10-Q 1 nihd-9302012x10q.htm FORM 10-Q NIHD-9.30.2012-10Q
                                    




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF               
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended September 30, 2012
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF          
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from          to          
 
 
 
Commission file number 0-32421
NII HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
91-1671412
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
 
 
1875 Explorer Street, Suite 1000
Reston, Virginia
 (Address of principal executive offices)
 
20190
 (Zip Code)
(703) 390-5100
(Registrant's telephone number, including area code)

Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
Number of Shares Outstanding
Title of Class
on November 2, 2012
Common Stock, $0.001 par value per share
171,653,078




                                    

NII HOLDINGS, INC. AND SUBSIDIARES
INDEX
 
 
Page
 
 
 
 
 
 
 
 

2


                                    

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
Unaudited
 
September 30, 2012
 
December 31, 2011
 
 
 
(Restated) (1)
ASSETS
Current assets
 

 
 

Cash and cash equivalents
$
1,568,019

 
$
2,322,919

Short-term investments
117,119

 
343,422

Accounts receivable, less allowance for doubtful accounts of $73,666 and $66,252
800,026

 
858,471

Handset and accessory inventory
258,206

 
277,291

Deferred income taxes, net
180,286

 
203,012

Prepaid expenses and other
498,859

 
331,407

Total current assets
3,422,515

 
4,336,522

Property, plant and equipment, net
3,888,642

 
3,481,869

Intangible assets, net
1,175,806

 
1,182,380

Deferred income taxes, net
444,463

 
410,162

Other assets
418,623

 
411,203

Total assets
$
9,350,049

 
$
9,822,136

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
 

 
 

Accounts payable
$
294,624

 
$
377,679

Accrued expenses and other
958,399

 
1,008,932

Deferred revenues
164,384

 
159,150

Current portion of long-term debt
155,922

 
573,465

Total current liabilities
1,573,329

 
2,119,226

Long-term debt
4,483,807

 
4,244,752

Deferred revenues
14,796

 
15,585

Deferred credits
52,977

 
61,156

Other long-term liabilities
288,944

 
243,335

Total liabilities
6,413,853

 
6,684,054

Commitments and contingencies (Note 4)
 
 
 
Stockholders’ equity
 

 
 

Undesignated preferred stock, par value $0.001, 10,000 shares authorized — 2012
  and 2011, no shares issued or outstanding — 2012 and 2011

 

Common stock, par value $0.001, 600,000 shares authorized — 2012 and 2011,
  171,653 shares issued and outstanding — 2012, 171,177 shares issued and
  outstanding — 2011
171

 
171

Paid-in capital
1,474,074

 
1,440,079

Retained earnings
2,049,542

 
2,221,882

Accumulated other comprehensive loss
(587,591
)
 
(524,050
)
Total stockholders’ equity
2,936,196

 
3,138,082

Total liabilities and stockholders’ equity
$
9,350,049

 
$
9,822,136

_______________________________________
(1) As described in Note 1 to these condensed consolidated financial statements, we have restated the prior period condensed consolidated financial statements included herein to correct certain errors.
The accompanying notes are an integral part of these condensed consolidated financial statements.

3


                                    

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Unaudited
 
Nine Months Ended September 30,
 
Three Months Ended September 30,
 
2012
 
2011
 
2012
 
2011
 
 
 
(Restated) (1)
 
 
 
(Restated) (1)
Operating revenues
 
 
 

 
 
 
 

Service and other revenues
$
4,383,935

 
$
4,884,114

 
$
1,419,093

 
$
1,667,428

Handset and accessory revenues
236,934

 
251,498

 
72,803

 
86,785

 
4,620,869

 
5,135,612

 
1,491,896

 
1,754,213

Operating expenses
 
 
 

 
 
 
 

Cost of service (exclusive of depreciation and
  amortization included below)
1,263,069

 
1,359,498

 
398,735

 
465,887

Cost of handsets and accessories
695,892

 
643,356

 
232,905

 
225,144

Selling, general and administrative
1,877,812

 
1,835,316

 
642,351

 
677,274

Depreciation
493,854

 
463,335

 
170,250

 
158,791

Amortization
34,145

 
29,518

 
15,118

 
10,102

 
4,364,772

 
4,331,023

 
1,459,359

 
1,537,198

Operating income
256,097

 
804,589

 
32,537

 
217,015

Other (expense) income
 
 
 

 
 
 
 

Interest expense, net
(274,389
)
 
(272,837
)
 
(104,447
)
 
(94,890
)
Interest income
25,556

 
24,969

 
13,324

 
9,158

Foreign currency transaction (losses) gains, net
(42,199
)
 
(39,826
)
 
10,811

 
(63,926
)
Other expense, net
(21,486
)
 
(16,767
)
 
(7,003
)
 
(8,409
)
 
(312,518
)
 
(304,461
)
 
(87,315
)
 
(158,067
)
(Loss) income before income tax provision
(56,421
)
 
500,128

 
(54,778
)
 
58,948

Income tax provision
(115,919
)
 
(278,097
)
 
(27,640
)
 
(59,251
)
Net (loss) income
$
(172,340
)
 
$
222,031

 
$
(82,418
)
 
$
(303
)
 
 
 
 
 
 
 
 
Net (loss) income, per common share, basic
$
(1.01
)
 
$
1.29

 
$
(0.48
)
 
$

Net (loss) income, per common share, diluted
$
(1.01
)
 
$
1.28

 
$
(0.48
)
 
$

 
 
 
 
 
 
 
 
Weighted average number of common shares
  outstanding, basic
171,448

 
170,408

 
171,632

 
171,135

Weighted average number of common shares
  outstanding, diluted
171,448

 
172,913

 
171,632

 
171,135

 
 
 
 
 
 
 
 
Comprehensive loss, net of income taxes
 
 
 
 
 
 
 
  Foreign currency translation adjustment
$
(61,222
)
 
$
(377,010
)
 
$
56,221

 
$
(555,137
)
  Other
(2,319
)
 
2,921

 
(659
)
 
3,386

  Other comprehensive (loss) income
(63,541
)
 
(374,089
)
 
55,562

 
(551,751
)
  Net (loss) income
(172,340
)
 
222,031

 
(82,418
)
 
(303
)
    Total comprehensive loss
$
(235,881
)
 
$
(152,058
)
 
$
(26,856
)
 
$
(552,054
)
_______________________________________
(1) As described in Note 1 to these condensed consolidated financial statements, we have restated the prior period condensed consolidated financial statements included herein to correct certain errors.
The accompanying notes are an integral part of these condensed consolidated financial statements.

4


                                    

NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Nine Months Ended September 30, 2012
(in thousands)
Unaudited
 
Common Stock
 
Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
Balance, January 1, 2012 - Restated (1)
171,177

 
$
171

 
$
1,440,079

 
$
2,221,882

 
$
(524,050
)
 
$
3,138,082

Net loss

 

 

 
(172,340
)
 

 
(172,340
)
Other comprehensive loss, net of taxes

 

 

 

 
(63,541
)
 
(63,541
)
Purchase of convertible notes

 

 
(526
)
 

 

 
(526
)
Share-based payment expense

 

 
39,276

 

 

 
39,276

Exercise of stock options
476

 

 
150

 

 

 
150

Other

 

 
(4,905
)
 

 

 
(4,905
)
Balance, September 30, 2012
171,653

 
$
171

 
$
1,474,074

 
$
2,049,542

 
$
(587,591
)
 
$
2,936,196

_______________________________________
(1) As described in Note 1 to these condensed consolidated financial statements, we have restated the prior period condensed consolidated financial statements included herein to correct certain errors.






































The accompanying notes are an integral part of these condensed consolidated financial statements.

5


                                    

NII HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2012 and 2011
(in thousands)
Unaudited
 
2012
 
2011
 
 
 
(Restated) (1)
Cash flows from operating activities:
 

 
 

Net (loss) income
$
(172,340
)
 
$
222,031

Adjustments to reconcile net (loss) income to net cash provided by
 operating activities:
 

 
 

Amortization of debt discount and financing costs
19,922

 
42,040

Depreciation and amortization
527,999

 
492,853

Provision for losses on accounts receivable
132,418

 
121,364

Foreign currency transaction losses, net
42,199

 
39,826

Deferred income tax benefit
(36,370
)
 
(20,145
)
Share-based payment expense
39,276

 
45,872

Other, net
57,673

 
23,836

Change in assets and liabilities:
 

 
 

Accounts receivable, gross
(101,522
)
 
(255,548
)
Handset and accessory inventory
29,557

 
12,838

Prepaid expenses and other
(249,399
)
 
(23,017
)
Other long-term assets
(51,789
)
 
(7,766
)
Accounts payable, accrued expenses and other
65,367

 
155,356

Net cash provided by operating activities
302,991

 
849,540

Cash flows from investing activities:
 

 
 

Capital expenditures, including capitalized interest
(828,174
)
 
(732,557
)
Purchase of long-term and short-term investments
(1,157,600
)
 
(1,860,383
)
Proceeds from sales of long-term and short-term investments
1,382,328

 
1,975,391

Transfers from restricted cash
21,049

 
89,360

Payments for acquisitions, purchases of licenses, capitalized interest and
  other
(84,458
)
 
(102,612
)
Net cash used in investing activities
(666,855
)
 
(630,801
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of senior notes

 
750,000

Borrowings under equipment financing and other
234,470

 
108,546

Repayments of convertible notes
(212,782
)
 
(214,488
)
Repayments under syndicated loan facilities and other borrowings
(244,538
)
 
(287,586
)
Repayments of import financing
(137,858
)
 
(91,378
)
Other, net
(35,366
)
 
9,403

Net cash (used in) provided by financing activities
(396,074
)
 
274,497

Effect of exchange rate changes on cash and cash equivalents
5,038

 
(30,735
)
Net (decrease) increase in cash and cash equivalents
(754,900
)
 
462,501

Cash and cash equivalents, beginning of period
2,322,919

 
1,767,501

Cash and cash equivalents, end of period
$
1,568,019

 
$
2,230,002

_______________________________________
(1) As described in Note 1 to these condensed consolidated financial statements, we have restated the prior period condensed consolidated financial statements included herein to correct certain errors.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1.        Basis of Presentation
General.  Our unaudited condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission, or the SEC. While they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements, they reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for interim periods. In addition, the year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2011 and our quarterly reports on Form 10-Q for the three months ended March 31, 2012 and June 30, 2012. You should not expect results of operations for interim periods to be an indication of the results for a full year.
Restatement of Previously Issued Financial Statements. In connection with the preparation and issuance of our quarterly report on Form 10-Q for the three months ended June 30, 2012, we determined that certain previously issued financial statements contained errors. At that time, we evaluated the impact of these errors under the SEC's authoritative guidance on materiality and the quantification of the effect of prior period misstatements on financial statements and determined that the impact of these errors, individually and in the aggregate, on prior period financial statements was immaterial. However, as the impact of correcting the cumulative effect of these errors would have been material to our projected results of operations for the year ended December 31, 2012, we concluded that prior period financial statements should be revised in future filings.
On October 29, 2012, after discussions with the SEC staff regarding our assessment of the materiality of the identified errors, management and the Audit Committee of our Board of Directors concluded that we should restate our audited financial statements for the years ended December 31, 2011, 2010 and 2009 to reflect the corrections substantially disclosed in Note 8 to our quarterly report on Form 10-Q for the three months ended June 30, 2012 and for immaterial errors identified in the third quarter of 2012. These restated audited financial statements will be reflected in a Form 10-K/A for the year ended December 31, 2011. For the same reasons, we also plan to restate our unaudited interim financial statements for the three-month periods ended March 31, 2012 and 2011. The restated unaudited interim financial statements will be reflected in a Form 10-Q/A for the three months ended March 31, 2012. The unaudited interim financial statements for the six- and three-month periods ended June 30, 2011 were previously revised in connection with the filing of the quarterly report on Form 10-Q for the three months ended June 30, 2012. However, we plan to amend this quarterly report on Form 10-Q for the six and three months ended June 30, 2012 to update Note 8 to reflect the restatement of the prior period financial statements referenced above and to reflect the immaterial errors identified in the third quarter of 2012. The unaudited interim financial statements for the nine- and three-month periods ended September 30, 2011 are restated in the condensed consolidated financial statements included herein.
The following is a description of the areas in which these errors were identified and for which we made correcting adjustments to our financial statements for the nine and three months ended September 30, 2011:

Value Added Taxes (VAT) - We identified and corrected various errors in the recognition of value added tax expenses in Brazil reflecting both under accrual and over accrual of expenses depending on the period and transaction type;

Construction in Progress - We identified and corrected errors related to the incorrect capitalization of certain expenses incurred on internally developed software projects. The correction of these adjustments resulted in a reduction to property, plant and equipment and an increase in general and administrative expenses, as well as inconsequential adjustments to net cash flows from operating and investing activities;

Income Taxes - We identified and corrected errors in the calculation of income tax expense and applicable tax liabilities reflected in the prior period tax provision calculations, as well as the related income tax expense and liability effects of the pre-tax adjustments described here. We also identified and corrected a balance sheet misclassification between current and noncurrent deferred income taxes;

Leases - We identified and corrected errors related to the misclassification of certain transmitter and receiver site co-location leases that were incorrectly classified as operating leases rather than capital leases; and

Other - We identified and corrected other errors that are not applicable to the above categories.

7




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

For the nine and three months ended September 30, 2011, the errors noted above understated operating income by $16.2 million and $4.6 million, respectively, understated income before income tax provision by $13.8 million and $3.2 million, respectively, and understated net income by $14.5 million and $2.5 million, respectively. As of December 31, 2011, these errors understated retained earnings by $7.1 million. In addition, these errors understated net income per basic and diluted common share by $0.07 and $0.08, respectively, for the nine months ended September 30, 2011, and $0.02 and $0.02, respectively, for the three months ended September 30, 2011.
Accumulated Other Comprehensive Loss.  The components of our accumulated other comprehensive loss, net of taxes, are as follows:
 
 
September 30, 2012
 
December 31, 2011
 
(in thousands)
Cumulative foreign currency translation adjustment
$
(580,012
)
 
$
(518,790
)
Other
(7,579
)
 
(5,260
)
 
$
(587,591
)
 
$
(524,050
)

Supplemental Cash Flow Information.
 
Nine Months Ended September 30,
 
2012
 
2011
 
 
 
(Restated)
 
(in thousands)
Capital expenditures
 

 
 

Cash paid for capital expenditures, including capitalized interest on
  property, plant and equipment
$
828,174

 
$
732,557

Change in capital expenditures accrued and unpaid or financed, including
  accreted interest capitalized
152,226

 
120,157

 
$
980,400

 
$
852,714

Interest costs
 

 
 

Interest expense, net
$
274,389

 
$
272,837

Interest capitalized
98,616

 
55,949

 
$
373,005

 
$
328,786

For the nine months ended September 30, 2012, we had $189.7 million in non-cash investing and financing, primarily related to borrowings under our equipment financing facilities in Mexico and Chile, the short-term financing of imported handsets and infrastructure in Brazil and co-location capital lease obligations on our communication towers in Brazil and Mexico. For the nine months ended September 30, 2011, we had $845.1 million in non-cash investing and financing, primarily related to the long-term financing of the spectrum that was awarded to Nextel Brazil in June 2011 and refinanced in December 2011, the short-term financing of imported handsets and infrastructure in Brazil and co-location capital lease obligations on our communication towers in Brazil and Mexico.
Revenue-Based Taxes.  We record revenue-based taxes and other excise taxes on a gross basis as a component of both service and other revenues and selling, general and administrative expenses in our consolidated financial statements. For the nine and three months ended September 30, 2012, we recognized $161.3 million and $50.8 million, respectively, in revenue-based taxes and other excise taxes. For the nine and three months ended September 30, 2011, we recognized $187.6 million and $64.7 million, respectively, in revenue-based taxes and other excise taxes.
Net (Loss) Income Per Common Share, Basic and Diluted.  Basic net (loss) income per common share is computed by dividing adjusted net (loss) income attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted net (loss) income per common share reflects the potential dilution of securities that could participate in our earnings, but not securities that are antidilutive, including stock options with an exercise price greater than the average market price of our common stock.
Our unvested restricted stock awards, or RSAs, contain non-forfeitable rights to dividends, whether paid or unpaid. As a

8




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

result, our RSAs are considered participating securities because their holders have the right to participate in earnings with common stockholders. We use the two-class method to allocate net income between common shares and other participating securities.
As presented for the nine and three months ended September 30, 2012, our calculation of diluted net loss per share is based on the weighted average number of common shares outstanding during the period and does not include other potential common shares, including shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans, restricted common shares issued under those plans and common shares resulting from the potential conversion of our 3.125% convertible notes prior to their maturity, since their effect would be antidilutive to our net loss for those periods.
As presented for the nine and three months ended September 30, 2011, our calculation of diluted net income per share includes common shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans and restricted common shares issued under those plans. We did not include the common shares that could be issued upon conversion of our 3.125% convertible notes in our calculation of diluted net income per common share because their effect would have been antidilutive to our net income per common share for those periods. Further, for the nine and three months ended September 30, 2011, we did not include 9.5 million common shares issuable upon exercise of stock options nor did we include an immaterial amount of our restricted common shares in our calculation of diluted net income per common share because their effect would also have been antidilutive to our net income per common share for those periods.
The following tables provide a reconciliation of the numerators and denominators used to calculate basic and diluted net (loss) income per common share as disclosed in our consolidated statements of operations for the nine and three months ended September 30, 2012 and 2011:
 
Nine Months Ended September 30, 2012
 
Nine Months Ended September 30, 2011
 
Loss
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 
Loss
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 
 
 
 
 
 
 
(Restated)
 
 
 
(Restated)
 
(in thousands, except per share data)
Basic net (loss) income per
  common share:
 

 
 

 
 

 
 
 
 
 
 
Net (loss) income
$
(172,340
)
 
171,448

 
 
 
$
222,031

 
170,408

 
 
Net income allocable to
  participating securities

 

 
 
 
(1,439
)
 

 
 
Adjusted net (loss) income
  attributable to common shares
(172,340
)
 
171,448

 
$
(1.01
)
 
220,592

 
170,408

 
$
1.29

Effect of dilutive securities:
 
 
 

 
 

 
 
 
 
 
 
Stock options

 

 
 

 

 
2,233

 
 
Restricted stock

 

 
 

 

 
271

 
 
Convertible notes, net of
  capitalized interest and taxes

 

 
 
 

 
1

 
 
Diluted net (loss) income per
  common share:
 

 
 

 
 

 
 
 
 
 
 
Net (loss) income on which
  diluted earnings per share is
  calculated
$
(172,340
)
 
171,448

 
$
(1.01
)
 
$
222,031

 
172,913

 
$
1.28



9




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Three Months Ended September 30, 2012
 
Three Months Ended September 30, 2011
 
Loss (Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 
Loss
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 
 
 
 
 
 
 
(Restated)
 
 
 
(Restated)
 
(in thousands, except per share data)
Basic net loss per
  common share:
 
 
 
 
 
 
 

 
 

 
 

Net loss
$
(82,418
)
 
171,632

 
 
 
$
(303
)
 
171,135

 
 
Net income allocable to
  participating securities

 

 
 
 

 

 
 
Adjusted net loss attributable to
  common shares
(82,418
)
 
171,632

 
$
(0.48
)
 
(303
)
 
171,135

 
$

Effect of dilutive securities:
 
 
 
 
 
 
 

 
 

 
 

Stock options

 

 
 
 

 

 
 

Restricted stock

 

 
 
 

 

 
 

Convertible notes, net of
  capitalized interest and taxes

 

 
 
 

 

 
 

Diluted net loss per
  common share:
 
 
 
 
 
 
 

 
 

 
 

Net loss on which
  diluted earnings per share is
  calculated
$
(82,418
)
 
171,632

 
$
(0.48
)
 
$
(303
)
 
171,135

 
$

Asset Impairment. During the third quarter of 2012, we recorded a $14.0 million asset impairment charge at the corporate level as a component of selling, general and administrative expenses related to an abandoned web-based internal-use software project, which we determined was no longer necessary for our strategic plans.
New Accounting Pronouncements.  There were no new accounting standards issued during the nine or three months September 30, 2012 that materially impacted our condensed consolidated financial statements.

Note 2.        Debt
 
September 30, 2012
 
December 31, 2011
 
(in thousands)
 
 
 
(Restated)
Senior notes, net
$
2,724,358

 
$
2,721,658

Spectrum financing
640,205

 
693,038

Equipment financing
470,433

 
179,779

General financing
384,523

 
547,130

Capital leases and tower financing obligations
342,796

 
292,461

Convertible notes, net

 
206,480

Import financing
75,486

 
173,954

Other
1,928

 
3,717

Total debt
4,639,729

 
4,818,217

Less: current portion
(155,922
)
 
(573,465
)
 
$
4,483,807

 
$
4,244,752

Equipment Financing.
In April 2012, Nextel Brazil entered into a U.S. dollar-denominated loan agreement with the China Development Bank, under which Nextel Brazil is able to borrow up to $500.0 million to finance infrastructure equipment and certain other costs related

10




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

to the deployment of its WCDMA-based network. As of September 30, 2012, Nextel Brazil borrowed $160.6 million under this loan agreement for capital expenditures. Nextel Mexico and Nextel Chile also have similar financing arrangements, under which Nextel Mexico borrowed $88.1 million and Nextel Chile borrowed $75.9 million during the nine months ended September 30, 2012.
Convertible Notes.
3.125% Convertible Notes and Authoritative Guidance on Convertible Debt Instruments.  As a result of adopting the Financial Accounting Standards Board's, or the FASB’s, authoritative guidance on convertible debt instruments, we are required to separately account for the debt and equity components of our 3.125% convertible notes in a manner that reflects our nonconvertible debt (unsecured debt) borrowing rate. The debt and equity components recognized for our 3.125% convertible notes were as follows (in thousands):
 
September 30, 2012
 
December 31, 2011
 
 
 
 
Principal amount of convertible notes
$

 
$
209,788

Unamortized discount on convertible notes

 
3,308

Net carrying amount of convertible notes

 
206,480

Carrying amount of equity component

 
174,891

The amount of interest expense recognized on our 3.125% convertible notes and effective interest rates for the nine and three months ended September 30, 2012 and 2011 were as follows (dollars in thousands):
 
Nine Months Ended September 30,
 
2012
 
2011
 
 
 
 
Contractual coupon interest
$
2,383

 
$
25,243

Amortization of discount on convertible notes
2,718

 
29,424

Interest expense, net
$
5,101

 
$
54,667

Effective interest rate on convertible notes
7.15
%
 
7.15
%

 
Three Months Ended September 30,
 
2012
 
2011
 
 
 
 
Contractual coupon interest
$

 
$
8,055

Amortization of discount on convertible notes

 
10,021

Interest expense, net
$

 
$
18,076

Effective interest rate on convertible notes

 
7.15
%

Note 3.        Fair Value Measurements
Available-for-Sale Securities.
Our available-for-sale securities include short-term investments made by Nextel Brazil in two investment funds and certificates of deposit with two Brazilian banks. These funds invest primarily in Brazilian government bonds, long-term bank certificates of deposit and Brazilian corporate debentures. We account for these securities at fair value in accordance with the FASB's authoritative guidance surrounding the accounting for investments in debt and equity securities. The fair value of the securities is based on the net asset value of the funds. In our judgment, these securities trade with sufficient daily observable market activity to support a Level 1 classification within the fair value hierarchy.
The following tables set forth the classification within the fair value hierarchy of our financial instruments measured at fair value on a recurring basis in the accompanying condensed consolidated balance sheets as of September 30, 2012 and December

11




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

31, 2011 (in thousands):
 
Fair Value Measurements as of
 
Total
 
September 30, 2012
 
Fair Value as of
 
Using the Fair Value Hierarchy
 
September 30,
Financial Instruments
Level 1
 
Level 2
 
Level 3
 
2012
Short-term investments:
 

 
 

 
 

 
 

Available-for-sale securities — Nextel Brazil investments
$
117,119

 
$

 
$

 
$
117,119


 
Fair Value Measurements as of
 
Total
 
December 31, 2011
 
Fair Value as of
 
Using the Fair Value Hierarchy
 
December 31,
Financial Instruments
Level 1
 
Level 2
 
Level 3
 
2011
Short-term investment:
 

 
 

 
 

 
 

Available-for-sale securities — Nextel Brazil investments
$
117,620

 
$

 
$

 
$
117,620

Financial Instruments.
Held-to-Maturity Investments.
We periodically invest some of our cash holdings in certain securities that we intend to hold to maturity. These held-to-maturity securities include investments in U.S. treasury securities, as well as investments in securities issued by U.S. government agencies and backed by the U.S. government with maturities ranging from one to fourteen months. We account for held-to-maturity securities at amortized cost. We determined the fair value of our held-to-maturity investments in U.S. treasury securities based on quoted market prices for the individual instruments. In our judgment, these securities trade with sufficient daily observable market activity to support a Level 1 classification within the fair value hierarchy. We determined the fair value of our investments in corporate bonds based on reported trade data in a broker dealer market for the individual instruments. We consider these measurements to be Level 2 in the fair value hierarchy. All of our held-to-maturity investments matured during the second quarter of 2012. The gross unrecognized holding gains and losses as of December 31, 2011 relating to these investments were not material. The carrying amounts and estimated fair values of our held-to-maturity investments as of December 31, 2011 are as follows:
 
December 31, 2011
 
Carrying
Amount
 
Estimated
Fair Value
Short-term investments:
 
 
 
Held-to-maturity securities — U.S. Agencies
$
74,803

 
$
75,075

Held-to-maturity securities — U.S. Treasuries
150,999

 
151,678

 
$
225,802

 
$
226,753


Long-Term Debt Instruments.
The carrying amounts and estimated fair values of our long-term debt instruments are as follows:
 
September 30, 2012
 
December 31, 2011
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
 
(in thousands)
Senior notes
$
2,724,358

 
$
2,359,750

 
$
2,721,658

 
$
2,880,375

Spectrum financing
640,205

 
635,188

 
693,038

 
768,735

General financing
384,523

 
364,756

 
547,130

 
502,438

Convertible notes

 

 
206,480

 
210,837

Equipment financing
470,433

 
465,990

 
179,779

 
169,075

 
$
4,219,519

 
$
3,825,684

 
$
4,348,085

 
$
4,531,460


12




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

We estimated the fair values of our convertible notes, which matured during the second quarter of 2012, and our senior notes using quoted market prices in a broker dealer market, which may be adjusted for certain factors such as historical trading levels and market data for our notes, credit default spreads, stock volatility assumptions with respect to our convertible notes and other corroborating market or internally generated data. Because our fair value measurement includes market data, corroborating market data and some internally generated information, we consider this Level 2 in the fair value hierarchy.
We estimated the fair values of our equipment and spectrum financings using primarily Level 3 inputs such as U.S. Treasury yield curves, prices of comparable bonds, the London Interbank Offered Rate, or LIBOR, and zero-coupon yield curves, U.S. treasury bond rates and credit spreads on comparable publicly traded bonds.
General financing consists primarily of loans with certain banks and other lenders in Brazil and Mexico, and as of December 31, 2011, a syndicated loan facility in Peru that we repaid during the first quarter of 2012. We estimated the fair value of these loans utilizing primarily Level 3 inputs such as U.S. treasury security yield curves, prices of comparable bonds, LIBOR and zero-coupon yield curves, Treasury bond rates and credit spreads on comparable publicly traded bonds. We believe that the fair value of our short-term bank loans approximate their carrying value primarily because of the short maturities of the agreements prior to realization and consider these measurements to be Level 3 in the fair value hierarchy.
Other Financial Instruments.
We estimate the fair value of our financial instruments other than our available-for-sale securities, including cash and cash equivalents, held-to-maturity investments, accounts receivable, accounts payable, derivative instruments and debt. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings contained in the consolidated balance sheets approximate their fair values due to the short-term nature of these instruments. The fair values of our derivative and other non-current instruments are immaterial.

Note 4.        Commitments and Contingencies
Brazilian Contingencies.
Nextel Brazil has received various assessment notices from state and federal Brazilian authorities asserting deficiencies in payments related primarily to value-added taxes, excise taxes on imported equipment and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitions disputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. In other cases, Nextel Brazil’s petitions have been denied, and Nextel Brazil is currently appealing those decisions. Nextel Brazil is also disputing various other claims. Nextel Brazil did not reverse any material accrued liabilities related to contingencies during the nine or three months ended September 30, 2012.
As of September 30, 2012 and December 31, 2011, Nextel Brazil had accrued liabilities of $63.2 million and $60.0 million, respectively, related to contingencies, all of which were classified in accrued contingencies reported as a component of other long-term liabilities, and $17.9 million and $27.4 million of which related to unasserted claims, respectively. We currently estimate the range of reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be between $275.2 million and $279.2 million as of September 30, 2012. We are continuing to evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies. As a result, future increases or decreases to our accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.
Legal Proceedings.
We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.



13




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5.        Income Taxes
 
Nine Months Ended
September 30,
 
Three Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
 
 
 
(Restated)
 
 
 
(Restated)
 
(in thousands)
(Loss) income before income
   tax provision
$
(56,421
)
 
$
500,128

 
$
(54,778
)
 
$
58,948

 
 
 
 
 
 
 
 
Current income tax provision
$
(152,289
)
 
$
(298,242
)
 
$
(27,148
)
 
$
(71,424
)
Deferred income tax benefit
  (provision)
36,370

 
20,145

 
(492
)
 
12,173

Total income tax provision
$
(115,919
)
 
$
(278,097
)
 
$
(27,640
)
 
$
(59,251
)

The decreases in the consolidated income tax provision for the nine and three months ended September 30, 2012 compared to the same periods in 2011 are primarily due to decreases of $556.5 million and $113.7 million, respectively, in consolidated income before income tax provision. However, increases in the loss before income tax provision recognized in the U.S. and Chile during 2012 required full valuation allowances, which prevented an income tax benefit from being recognized on these losses. Recognizing no income tax benefit for the U.S. and Chilean losses resulted in consolidated income tax expense for the nine and three months ended September 30, 2012, despite recognizing a consolidated loss before income tax provision for these periods.
 
We are subject to income taxes in both the United States and the non-U.S. jurisdictions in which we operate. Certain of our entities are under examination by the relevant taxing authorities for various tax years. The earliest years that remain subject to examination by jurisdiction are: Chile - 1993; U.S. - 1999; Mexico - 2003; Argentina - 2005; Brazil - 2006; Peru - 2007 and Luxembourg, Netherlands and Spain - 2009. We regularly assess the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes.

The following table shows a reconciliation of our unrecognized tax benefits according to the FASB's authoritative guidance on accounting for uncertainty in income taxes, for the nine months ended September 30, 2012 (in thousands):
Unrecognized tax benefits - December 31, 2011
$
35,572

Additions for current year tax positions
2,408

Additions for prior year tax positions

Reductions for current year tax positions

Reductions for prior year tax positions

Lapse of statute of limitations

Settlements with taxing authorities

Foreign currency translation adjustment
(282
)
Unrecognized tax benefits - September 30, 2012
$
37,698


The unrecognized tax benefits that could potentially reduce our future effective tax rate, if recognized, were $5.5 million and $5.7 million as of September 30, 2012 and December 31, 2011, respectively.
We record interest and penalties associated with uncertain tax positions as a component of our income tax provision.
We assessed the realizability of our deferred tax assets during the third quarter of 2012, consistent with the methodology we employed for the same period in 2011. In that assessment, we considered the reversal of existing temporary differences associated with deferred tax assets and liabilities, future taxable income, tax planning strategies and historical and future pre-tax book income (as adjusted for permanent differences between financial and tax accounting items) in order to determine if it is “more-likely-than-not” that the deferred tax asset will be realized. As a result of this assessment, in 2011, we recorded a full valuation allowance on our U.S. companies' deferred tax assets and have maintained the same position for 2012. For our other companies, we determined that the realizability of their deferred assets had not changed. We will continue to evaluate the amount of the valuation allowance

14




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

for all of our foreign and U.S. companies throughout the remainder of 2012 to determine the appropriate level of valuation allowance.

During 2004, Nextel Mexico amended its Mexican Federal income tax returns in order to reverse a benefit previously claimed for a disputed provision of the Federal income tax law covering deductions and gains from the sale of property. We filed the amended returns in order to avoid potential penalties, and we also filed administrative petitions seeking clarification of our right to the tax benefits claimed on the original income tax returns. The tax authorities constructively denied our administrative petitions in January 2005, and in May 2005, we filed an annulment suit challenging the constructive denial. In March 2011, we were officially notified that the courts denied our petition based on the economic substance of our interpretation. Therefore, during the first quarter of 2011, we reversed the income tax receivable previously recorded on the financial statements and recorded a $14.5 million increase in income tax expense with respect to this item.


Note 6.        Segment Reporting
We have determined that our reportable segments are those that are based on our method of internal reporting, which disaggregates our business by geographical location. Our reportable segments are: (1) Brazil, (2) Mexico, (3) Argentina and (4) Peru. The operations of all other businesses that fall below the segment reporting thresholds are included in the “Corporate and other” segment below. This segment includes our Chilean operating companies and our corporate operations in the U.S. We evaluate performance of these segments and provide resources to them based on operating income before depreciation, amortization and restructuring and other charges, which we refer to as segment earnings.

15




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Brazil
 
Mexico
 
Argentina
 
Peru
 
Corporate and
other
 
Intercompany
Eliminations
 
Consolidated
 
(in thousands)
Nine Months Ended September 30,
  2012
 

 
 

 
 

 
 

 
 

 
 

 
 

Operating revenues
$
2,230,010

 
$
1,588,785

 
$
512,153

 
$
259,718

 
$
36,215

 
$
(6,012
)
 
$
4,620,869

Segment earnings (losses)
$
581,921

 
$
444,698

 
$
131,969

 
$
(2,716
)
 
$
(378,395
)
 
$
6,619

 
$
784,096

Less:
 

 
 

 
 

 
 

 
 

 
 

 
 

Depreciation and amortization
 

 
 

 
 

 
 

 
 

 
 

 
(527,999
)
Foreign currency transaction losses, net
 

 
 

 
 

 
 

 
 

 
 

 
(42,199
)
Interest expense and other, net
 

 
 

 
 

 
 

 
 

 
 

 
(270,319
)
Loss before income tax provision
 

 
 

 
 

 
 

 
 

 
 

 
$
(56,421
)
Capital expenditures
$
396,502

 
$
337,398

 
$
36,113

 
$
43,460

 
$
166,927

 
$

 
$
980,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
  2011 (Restated)
 

 
 

 
 

 
 

 
 

 
 

 
 

Operating revenues
$
2,641,114

 
$
1,732,516

 
$
478,696

 
$
264,071

 
$
22,642

 
$
(3,427
)
 
$
5,135,612

Segment earnings (losses)
$
840,904

 
$
590,466

 
$
127,174

 
$
26,399

 
$
(294,907
)
 
$
7,406

 
$
1,297,442

Less:
 

 
 

 
 

 
 

 
 

 
 

 
 

Depreciation and amortization
 

 
 

 
 

 
 

 
 

 
 

 
(492,853
)
Foreign currency transaction losses, net
 

 
 

 
 

 
 

 
 

 
 

 
(39,826
)
Interest expense and other, net
 

 
 

 
 

 
 

 
 

 
 

 
(264,635
)
Income before income tax provision
 

 
 

 
 

 
 

 
 

 
 

 
$
500,128

Capital expenditures
$
386,104

 
$
209,794

 
$
53,888

 
$
76,690

 
$
126,238

 
$

 
$
852,714

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
  2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
693,189

 
$
523,220

 
$
178,505

 
$
84,529

 
$
15,432

 
$
(2,979
)
 
$
1,491,896

Segment earnings (losses)
$
160,698

 
$
147,627

 
$
50,045

 
$
(6,733
)
 
$
(135,971
)
 
$
2,239

 
$
217,905

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 

 
 

 
 

 
 

 
 

 
 

 
(185,368
)
Foreign currency transaction gains, net
 

 
 

 
 

 
 

 
 

 
 

 
10,811

Interest expense and other, net
 

 
 

 
 

 
 

 
 

 
 

 
(98,126
)
Loss before income tax provision
 

 
 

 
 

 
 

 
 

 
 

 
$
(54,778
)
Capital expenditures
$
171,461

 
$
137,772

 
$
11,688

 
$
23,452

 
$
45,077

 
$

 
$
389,450

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
  2011 (Restated)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
912,945

 
$
577,202

 
$
167,132

 
$
90,244

 
$
7,770

 
$
(1,080
)
 
$
1,754,213

Segment earnings (losses)
$
251,806

 
$
186,856

 
$
40,900

 
$
11,346

 
$
(107,973
)
 
$
2,973

 
$
385,908

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
(168,893
)
Foreign currency transaction losses, net
 
 
 
 
 
 
 
 
 
 
 
 
(63,926
)
Interest expense and other, net
 
 
 
 
 
 
 
 
 
 
 
 
(94,141
)
Income before income tax provision
 
 
 
 
 
 
 
 
 
 
 
 
$
58,948

Capital expenditures
$
174,730

 
$
79,224

 
$
24,542

 
$
30,224

 
$
28,914

 
$

 
$
337,634

 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

Identifiable assets
$
3,968,942

 
$
2,398,811

 
$
464,309

 
$
580,524

 
$
1,937,750

 
$
(287
)
 
$
9,350,049

December 31, 2011 (Restated)
 

 
 

 
 

 
 

 
 

 
 

 
 

Identifiable assets
$
4,071,612

 
$
2,346,307

 
$
427,428

 
$
597,891

 
$
2,379,185

 
$
(287
)
 
$
9,822,136



16




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 7.        Condensed Consolidating Financial Statements
In 2011, we issued $1.45 billion in aggregate principal amount of our 7.625% senior notes due in 2021. In addition, during 2009, we issued senior notes totaling $1.3 billion in aggregate principal amount comprised of our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019. We refer to the senior notes issued in 2011 and 2009 collectively as the "senior notes." All of these senior notes are senior unsecured obligations of NII Capital Corp., our wholly-owned domestic subsidiary, and are guaranteed on a senior unsecured basis by NII Holdings and all of its current and future first tier and domestic restricted subsidiaries, other than NII Capital Corp. No foreign subsidiaries will guarantee the senior notes unless they are first tier subsidiaries of NII Holdings. These guarantees are full and unconditional, as well as joint and several.
In connection with the issuance of the senior notes and the guarantees thereof, we are required to provide certain condensed consolidating financial information. Included in the tables below are condensed consolidating balance sheets as of September 30, 2012 and December 31, 2011, as well as condensed consolidating statements of operations for the nine and three months ended September 30, 2012 and 2011 and condensed consolidating statements of cash flows for the nine months ended September 30, 2012 and 2011, of: (a) the parent company, NII Holdings, Inc.; (b) the subsidiary issuer, NII Capital Corp.; (c) the guarantor subsidiaries on a combined basis; (d) the non-guarantor subsidiaries on a combined basis; (e) consolidating adjustments; and (f) NII Holdings, Inc. and subsidiaries on a consolidated basis.

17




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
As of September 30, 2012

 
NII Holdings,
Inc. (Parent)
 
NII Capital
Corp. (Issuer)(1)
 
Guarantor
Subsidiaries(2)
 
Non-
Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
 
(in thousands)
ASSETS
Current assets
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
787,076

 
$
55,281

 
$
3,931

 
$
721,731

 
$

 
$
1,568,019

Short-term investments

 

 

 
117,119

 

 
117,119

Accounts receivable, net
7,483

 
67,320

 
89,058

 
804,490

 
(168,325
)
 
800,026

Handset and accessory inventory

 

 

 
258,265

 
(59
)
 
258,206

Deferred income taxes, net

 

 
5,672

 
183,726

 
(9,112
)
 
180,286

Prepaid expenses and other
5,863

 

 
7,895

 
485,101

 

 
498,859

Total current assets
800,422

 
122,601

 
106,556

 
2,570,432

 
(177,496
)
 
3,422,515

Property, plant and
  equipment, net

 

 
226,841

 
3,662,088

 
(287
)
 
3,888,642

Investments in and advances
  to affiliates
3,251,818

 
2,838,727

 
2,929,248

 

 
(9,019,793
)
 

Intangible assets, net
18,000

 

 

 
1,157,806

 

 
1,175,806

Deferred income taxes, net
21,463

 

 

 
444,463

 
(21,463
)
 
444,463

Other assets
2,394,089

 
3,764,553

 
747,182

 
507,865

 
(6,995,066
)
 
418,623

Total assets
$
6,485,792

 
$
6,725,881

 
$
4,009,827

 
$
8,342,654

 
$
(16,214,105
)
 
$
9,350,049

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$

 
$

 
$
5,970

 
$
288,654

 
$

 
$
294,624

Accrued expenses and other
600,032

 
206,401

 
1,600,851

 
1,353,222

 
(2,802,107
)
 
958,399

Deferred revenues

 

 

 
164,384

 

 
164,384

Current portion of long-term debt

 

 
12,719

 
143,203

 

 
155,922

Total current liabilities
600,032

 
206,401

 
1,619,540

 
1,949,463

 
(2,802,107
)
 
1,573,329

Long-term debt
23

 
2,724,359

 
43,669

 
1,715,756

 

 
4,483,807

Deferred revenues

 

 

 
14,796

 

 
14,796

Deferred credits

 
2,950

 
21,054

 
50,436

 
(21,463
)
 
52,977

Other long-term liabilities
2,949,541

 

 
22,211

 
1,682,955

 
(4,365,763
)
 
288,944

Total liabilities
3,549,596

 
2,933,710

 
1,706,474

 
5,413,406

 
(7,189,333
)
 
6,413,853

Total stockholders’ equity
2,936,196

 
3,792,171

 
2,303,353

 
2,929,248

 
(9,024,772
)
 
2,936,196

Total liabilities and
  stockholders’ equity
$
6,485,792

 
$
6,725,881

 
$
4,009,827

 
$
8,342,654

 
$
(16,214,105
)
 
$
9,350,049

_______________________________________
(1)
NII Capital Corp. is the issuer of our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019.
(2)
Represents our subsidiaries that have provided guarantees of the obligations of NII Capital Corp. under our 7.625% senior notes due 2021, our 10.0% senior notes due 2016 and our 8.875% senior notes due 2019.

18




NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET - RESTATED
As of December 31, 2011

 
NII Holdings,
Inc. (Parent)
 
NII Capital
Corp. (Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
 
(in thousands)
ASSETS
Current assets
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
1,042,358

 
$
956

 
$
8,416

 
$
1,271,189

 
$

 
$
2,322,919

Short-term investments
225,802

 

 

 
117,620

 

 
343,422

Accounts receivable, net
13,643

 
79,719

 
168,769

 
864,961

 
(268,621
)
 
858,471

Handset and accessory inventory

 

 

 
277,291

 

 
277,291

Deferred income taxes, net

 

 
6,873

 
200,497

 
(4,358
)
 
203,012

Prepaid expenses and other
1,483

 

 
8,552

 
321,384

 
(12
)
 
331,407

Total current assets
1,283,286

 
80,675

 
192,610

 
3,052,942

 
(272,991
)
 
4,336,522

Property, plant and
  equipment, net

 

 
190,208

 
3,291,948

 
(287
)
 
3,481,869

Investments in and advances
  to affiliates
3,220,290

 
2,900,599

 
2,999,630

 

 
(9,120,519
)
 

Intangible assets, net
18,000

 

 

 
1,164,380

 

 
1,182,380

Deferred income taxes, net
45,740

 

 

 
410,162

 
(45,740
)
 
410,162

Other assets
2,348,372

 
3,799,519

 
606,845

 
470,516

 
(6,814,049
)
 
411,203

Total assets
$
6,915,688

 
$
6,780,793

 
$
3,989,293

 
$
8,389,948

 
$
(16,253,586
)
 
$
9,822,136

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$

 
$

 
$
2,546

 
$
375,133

 
$

 
$
377,679

Accrued expenses and other
635,303

 
191,992

 
1,601,508

 
1,340,655

 
(2,760,526
)
 
1,008,932

Deferred revenues

 

 

 
159,150

 

 
159,150