriber additions | 171.2 | 38.4 | |||||
Migrations from iDEN to WCDMA | 47.7 | — | |||||
iDEN customer churn | 2.53 | % | 2.34 | % | |||
WCDMA customer churn | 1.47 | % | NM | ||||
Churn (%) | 2.39 | % | 2.34 | % | |||
ARPU (1) | $ | 31 | $ | 47 | |||
CPGA (1) | $ | 272 | $ | 204 | |||
NM - Not Meaningful
Nextel Mexico | |||||||
(dollars in millions, except ARPU and CPGA, and subscribers in thousands) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Operating revenues Service and other revenues | $ | 373.3 | $ | 501.0 | |||
Handset and accessory revenues | 8.5 | 13.0 | |||||
381.8 | 514.0 | ||||||
Operating expenses Cost of service (exclusive of depreciation and amortization included below) | 124.8 | 123.2 | |||||
Cost of handset and accessory sales | 133.3 | 128.5 | |||||
Selling, general and administrative | 136.2 | 161.1 | |||||
Segment (losses) earnings | $ | (12.5 | ) | $ | 101.2 | ||
iDEN | 1,593.8 | 3,729.1 | |||||
WCDMA | 1,458.4 | 188.5 | |||||
Total subscriber units in commercial service (as of March 31) | 3,052.2 | 3,917.6 | |||||
iDEN | (289.1 | ) | (29.0 | ) | |||
WCDMA | 76.8 | 44.8 | |||||
Total net subscriber (losses) additions | (212.3 | ) | 15.8 | ||||
Migrations from iDEN to WCDMA | 191.7 | 84.7 | |||||
iDEN customer churn | 5.68 | % | 2.15 | % | |||
WCDMA customer churn | 2.40 | % | 0.17 | % | |||
Churn (%) | 4.30 | % | 2.08 | % | |||
ARPU (1) | $ | 35 | $ | 38 | |||
CPGA (1) | $ | 578 | $ | 487 | |||
Nextel Argentina | |||||||
(dollars in millions, except ARPU and CPGA, and subscribers in thousands) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Operating revenues Service and other revenues | $ | 100.9 | $ | 153.1 | |||
Handset and accessory revenues | 11.8 | 13.9 | |||||
112.7 | 167.0 | ||||||
Operating expenses Cost of service (exclusive of depreciation and amortization included below) | 26.9 | 40.1 | |||||
Cost of handset and accessory sales | 16.1 | 21.2 | |||||
Selling, general and administrative | 42.7 | 53.4 | |||||
Segment earnings | $ | 27.0 | $ | 52.3 | |||
iDEN | 1,996.7 | 1,819.2 | |||||
WCDMA | — | — | |||||
Total subscriber units in commercial service (as of March 31) | 1,996.7 | 1,819.2 | |||||
iDEN | (26.4 | ) | 63.6 | ||||
WCDMA | — | — | |||||
Total net subscriber (losses) additions | (26.4 | ) | 63.6 | ||||
iDEN customer churn | 4.16 | % | 2.93 | % | |||
WCDMA customer churn | — | — | |||||
Churn (%) | 4.16 | % | 2.93 | % | |||
ARPU (1) | $ | 15 | $ | 25 | |||
CPGA (1) | $ | 66 | $ | 94 | |||
(1) For information regarding ARPU and CPGA, see “Non-GAAP Reconciliations for the Three Months Ended March 31, 2014 and 2013” included in this release.
NON-GAAP RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(UNAUDITED)
Consolidated OIBDA and Consolidated Adjusted OIBDA
Consolidated operating income before depreciation and amortization, or OIBDA, represents operating income before depreciation and amortization expense. Consolidated adjusted operating income before depreciation and amortization, or adjusted OIBDA, represents consolidated operating income before depreciation expense, amortization expense, material non-cash asset impairments, severance costs associated with publicly announced restructuring plans and other material non-recurring or unusual charges. Consolidated OIBDA and consolidated adjusted OIBDA are not measurements under accounting principles generally accepted in the United States, may not be similar to consolidated OIBDA and consolidated adjusted OIBDA measures of other companies and should be considered in addition to, but not as substitutes for, the information contained in our statements of operations. We believe that consolidated OIBDA and consolidated adjusted OIBDA provide useful information to investors because they are indicators of our operating performance, especially in a capital intensive industry such as ours, since they exclude items that are not directly attributable to ongoing business operations. Consolidated OIBDA and consolidated adjusted OIBDA can be reconciled to our consolidated statements of operations as follows (in millions):
NII Holdings, Inc. | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Consolidated operating loss | $ | (239.1 | ) | $ | (79.5 | ) | |
Consolidated depreciation | 140.6 | 167.5 | |||||
Consolidated amortization | 17.1 | 15.3 | |||||
Consolidated operating (loss) income before depreciation and amortization | (81.4 | ) | 103.3 | ||||
Non-cash asset impairment charges | — | 85.3 | |||||
Restructuring (benefits) charges | (2.5 | ) | 39.3 | ||||
Consolidated adjusted operating (loss) income before depreciation and amortization | $ | (83.9 | ) | $ | 227.9 | ||
Average Monthly Revenue Per Handset/Unit in Service (ARPU)
Average monthly revenue per subscriber 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 subscriber units 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 March 31, | ||||||||
2014 | 2013 | |||||||
Consolidated service and other revenues | $ | 913.9 | $ | 1,283.1 | ||||
Less: consolidated other revenues | (105.5 | ) | (147.5 | ) | ||||
Total consolidated subscriber revenues | $ | 808.4 | $ | 1,135.6 | ||||
ARPU calculated with subscriber revenues | $ | 29 | $ | 39 | ||||
ARPU calculated with service and other revenues | $ | 32 | $ | 44 | ||||
Nextel Brazil | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Service and other revenues | $ | 425.8 | $ | 616.6 | ||||
Less: other revenues | (51.6 | ) | (73.5 | ) | ||||
Total subscriber revenues | $ | 374.2 | $ | 543.1 | ||||
ARPU calculated with subscriber revenues | $ | 31 | $ | 47 | ||||
ARPU calculated with service and other revenues | $ | 35 | $ | 53 | ||||
Nextel Mexico | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Service and other revenues | $ | 373.3 | $ | 501.0 | ||||
Less: other revenues | (42.2 | ) | (53.4 | ) | ||||
Total subscriber revenues | $ | 331.1 | $ | 447.6 | ||||
ARPU calculated with subscriber revenues | $ | 35 | $ | 38 | ||||
ARPU calculated with service and other revenues | $ | 39 | $ | 43 | ||||
Nextel Argentina | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Service and other revenues | $ | 100.9 | $ | 153.1 | ||||
Less: other revenues | (11.1 | ) | (19.8 | ) | ||||
Total subscriber revenues | $ | 89.8 | $ | 133.3 | ||||
ARPU calculated with subscriber revenues | $ | 15 | $ | 25 | ||||
ARPU calculated with service and other revenues | $ | 17 | $ | 29 | ||||
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 March 31, | ||||||||
2014 | 2013 | |||||||
Consolidated handset and accessory revenues | $ | 56.3 | $ | 47.7 | ||||
Less: consolidated uninsured handset replacement revenues | (5.2 | ) | (4.2 | ) | ||||
Consolidated handset and accessory revenues, net | 51.1 | 43.5 | ||||||
Less: consolidated cost of handset and accessory sales | 265.8 | 206.3 | ||||||
Consolidated handset subsidy costs | 214.7 | 162.8 | ||||||
Consolidated selling and marketing | 148.6 | 144.1 | ||||||
Costs per statement of operations | 363.3 | 306.9 | ||||||
Less: consolidated costs unrelated to initial customer acquisition | (97.0 | ) | (79.1 | ) | ||||
Customer acquisition costs | $ | 266.3 | $ | 227.8 | ||||
Cost per Gross Add | $ | 290 | $ | 277 | ||||
Nextel Brazil | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Handset and accessory revenues | $ | 35.4 | $ | 19.3 | ||||
Less: uninsured handset replacement revenues | (2.1 | ) | (1.9 | ) | ||||
Handset and accessory revenues, net | 33.3 | 17.4 | ||||||
Less: cost of handset and accessory sales | 111.7 | 50.6 | ||||||
Handset subsidy costs | 78.4 | 33.2 | ||||||
Selling and marketing | 68.8 | 44.9 | ||||||
Costs per statement of operations | 147.2 | 78.1 | ||||||
Less: costs unrelated to initial customer acquisition | (21.7 | ) | (15.1 | ) | ||||
Customer acquisition costs | $ | 125.5 | $ | 63.0 | ||||
Cost per Gross Add | $ | 272 | $ | 204 | ||||
Nextel Mexico | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Handset and accessory revenues | $ | 8.5 | $ | 13.0 | ||||
Less: uninsured handset replacement revenues | (3.0 | ) | (2.3 | ) | ||||
Handset and accessory revenues, net | 5.5 | 10.7 | ||||||
Less: cost of handset and accessory sales | 133.3 | 128.5 | ||||||
Handset subsidy costs | 127.8 | 117.8 | ||||||
Selling and marketing | 59.0 | 71.7 | ||||||
Costs per statement of operations | 186.8 | 189.5 | ||||||
Less: costs unrelated to initial customer acquisition | (74.0 | ) | (62.8 | ) | ||||
Customer acquisition costs | $ | 112.8 | $ | 126.7 | ||||
Cost per Gross Add | $ | 578 | $ | 487 | ||||
Nextel Argentina | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Handset and accessory revenues | $ | 11.8 | $ | 13.9 | ||||
Less: uninsured handset replacement revenues | — | — | ||||||
Handset and accessory revenues, net | 11.8 | 13.9 | ||||||
Less: cost of handsets and accessories | 16.1 | 21.2 | ||||||
Handset subsidy costs | 4.3 | 7.3 | ||||||
Selling and marketing | 11.2 | 14.4 | ||||||
Costs per statement of operations | 15.5 | 21.7 | ||||||
Less: costs unrelated to initial customer acquisition | (0.6 | ) | (1.0 | ) | ||||
Customer acquisition costs | $ | 14.9 | $ | 20.7 | ||||
Cost per Gross Add | $ | 66 | $ | 94 | ||||
Net Debt
Net debt represents total debt less cash, cash equivalents, short-term and long-term investments and restricted cash. 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 provides useful information concerning our liquidity and leverage. Net debt as of March 31, 2014 can be calculated as follows (in millions):
NII Holdings, Inc. | |||
Total debt | $ | 5,852.8 | |
Add: debt discounts | 10.0 | ||
Less: cash and cash equivalents | 1,299.8 | ||
Less: short-term investments | 305.2 | ||
Less: long-term investments | 13.8 | ||
Less: restricted cash | 93.3 | ||
Net debt | $ | 4,150.7 | |
Impact of Foreign Currency Fluctuations
The following table shows the impact of changes in foreign currency exchange rates on certain financial measures for the three months ended March 31, 2014 compared to the same period in 2013 by (i) adjusting the relevant measures for three months ended March 31, 2013 to levels that would have resulted if the average foreign currency exchange rates for the three months ended March 31, 2013 were the same as the average foreign currency exchange rates that were in effect for the three months ended March 31, 2014; and (ii) comparing the actual and adjusted financial measures for the three months ended March 31, 2013 to the similar financial measures for the three months ended March 31, 2014 to show the percentage change in those measures before and after taking those adjustments into account. The amounts reflected in the following table for operating income before depreciation and amortization on a consolidated basis and segment earnings for Nextel Brazil, Nextel Mexico and Nextel Argentina, before the adjustments for changes in foreign currency exchange rates, are based on the calculations contained elsewhere in these non-GAAP reconciliations for the three months ended March 31, 2014 and 2013. The average foreign currency exchange rates for each of the relevant currencies during each of the three months ended March 31, 2014 and 2013 are included in the notes to the table below. The information reflected in the following table is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statements of operations. We believe that these calculations provide useful information concerning our relative performance for the three months ended March 31, 2014 compared to the same period in 2013 by removing the impact of the significant difference in the average foreign currency exchange rates in effect for the period.
NII Holdings, Inc. | ||||||||||||||
(dollars in thousands) | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
1Q 2013 Actual | 1Q 2013 Adjustment (1) | 1Q 2013 Normalized (1) | 1Q 2014 Actual | 1Q 2013 to 1Q 2014 Actual Growth Rate (2) | 1Q 2013 to 1Q 2014 Normalized Growth Rate (3) | |||||||||
Consolidated: | ||||||||||||||
Operating revenues | $ | 1,330,839 | $ | (181,757 | ) | $ | 1,149,082 | $ | 970,214 | (27)% | (16)% | |||
Adjusted operating income (loss) before depreciation and amortization | 227,913 | (68,293 | ) | 159,620 | (83,931 | ) | (137)% | (153)% | ||||||
Nextel Brazil: | ||||||||||||||
Operating revenues | $ | 635,872 | $ | (98,851 | ) | $ | 537,021 | $ | 461,224 | (27)% | (14)% | |||
Segment earnings (losses) | 157,643 | (33,936 | ) | 123,707 | (29,145 | ) | (118)% | (124)% | ||||||
Nextel Mexico: | ||||||||||||||
Operating revenues | $ | 514,014 | $ | (22,047 | ) | $ | 491,967 | $ | 381,844 | (26)% | (22)% | |||
Segment earnings (losses) | 101,229 | (5,901 | ) | 95,328 | (12,540 | ) | (112)% | (113)% | ||||||
Nextel Argentina: | ||||||||||||||
Operating revenues | $ | 167,024 | $ | (57,239 | ) | $ | 109,785 | $ | 112,680 | (33)% | 3% | |||
Segment earnings | 52,341 | (30,488 | ) | 21,853 | 26,978 | (48)% | 23% | |||||||
(1) | The "1Q 2013 Normalized" amount reflects the impact of applying the average foreign currency exchange rates for the three months ended March 31, 2014 to the operating revenues earned in foreign currencies and to the other components of each of the actual financial measures shown above for the three months ended March 31, 2013, other than certain components of those measures consisting of U.S. dollar-based operating expenses, which were not adjusted. The amounts included under the column "1Q 2013 Adjustment" reflect the amount determined by subtracting the "1Q 2013 Normalized" amount calculated as described in the preceding sentence from the "1Q 2013 Actual" amount and reflects the impact of the year-over-year change in the average foreign currency exchange rates on each of the financial measures for the three months ended March 31, 2013. The average foreign currency exchange rates for each of the relevant currencies during the three months ended March 31, 2014 and 2013 for purposes of these calculations were as follows: |
Three Months Ended March 31, | |||
2014 | 2013 | ||
Brazilian real | 2.36 | 2.00 | |
Mexican peso | 13.24 | 12.66 | |
Argentine peso | 7.63 | 5.02 | |
(2) | The percentage amounts in these columns reflect the growth rates for each of the financial measures comparing the amounts in the "1Q 2014 Actual" column with those in the "1Q 2013 Actual" column. |
(3) | The percentage amounts in these columns reflect the growth rates for each of the financial measures comparing the amounts in the "1Q 2014 Actual" column with those in the "1Q 2013 Normalized" column. |