NII HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(in millions, except per share amounts, and unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Operating revenues
Service and other
revenues $745.5 $563.4 $391.3 $288.3
Digital handset and
accessory revenues 35.4 28.2 19.4 15.6
780.9 591.6 410.7 303.9
Operating expenses
Cost of service
(exclusive of
depreciation
included below) 194.3 149.5 97.9 77.4
Cost of digital
handset and
accessory sales 110.6 98.5 56.3 51.2
Selling, general and
administrative 257.2 180.7 138.0 93.6
Depreciation 53.1 40.6 28.3 20.6
Amortization 2.8 7.3 1.5 3.4
618.0 476.6 322.0 246.2
Operating income 162.9 115.0 88.7 57.7
Other income (expense)
Interest expense (26.2) (26.9) (13.3) (10.9)
Interest income 10.1 5.4 5.6 3.2
Debt conversion
expense (8.9) - (8.9) -
Loss on early
extinguishment of
debt, net - (79.3) - -
Foreign currency
transaction gains,
net 2.1 8.2 0.1 1.5
Other (expense)
income, net (3.6) 1.8 (1.7) 2.8
(26.5) (90.8) (18.2) (3.4)
Income before
income tax
provision
and cumulative
effect of change
in accounting
principle 136.4 24.2 70.5 54.3
Income tax
provision (60.8) (47.1) (40.0) (24.5)
Income (loss) before
cumulative effect of
change in accounting
principle 75.6 (22.9) 30.5 29.8
Cumulative effect of
change in accounting
principle, net of
income taxes - 0.9 - -
Net income (loss) $75.6 $(22.0) $30.5 $29.8
Income (loss)
Before cumulative
effect of change
in accounting
principle per
common share,
basic $1.07 $(0.33) $0.43 $0.43
Cumulative effect
Of change in
accounting
principle
per common
share, basic - 0.01 - -
Net income (loss)
per common share,
basic $1.07 $(0.32) $0.43 $0.43
Income (loss)
before cumulative
effect of change
in accounting
principle per
common share,
diluted $0.96 $(0.33) $0.40 $0.40
Cumulative effect
of change in
accounting
principle per
common share,
diluted - 0.01 - -
Net income (loss)
per common share,
diluted $0.96 $(0.32) $0.40 $0.40
Weighted average
number of common
shares outstanding,
basic 71 69 71 70
Weighted average
number of common
shares outstanding,
diluted 86 69 86 85
CONSOLIDATED BALANCE SHEET DATA
(in millions)
June 30, December 31,
2005 2004
(unaudited)
Cash, cash equivalents
and short-term investments $555.8 $369.4
Accounts receivable,
less allowance for
doubtful accounts of
$11.3 and $8.1 183.8 160.7
Property, plant and
equipment, net 731.7 558.2
Intangible assets, net 76.6 68.0
Total assets 1,960.4 1,491.3
Long-term debt, including
current portion 781.3 603.5
Total liabilities 1,325.2 1,069.3
Stockholders' equity 635.2 422.0
NII HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS AND METRICS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
NII Holdings, Inc.
(subscribers in thousands)
Three Months Ended
June 30,
2005 2004
Total digital subscribers(as of June 30) 2,120.4 1,664.3
Net subscriber additions 135.3 111.2
Churn (%) 1.8% 1.8%
Average monthly revenue per handset/unit
in service (ARPU)(1) $58 $55
Cost per gross add (CPGA) (1) $339 $334
Nextel Mexico
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Operating revenues
Service and other
revenues $445.9 $353.8 $233.0 $180.4
Digital handset and
accessory revenues 11.0 10.3 5.9 5.2
456.9 364.1 238.9 185.6
Operating expenses
Cost of service 79.9 63.1 42.6 32.6
Cost of digital handset
and accessory sales 56.1 51.3 27.5 26.2
Selling, general and
administrative 131.7 96.6 71.0 50.0
Depreciation and
amortization 31.1 34.6 15.9 17.1
298.8 245.6 157.0 125.9
Operating income $158.1 $118.5 $81.9 $59.7
Total digital
subscribers
(as of June 30) 937.1 753.1
Net subscriber
additions 54.5 50.2
Churn (%) 1.8% 1.7%
ARPU (1) $79 $76
CPGA (1) $485 $458
Nextel Brazil
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Operating revenues
Service and other
revenues $132.9 $84.9 $70.7 $43.1
Digital handset and
accessory revenues 11.4 8.9 6.2 5.5
144.3 93.8 76.9 48.6
Operating expenses
Cost of service 56.6 39.2 25.9 20.5
Cost of digital handset
and accessory sales 26.2 25.0 13.4 14.0
Selling, general and
administrative 47.8 22.3 26.9 9.6
Depreciation and
amortization 12.5 5.5 7.1 2.9
143.1 92.0 73.3 47.0
Operating income $1.2 $1.8 $3.6 $1.6
Total digital subscribers
(as of June 30) 536.2 424.1
Net subscriber additions 32.4 23.9
Churn (%) 2.1% 2.3%
ARPU (1) $41 $32
CPGA (1) $254 $245
Nextel Argentina
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Operating revenues
Service and other
revenues $114.7 $78.9 $60.9 $41.7
Digital handset and
accessory revenues 10.5 8.0 5.9 4.5
125.2 86.9 66.8 46.2
Operating expenses
Cost of service 40.3 29.6 20.9 15.7
Cost of digital handset
and accessory sales 19.4 15.0 10.8 7.8
Selling, general and
administrative 31.6 22.2 16.9 11.7
Depreciation and
amortization 7.7 5.0 4.4 2.5
99.0 71.8 53.0 37.7
Operating income $26.2 $15.1 $13.8 $8.5
Total digital subscribers
(as of June 30) 432.3 322.5
Net subscriber additions 31.7 26.4
Churn (%) 1.2% 1.1%
ARPU (1) $42 $40
CPGA (1) $184 $185
Nextel Peru
(dollars in millions, except ARPU and CPGA, and subscribers in thousands)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Operating revenues
Service and other
revenues $51.4 $45.3 $26.4 $22.8
Digital handset and
accessory revenues 2.4 1.0 1.4 0.5
53.8 46.3 27.8 23.3
Operating expenses
Cost of service 16.9 17.1 8.2 8.3
Cost of digital
Handset and
accessory sales 8.7 7.2 4.6 3.2
Selling, general
and administrative 16.4 14.0 8.5 7.3
Depreciation and
amortization 4.0 2.6 2.1 1.4
46.0 40.9 23.4 20.2
Operating income $7.8 $5.4 $4.4 $3.1
Total digital subscribers
(as of June 30) 214.8 164.6
Net subscriber additions 16.7 10.7
Churn (%) 1.9% 2.2%
ARPU (1) $40 $45
CPGA (1) $212 $245
(1) For information regarding ARPU and CPGA, see "Non-GAAP Reconciliations for the Six and Three Months Ended June 30, 2005 and 2004" included in this release.
NON-GAAP RECONCILIATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
NII Holdings, Inc.
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Consolidated
Operating income $162.9 $115.0 $88.7 $57.7
Consolidated
depreciation 53.1 40.628.3 20.6
Consolidated
amortization 2.8 7.3 1.5 3.4
Consolidated
operating income
before depreciation
and amortization 218.8 $162.9 $118.5 $81.7
Guidance Revised Guidance
Estimate Estimate
For the For the
Year Ended Year Ended
December 31, December 31,
2005 2005
Consolidated operating income $329.0 $346.6
Consolidated depreciation 116.0 122.5
Consolidated amortization 5.0 5.9
Consolidated operating income before
depreciation and amortization $450.0 $475.0
Average Monthly Revenue Per Handset/Unit in Service (ARPU)
NII Holdings, Inc.
Three Months Ended
June 30,
2005 2004
Consolidated service and other revenues $391.3 $288.3
Less: consolidated analog revenues (2.3) (2.3)
Less: consolidated other revenues (33.5) (22.3)
Total consolidated subscriber revenues $355.5 $263.7
ARPU calculated with subscriber revenues $58 $55
ARPU calculated with service and
other revenues $64 $60
Nextel Mexico
Three Months Ended
June 30,
2005 2004
Service and other revenues $233.0 $180.4
Less: analog revenues (1.2) (1.3)
Less: other revenues (17.1) (12.7)
Total subscriber revenues $214.7 $166.4
ARPU calculated with subscriber revenues $79 $76
ARPU calculated with service and
other revenues $86 $83
Nextel Brazil
Three Months Ended
June 30,
2005 2004
Service and other revenues $70.7 $43.1
Less: analog revenues (0.6) (0.6)
Less: other revenues (6.7) (3.1)
Total subscriber revenues $63.4 $39.4
ARPU calculated with subscriber revenues $41 $32
ARPU calculated with service and
other revenues $45 $35
Nextel Argentina
Three Months Ended
June 30,
2005 2004
Service and other revenues $60.9 $41.7
Less: other revenues (8.2) (5.1)
Total subscriber revenues $52.7 $36.6
ARPU calculated with subscriber revenues $42 $40
ARPU calculated with service and
other revenues $49 $45
Nextel Peru
Three Months Ended
June 30,
2005 2004
Service and other revenues $26.4 $22.8
Less: other revenues (1.7) (1.5)
Total subscriber revenues $24.7 $21.3
ARPU calculated with subscriber revenues $40 $45
ARPU calculated with service and
other revenues $43 $48
Cost per Gross Add (CPGA)
NII Holdings, Inc.
Three Months Ended
June 30,
2005 2004
Consolidated digital handset
and accessory revenues $19.3 $15.7
Less: consolidated cost of
handset and accessory sales 56.3 51.2
Consolidated handset subsidy costs 37.0 35.5
Consolidated selling and marketing 54.2 40.1
Costs per statement of operations 91.2 75.6
Less: consolidated costs unrelated
to initial customer acquisition (8.8) (9.4)
Customer acquisition costs $82.4 $66.2
Cost per Gross Add $339 $334
Nextel Mexico
Three Months Ended
June 30,
2005 2004
Digital handset and accessory revenues $5.9 $5.2
Less: cost of handset and accessory sales 27.5 26.2
Handset subsidy costs 21.6 21.0
Selling and marketing 33.8 24.9
Costs per statement of operations 55.4 45.9
Less: costs unrelated to initial customer
acquisition (5.2) (5.6)
Customer acquisition costs $50.2 $40.3
Cost per Gross Add $485 $458
Nextel Brazil
Three Months Ended
June 30,
2005 2004
Digital handset and accessory revenues $6.2 $5.5
Less: cost of handset and accessory sales 13.4 14.0
Handset subsidy costs 7.2 8.5
Selling and marketing 10.4 7.3
Costs per statement of operations 17.6 15.8
Less: costs unrelated to initial customer
acquisition (1.2) (2.9)
Customer acquisition costs $16.4 $12.9
Cost per Gross Add $254 $245
Nextel Argentina
Three Months Ended
June 30,
2005 2004
Digital handset and accessory revenues $5.9 $4.5
Less: cost of handset and accessory sales 10.8 7.9
Handset subsidy costs 4.9 3.4
Selling and marketing 5.4 3.8
Costs per statement of operations 10.3 7.2
Less: costs unrelated to initial customer
acquisition (1.7) (0.4)
Customer acquisition costs $8.6 $6.8
Cost per Gross Add $184 $185
Nextel Peru
Three Months Ended
June 30,
2005 2004
Digital handset and accessory revenues $1.4 $0.5
Less: cost of handset and accessory sales 4.6 3.1
Handset subsidy costs 3.2 2.6
Selling and marketing 3.4 3.1
Costs per statement of operations 6.6 5.7
Less: costs unrelated to initial customer
acquisition (0.6) (0.5)
Customer acquisition costs $6.0 $5.2
Cost per Gross Add $212 $245
Net debt as of June 30, 2005 can be calculated as follows (in millions):
Total long-term debt $768.9
Less: cash, cash equivalents and
short-term investments 555.8
Net debt $213.1
Net Debt To Revised Consolidated Oibda Guidance and Net Debt to Revised Consolidated Operating Income Guidance for the Year Ended December 31, 2005
Net debt to revised consolidated
operating income before depreciation
and amortization guidance 0.4
Net debt to revised consolidated
operating income guidance 0.6
Cash, Cash Equivalents and Short-Term Investments
Consolidated cash and cash
equivalents $544.9
Plus: short-term investments 10.9
Consolidated cash, cash equivalents
and short-term investments $555.8