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As filed with the Securities and Exchange Commission on January 24, 1997
Registration No. 333-19333
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEXTEL COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Delaware 36-3939651
(State or Other (I.R.S. Employer
Jurisdiction of Identification
Incorporation or Number)
Organization)
</TABLE>
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1505 Farm Credit Drive
McLean, Virginia 22102
(703) 394-3000
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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Thomas J. Sidman, Esq.
Vice President
and General Counsel
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
(703) 394-3000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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Copies to:
Lisa A. Stater, Esq.
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street
Atlanta, Georgia 30308
(404) 521-3939
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Approximate date of commencement of proposed sale to the public: From
time to time following the effective date of this Registration Statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check following box: [ ]
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If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box:[x]
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If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: [ ]
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If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
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If delivery of the Prospectus is expected to be made pursuant to Rule
434, check the following box: [ ]
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Subject to Completion
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 5
Dated January 24, 1997
PROSPECTUS
NEXTEL COMMUNICATIONS, INC.
1,580,650 SHARES OF CLASS A COMMON
STOCK, PAR VALUE $.001 PER SHARE
_________________
This Prospectus relates to up to 1,580,650 shares (the "Shares") of
Class A Common Stock, par value $.001 per share (the "Common Stock"), of Nextel
Communications, Inc. ("Nextel" or the "Company"), to be offered for the account
of certain stockholders of the Company (the "Selling Stockholders"). The
Shares being offered hereby were issued to the Selling Stockholders in
connection with the acquisition of certain assets from the Selling Stockholders
or their respective affiliates. See "Selling Stockholders."
The Common Stock is quoted on the Nasdaq Stock Market (the "NSM")
under the symbol "CALL." The Company has been advised that the Shares may be
offered for sale and sold by the Selling Stockholders from time to time in
varying amounts, including in block transactions, on the NSM at then prevailing
market prices or in private transactions at prices and on terms to be
determined at the time of sale. The Shares may be sold by the Selling
Stockholders directly to one or more purchasers, through an underwritten
offering, through agents designated from time to time or to or through
broker-dealers designated from time to time. To the extent required, the
number of Shares to be sold, the purchase price, the public offering price, if
applicable, the name of any such agent or broker-dealer, and any applicable
commissions, discounts or other items constituting compensation to such
underwriters, agents or broker-dealers with respect to a particular offering
will be set forth in a supplement or supplements to this Prospectus (each, a
"Prospectus Supplement"). The aggregate proceeds to the Selling Stockholders
from the sale of the Shares so offered will be the purchase price of the Shares
sold less the aggregate commissions, discounts and other compensation, if any,
paid by the Selling Stockholders to underwriters, agents or broker-dealers.
See "PLAN OF DISTRIBUTION." The Company will not receive any proceeds from the
sale of the Shares but will bear certain of the expenses thereof. See "USE OF
PROCEEDS" and "PLAN OF DISTRIBUTION."
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any discount or commission
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
SEE "RISK FACTORS," BEGINNING ON PAGE 5 OF THIS PROSPECTUS, FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SHARES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 24, 1997.
<PAGE> 6
AVAILABLE INFORMATION
Nextel is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act") and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also may be obtained by mail
from the Public Reference Section of the Commission, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Additionally, the
Commission maintains a Web site on the Internet, that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission and that is located at
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (including the exhibits and amendments thereto, the "Registration
Statement") pursuant to the requirements of the Securities Act with respect to
the shares of Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain portions
of which are omitted in accordance with the rules and regulations of the
Commission and to which reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to herein are not necessarily complete. With respect to each such
contract, agreement or other document filed or incorporated by reference as an
exhibit to the Registration Statement or as an exhibit to documents
incorporated by reference in this Prospectus (see "Incorporation of Certain
Information by Reference"), reference is made to the respective exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. Copies of the
Registration Statement together with exhibits may be inspected at the office of
the Commission in Washington, D.C. without charge and copies thereof may be
obtained therefrom upon payment of a prescribed fee.
All information contained in this Prospectus relating to the Selling
Stockholders or to the proposed or potential methods of distribution of Common
Stock being offered hereby has been supplied by the Selling Stockholders.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION
TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS
TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED UPON WRITTEN OR ORAL REQUEST DIRECTED TO NEXTEL COMMUNICATIONS, INC.,
1505 FARM CREDIT DRIVE, MCLEAN, VIRGINIA 22102, ATTENTION: INVESTOR RELATIONS,
TELEPHONE: (703) 394-3500.
The information in the following documents filed by Nextel with the
Commission (File No. 0-19656) pursuant to the Exchange Act is incorporated by
reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31,
1995 filed with the Commission on April 1, 1996, as amended by
Form 10-K/A filed with the Commission on April 26, 1996 and as
further amended by Form 10-K/A2 filed with the Commission on
May 17, 1996;
(b) Quarterly Reports on Form 10-Q for the quarter ended March 31,
1996 filed with the Commission on May 12, 1996, for the
quarter ended June 30, 1996 filed with the Commission on
August 13, 1996 and for the quarter ended September 30, 1996
filed with the Commission on November 14, 1996;
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(c) Current Reports on Form 8-K: (i) dated February 6, 1996 and
filed with the Commission on February 7, 1996, as amended by
Form 8-K/A, filed on April 26, 1996, (ii) dated February 9,
1996 and filed with the Commission on February 12, 1996, (iii)
dated March 13, 1996 and filed with the Commission on March
15, 1996, (iv) dated and filed with the Commission on July 5,
1996, (v) dated and filed with the Commission on August 30,
1996, (vi) dated September 30, 1996 and filed with the
Commission on October 1, 1996, (vii) dated and filed with the
Commission on October 3, 1996, (viii) dated and filed with the
Commission on November 4, 1996, (ix) dated November 22,
1996 and filed with the Commission on November 26, 1996, and
(X) dated and filed with the Commission on January 21, 1997;
and
(d) Registration Statement on Form S-1, as amended, dated as of
January 27, 1992 (No. 33-43415), with respect to the
information contained under the heading "Description of
Capital Stock" which was incorporated by reference into the
Registration Statement on Form 8-A, dated January 16, 1992.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part thereof from the date of filing
of such documents.
Any statements made herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The information relating to Nextel contained in this Prospectus should
be read together with the information in the documents incorporated by
reference.
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THE COMPANY
On July 28, 1995, NEXTEL Communications, Inc., a corporation organized
under the laws of the State of Delaware in 1987 ("Old Nextel"), was merged with
ESMR, Inc. ("ESMR"), until then a wholly owned subsidiary of Motorola, Inc.
("Motorola"). ESMR was the surviving corporation in the merger (the "Motorola
Transaction") and succeeded to Old Nextel's assets and liabilities. ESMR
changed its name to Nextel Communications, Inc., effective upon consummation of
the Motorola Transaction. References herein to Nextel or the Company for
periods prior to July 28, 1995 refer to Old Nextel as the predecessor to the
business and operations of Nextel. Unless the context otherwise requires,
references to the Company or to Nextel are intended to include Nextel
Communications, Inc. and its consolidated subsidiaries.
Information contained herein gives effect to the acquisition of
approximately 1,220,000 shares of Common Stock by Digital Radio L.L.C. (the
"McCaw Investor") on April 5, 1995, an additional acquisition of 8,163,265
shares of Class A Convertible Redeemable Preferred Stock of Nextel and 82
shares of Class B Convertible Preferred Stock of Nextel by the McCaw Investor
and the consummation of related transactions on July 28, 1995 (the "McCaw
Transaction"), the merger of OneComm Corporation ("OneComm") with and into
Nextel on July 28, 1995 (the "OneComm Transaction"), the consummation of the
Motorola Transaction on July 28, 1995, the merger of a subsidiary of Nextel
with American Mobile Systems Incorporated ("AMS") on July 31, 1995 (the "AMS
Transaction"), the merger of Dial Page, Inc. ("Dial Page") with and into Nextel
on January 30, 1996 (the "Dial Page Transaction"), and the purchase of
8,155,506 shares of Common Stock by Comcast FCI, Inc. ("Comcast FCI"), a wholly
owned subsidiary of Comcast Corporation ("Comcast") on February 9, 1996,
pursuant to the exercise of certain anti-dilutive purchase rights (the "Comcast
Purchase Right") of Comcast and Comcast FCI in connection with the Dial Page
Transaction.
BUSINESS
Nextel's business consists principally of providing wireless
communications services to its customers utilizing specialized mobile radio
("SMR") frequencies licensed to its subsidiaries by the Federal Communications
Commission ("FCC"). Nextel is the leading provider of SMR wireless
communications services in nearly all 48 continental United States, including
all of the top 50 metropolitan market areas in the United States. As of
September 30, 1996, Nextel provided service to approximately 816,000 analog SMR
units and approximately 228,000 units utilizing Nextel's Digital Mobile
networks (as defined below). Nextel's operating revenues primarily arise from
two-way radio dispatch and mobile telephone service and, to a lesser extent,
from sales and maintenance of related equipment. Nextel's business plans and
efforts are to a large extent directed toward replacing the traditional analog
SMR systems that it currently operates with advanced mobile communications
systems employing digital technology with a multi-site configuration permitting
frequency reuse ("Digital Mobile networks"). The Company is implementing its
Digital Mobile networks utilizing digital technology developed by Motorola
(such technology is referred to as the "Integrated Digital Enhanced Network" or
"iDEN" and was known previously as "Motorola Integrated Radio System" or
"MIRS"). As of September 30, 1996, Nextel's Digital Mobile networks were
operating throughout most of California, the greater metropolitan areas of
Baltimore, Boston, Charlotte, North Carolina, Chicago, Colorado Springs,
Denver, Detroit, Greensboro, North Carolina, Hartford, Kansas City, Las Vegas,
Milwaukee, New York, Newark, Oklahoma City, Philadelphia, Portland, Oregon,
Raleigh/Durham, Seattle, St. Louis, Toledo, Topeka, Tulsa, Washington D.C.,
Wichita and Winston-Salem, North Carolina, south along the I-85 corridor
through Greenville/Spartanburg, South Carolina and including Atlanta, Georgia
and west along the I-20 corridor to and including Birmingham, Alabama.
Prior to the second quarter of 1996, the Company implemented its
Digital Mobile networks in its market areas using Motorola's "first generation"
iDEN technology. During that time frame, the Company encountered certain
technology and system performance issues relating primarily to the voice
transmission quality of the mobile telephone service. In response to these
issues, the Company and Motorola have undertaken, and continue to undertake,
system enhancement efforts to address various circumstances believed to
adversely affect system performance and customer satisfaction, particularly
those associated with voice transmission quality. Additionally, independent of
such system enhancement efforts, the Company, together with Motorola, is
pursuing a significant program directed toward the development and deployment of
modifications to the "first generation" iDEN technology platform, to be known as
Reconfigured iDEN, designed principally to produce improvements in voice
transmission quality. Based on its experiences with the Reconfigured iDEN
technology, including the feedback received in customer trials and various other
inputs and considerations, the Company announced the first full-scale commercial
launch of the Reconfigured iDEN Digital Mobile network in the Chicago market
late in the third quarter of 1996 and subsequently announced full-scale
commercial launches in the Atlanta, Boston, Denver, Detroit and Las Vegas
markets, in each case accompanied by a more broadly-focused marketing campaign
in such market areas.
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Nextel's principal executive and administrative facility is located at
1505 Farm Credit Drive, McLean, Virginia 22102, and its telephone number at
that location is (703) 394-3000.
RISK FACTORS
THE FOLLOWING RISK FACTORS MAY AFFECT THE VALUE OF SHARES OF COMMON
STOCK AND THEREFORE SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, IN
CONJUNCTION WITH THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE
IN THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION. SEE ALSO "--FORWARD
LOOKING STATEMENTS."
HISTORY OF AND FUTURE EXPECTATIONS OF LOSSES AND NEGATIVE CASH FLOW
The activities of Nextel since its inception in 1987 have been
concentrated on the acquisition and operation of SMR businesses and the
development of Digital Mobile networks. Nextel has incurred net losses since
its inception, including net losses of $125,849,000 for the nine months ended
December 31, 1994, and $331,165,000 for the year ended December 31, 1995.
Nextel had an accumulated deficit totalling $579,231,000 at December 31, 1995.
On a pro forma basis for the year ended December 31, 1995, taking into account
certain transactions that were consummated during and after that period but
before the date hereof (including the consummation of the Dial Page
Transaction), Nextel would have generated a net loss of $526,699,000.
System infrastructure purchases under purchase agreements with
Motorola and other vendors of equipment related to the Digital Mobile networks,
and inventory purchases made in anticipation of the commencement of commercial
service in Nextel's markets, have caused and will continue to cause a
significant increase in assets and liabilities during the start-up phase of the
Digital Mobile networks. Such Digital Mobile network costs are charged to
operations as depreciation expense beginning in the quarter during which such
market commences commercial operations.
Nextel anticipates that its net losses will increase significantly
during the ongoing start-up phase of Digital Mobile networks and that it will
continue to generate operating losses over the next several years. Nextel's
ability to arrange sufficient equity and/or debt financing or to generate
sufficient revenue to cover its operating and capital needs is subject to a
number of risks and contingencies. Accordingly, there can be no assurance as
to whether or when Nextel's operations will become profitable. See "--Nextel
to Require Financing" and "--Forward Looking Statements."
The development, implementation and operation of the Digital Mobile
networks will require significant funds. Due to expected operating losses and
capital requirements, Nextel expects that it will be required to raise a
portion of such funds externally. See "--Nextel to Require Financing" and
"--Forward Looking Statements."
RISKS OF IMPLEMENTATION OF DIGITAL MOBILE NETWORKS
Nextel and its subsidiaries are licensed to provide wireless
communications services in nearly all 48 states in the continental United
States, including all of the top 50 metropolitan market areas in the United
States. Nextel has activated its Digital Mobile networks in certain of these
market areas. As of September 30, 1996, Nextel's Digital Mobile networks were
operating throughout most of California, in the greater metropolitan areas of
Baltimore, Boston, Charlotte, North Carolina, Chicago, Colorado Springs,
Denver, Detroit, Greensboro, North Carolina, Hartford, Kansas City,
Las Vegas, Milwaukee, New York, Newark, Oklahoma City, Philadelphia, Portland,
Oregon, Raleigh/Durham, Seattle, St. Louis, Toledo, Topeka, Tulsa, Washington
D.C., Wichita and Winston-Salem, North Carolina, south along the I-85 corridor
through Greenville/Spartanburg, South Carolina to and including Atlanta,
Georgia and west along the I-20 corridor to and including Birmingham, Alabama.
As of September 30, 1996, Nextel's Digital Mobile networks were activated in
major metropolitan market areas throughout the United States that collectively
accounted for more than half of the total United States population, and
approximately 228,000 subscriber units were operating on Nextel's Digital
Mobile networks. Under its nationwide Digital Mobile network build-out plan
(which, as discussed below in "--Nextel to Require Financing,"
"--Implementation of Digital Mobile Networks Subject to Risks of Developing
Technology" and "--Success of Nextel Is Dependent on its Ability to Compete,"
is premised on several key assumptions, including availability of sufficient
funding, achievement of satisfactory system performance standards and
maintenance of targeted service and subscriber equipment pricing levels),
Nextel currently expects its Digital Mobile networks to be available in areas
covering approximately 85% of the United States population by the end of 1998.
See "--Forward Looking Statements."
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In order to activate Digital Mobile network service in a market, the
Company must free a certain number of 800 MHz frequencies from SMR analog
traffic in that market ("channel recovery"). Channel recovery involves
transferring 800 MHz customers to 900 MHz systems or other 800 MHz analog SMR
systems. Upon commencement of commercial service, the Company intends to sell
the Digital Mobile network services to existing customers and to add 800 MHz
frequencies to the Digital Mobile networks as such customers migrate
("migration"). The Company has commenced its channel recovery and migration
efforts for existing customers in each of the markets in which its Digital
Mobile networks have been activated. The Company expects that only a portion
of its SMR channels in each market will be needed for the initial phase of the
Digital Mobile network build-out. Accordingly, the Company expects to have the
opportunity to move its customers onto the Digital Mobile network gradually to
avoid any significant disruption of service, although there can be no assurance
that such disruption will not occur.
The implementation of Digital Mobile networks involves systems design,
site procurement, construction, electronics installation, receipt of necessary
FCC and other regulatory approvals, channel recovery and initial systems
optimization prior to commencing commercial service. Each stage can take from
several weeks to several months and involves various risks and contingencies,
the outcome of which cannot be predicted. There can be no assurance that
Nextel will be able to implement Digital Mobile networks in any particular
market in accordance with its current plans and schedules. See "--Forward
Looking Statements."
IMPLEMENTATION OF DIGITAL MOBILE NETWORKS SUBJECT TO RISKS OF DEVELOPING
TECHNOLOGY
Currently, there are two principal digital technology formats that are
being assessed or proposed for deployment by providers of cellular telephone
service or by certain entities that have been awarded personal communications
services ("PCS") licenses to provide wireless communications services in the
United States. One such format is known as the Time Division Multiple Access
("TDMA") digital transmission technology, a version of which, known as
"three-time slot TDMA" has been deployed by AT&T Wireless Services (formerly
McCaw Cellular Communications, Inc.), a subsidiary of AT&T, and by Southwestern
Bell Mobile Systems in certain of their cellular system markets, and is
expected to be deployed by certain other cellular operators pursuant to a
standard adopted by the cellular industry. The other principal format is known
as the Code Division Multiple Access ("CDMA") digital transmission technology.
Although TDMA and CDMA are both digital transmission technologies, and thus
share certain basic characteristics and areas of contrast to analog
transmission technology, TDMA and CDMA are not compatible or interchangeable
with each other.
The Motorola proprietary first generation iDEN technology originally
incorporated in Nextel's Digital Mobile networks is known as "six-time slot
TDMA." Although based on the TDMA technology format, this first generation
iDEN technology differs in a number of significant respects from the TDMA
technology versions being assessed or deployed by cellular operators and PCS
licensees in the United States, which differences may have important
consequences. Additionally, unlike the three-time slot TDMA technology format
being utilized for the mobile telephone function in the newly developed
Reconfigured iDEN technology platform or the three-time slot TDMA technology
format being utilized by certain cellular providers, the first generation iDEN
technology currently being utilized by Nextel in most of its presently
operating Digital Mobile networks, as well as for the dispatch function in the
newly-developed Reconfigured iDEN technology platform, can carry up to six
voice and/or control paths per channel. The use of six-time slot TDMA
technology in combination with Nextel's re-use of its licensed frequencies in a
cellular-type system design permits Nextel to utilize its current holdings of
spectrum more efficiently. Efficient utilization of spectrum is an important
objective generally because less spectrum is available in the SMR band than is
or may be licensed to each cellular and certain PCS operators in
each market. Reconfigured iDEN, which is designed to use three time slots per
channel for the mobile telephone service, will result in a reduction in channel
capacity compared to the capacity achievable using first generation iDEN
technology for mobile telephone service.
Although Nextel believes that TDMA technology, on balance, is superior
to analog technology that is used in traditional SMR systems, the use of
digital technology in general, and the six-time slot TDMA version of first
generation iDEN in particular, as each is currently deployed, involves certain
performance trade-offs, for example, in various characteristics affecting voice
quality and fidelity. In general, as the relevant technologies are currently
deployed, digital voice transmission produces a distinguishably different set
of sound characteristics than analog voice transmission (whether SMR or
cellular). The difference results, in part, from the fact that digital voice
transmission requires the digital encoding and decoding of the voice
communication. Hence, the six-time slot TDMA version of first generation iDEN,
the three-time slot version of Reconfigured iDEN and other digital cellular
voice transmissions, as currently deployed, each sound different from
traditional analog cellular voice transmissions. These trade-offs may have an
effect on customer acceptance of iDEN technology.
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It is possible that in the future a digital transmission technology
other than TDMA may gain acceptance sufficient to adversely affect the
resources devoted by third parties to developing or improving TDMA-based
technology. In addition, existing digital cellular technology formats
including cellular TDMA cannot currently be utilized on Nextel's present SMR
spectrum holdings. Accordingly, if any improvements were to be made to such
currently existing digital cellular technology formats, the prospect of
achievement of parallel improvements in the TDMA-based iDEN technology
presently utilized by Nextel is not certain. Any difference that may from time
to time exist between the technology deployed in Nextel's Digital Mobile
networks and competitive technologies then deployed by other wireless
communications service providers, such as analog, CDMA, TDMA or other
transmission technology formats that may be developed in the future, may affect
customer acceptance of the services offered by Nextel. See "--Forward
Looking Statements."
Customer acceptance of the services offered by Nextel will be affected
not only by technology-based differences, but also by the operational
performance and reliability of system transmissions on Nextel's Digital Mobile
networks. As is frequently the case both in the development and implementation
of new technologies and the offering of related services, Nextel has
experienced difficulties and delays in the implementation of the first
generation iDEN TDMA technology in its Digital Mobile networks, resulting from
certain technology and performance issues with respect to system reliability
(the percentage of time the system is operating), system access (how often a
user can gain access to the system) and various characteristics affecting voice
quality that have limited its ability to market mobile telephone services
utilizing the Company's Digital Mobile networks. Nextel's objectives in
carrying out the initial phase of system development and technology
optimization activities have been to achieve satisfactory performance levels in
the areas of system reliability and system access. Ongoing optimization,
software loading and planned maintenance activities affecting the Digital
Mobile network systems periodically require the scheduled turn-down of selected
subsystems during periods of very low system traffic, typically at night or on
weekend days. See "--Forward Looking Statements."
During calendar years 1994 and 1995, Nextel and Motorola coordinated
their efforts to identify and implement various system hardware adjustments and
software upgrades to bring about improvements in various Digital Mobile network
operating and performance characteristics. Although further improvements in
the areas of system reliability and access are expected to be pursued, Nextel
believes that its existing Digital Mobile networks, as operated at September
30, 1996, were demonstrating acceptable performance levels in these areas.
Motorola has advised Nextel that (independent of development commitments
contained in the second amendment to the existing equipment purchase agreement
between Nextel and Motorola (the "Second Equipment Agreement Amendment"))
Motorola contemplates continuing to install software upgrades in accordance
with its previous plans. Nextel expects that such software upgrades will be
directed at producing system access and reliability improvements, as well as
voice transmission quality improvements in the mobile telephone mode in the
Digital Mobile networks. Nextel further anticipates that there will be an
on-going focus on system optimization activities directed at achieving
improvements in the overall performance of the Digital Mobile networks.
Throughout late 1994 and continuing during 1995, Nextel and Motorola
conducted intensive objective system testing as well as customer surveys
designed to assess the foregoing operational issues. As discussed above, during
1994 and 1995, a number of system hardware adjustments and software upgrades
were made to address issues identified through such testing and surveys. Nextel
is continuing such system testing and customer surveys, and anticipates that it
will continue to advise and consult with Motorola concerning potential measures
that could be taken to address particularly-identified system performance or
customer satisfaction issues revealed in such testing and surveys. Nextel
believes that customer acceptance of the dispatch service on the Digital Mobile
networks was generally at an acceptable overall level during the period since
late 1994. Nextel also believes that the successful development and deployment
of the Reconfigured iDEN technology platform, with its accompanying improvements
in the quality of the mobile telephone service provided on Nextel's Digital
Mobile networks, should enable Nextel to be in a position to market such
services aggressively as part of a competitive wireless communications services
alternative to existing cellular telephone service in the markets where
Reconfigured iDEN is deployed.
Nextel, for a limited period after first making its Digital Mobile
network services available on a commercial basis, provided, and in certain
markets has continued to provide, discounts to customers, principally with
regard to such customers' usage of mobile telephone services, because of
concerns with the first generation iDEN system performance and network
service-related issues, and gave, and in certain markets continues to give,
credits to subscribers in an attempt to foster satisfactory customer relations
in response to certain performance and network service-related issues. Such
extended system development and technology optimization activities, customer
loading delays and customer discounts and credits have adversely affected and
may continue to adversely affect Nextel's ability to generate revenue.
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To date, Nextel's experience is based largely on customers in its markets
employing the first generation iDEN technology, who are primarily oriented to
dispatch service, and such experience should not necessarily be regarded as an
accurate predictor of Nextel's experience in the future, particularly as Nextel
embarks on its planned aggressive nationwide roll-out of the Reconfigured iDEN
technology and as Nextel's customer base expands beyond such group of initial
customers. Any inability to address satisfactorily and resolve performance
issues that affect customer acceptance of Digital Mobile network service could
delay or adversely affect the successful commercialization of the Digital
Mobile networks and could adversely affect the business and financial prospects
of Nextel. If Nextel for any reason is unable to implement Digital Mobile
networks and provide service to its target customers that is competitive with
the services of other wireless communications providers, Nextel would be
unable, utilizing its existing analog SMR systems, to provide mobile telephone
services comparable to those provided by other wireless communications systems
operators or to achieve significant further subscriber growth. See "--Success
of Nextel Is Dependent on Its Ability to Compete" and "--Forward Looking
Statements."
Nextel and Motorola expect that system optimization activities will be
a continuing component of normal Digital Mobile network operation, and the
satisfactory resolution of certain system performance issues in a particular
market or at a particular stage of operation will not necessarily preclude the
need to address those issues again, for example, as a result of a significant
increase in the number of subscribers using the Digital Mobile networks.
Moreover, future upgrades or modifications may have unexpected adverse effects
on performance issues previously addressed. Each of Motorola and Nextel
believes, however, that a large portion of the hardware and software
adjustments developed in the course of system development and technology
optimization activities to address particular issues, and the resulting system
performance improvements realized, should be applicable to similar issues in
different markets. Nevertheless, as is often the case in the deployment of
wireless communications networks, it should be expected that there will be
market-specific characteristics, such as local terrain, topography, the number
of licensed frequencies, the utilization of adjacent radio frequencies and
other factors, that will require customized optimization activities to address
related system performance issues successfully. See "--Forward Looking
Statements."
Pursuant to the Second Equipment Agreement Amendment, Motorola has
agreed to use its best efforts to develop, and Nextel has agreed to implement
when developed, Reconfigured iDEN. The principal objective of the Reconfigured
iDEN development and deployment efforts is to achieve significant improvements
in voice transmission quality for the mobile telephone service provided on
Nextel's Digital Mobile networks. No assurance can be given that any
modifications or enhancements, including Reconfigured iDEN, designed to produce
improvements in the voice transmission quality of the mobile telephone services
offered by the Company will be developed successfully, or on the currently
anticipated time schedule, or that any such modifications or enhancements, if
developed, would be deployed in Nextel's Digital Mobile networks or, if
deployed, would perform successfully or would satisfy customer requirements, or
that Nextel's mobile telephone services would be regarded as competitive in the
wireless communications services markets as such markets currently exist and as
they are expected to develop in the future. See "--Forward Looking
Statements."
Nextel continuously reviews alternate technologies as they are
developed. To date, however, it has not been regarded as necessary or as a
commercially feasible strategy to adapt currently available alternative
technologies to operate on Nextel's present spectrum position. Nextel
continues to pursue certain regulatory initiatives that would provide SMR
operators, including Nextel, with the right to use contiguous blocks of
spectrum. The FCC issued an order in December 1995 that would provide SMR
operators, including Nextel, with the opportunity to obtain contiguous
spectrum. See "--Nextel's Prospects Are Dependent on Governmental
Regulation." Were Nextel to obtain a sufficient contiguous spectrum position
in its market areas, pursuant to the FCC's 1995 order or otherwise, it would
become feasible to consider deployment of currently existing cellular digital
technology transmission formats, including CDMA and TDMA, on such contiguous
spectrum blocks. Independent of such technological feasibility, however,
additional factors, including Nextel's contractual obligations to Motorola
regarding the deployment and utilization of first generation iDEN and
Reconfigured iDEN technology, and additional capital requirements associated
with any switch in technology, would likely materially affect Nextel's
consideration of such alternative technologies.
Should Nextel choose to deploy a technology other than iDEN for any of
its wireless communications services, Nextel believes that its systems planning
and its contractual relationships with Motorola would permit it to utilize a
different technology. In light of the development period for Reconfigured
iDEN, however, Nextel has agreed, in the Second Equipment Agreement Amendment,
not to effect a "Switch in Technology" prior to October 1, 1997 without
Motorola's consent. A Switch in Technology is defined in the Second Equipment
Purchase Agreement Amendment as a decision by Nextel before August 4, 1999 to
install and use digital radio frequency technology as an alternative to first
generation iDEN or Reconfigured iDEN on more than 25% of its SMR channels in
the 806-824 MHz band in one or
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<PAGE> 13
more of its top 20 markets, or the utilization by Nextel of any of its SMR
channels for voice interconnect on certain U.S. cellular and/or PCS radio
telephony standards. Due to the considerable present uncertainty surrounding
the factors that might affect such a decision, including the performance
characteristics and customer perceptions of first generation iDEN, Reconfigured
iDEN, or of competing digital technologies and possible future improvements in
first generation iDEN or Reconfigured iDEN technology, it is impossible to
predict if or when such a decision could be made.
NEXTEL TO REQUIRE FINANCING
Nextel anticipates that, for the foreseeable future, it will be
utilizing significant amounts of its available cash for capital expenditures
for the construction of Digital Mobile networks (including the anticipated
conversion of its existing Digital Mobile networks to utilize the Reconfigured
iDEN technology platform as described below under " - Success of Nextel is
Dependent on its Ability to Compete"), operating expenses relating both to the
Digital Mobile networks and to Nextel's traditional analog SMR systems,
potential acquisitions (including the acquisition of rights to spectrum through
the contemplated 800 MHz spectrum auction process, and investment in various
potential international wireless communications business opportunities) and
corporate expenditures. During fiscal year 1995, Nextel's average monthly cash
utilization rate for investing activities (principally attributable to capital
expenditures for the build-out of the Digital Mobile networks and acquisitions
made during 1995) was approximately $33,300,000, and its average monthly
operating losses (exclusive of non-cash items) was approximately $15,900,000.
Such average amounts do not reflect the investing activities and operating
losses of Dial Page during such fiscal year or such activities and losses of
OneComm, AMS or Motorola's operation of its 800 MHz SMR licenses in the
continental U.S. (the "Motorola SMR Business") for the portion of such fiscal
year prior to completion of the OneComm Transaction, the AMS Transaction and
the Motorola Transaction, respectively, and are not presented as representative
of Nextel's anticipated experience in such areas. Nextel anticipates that its
cash utilization for investment activities and operating losses will continue
to exceed its cash flows from operating activities over the next several years
during the start-up phase of its Digital Mobile networks and that it will be
necessary for Nextel to utilize its existing cash and funding from outside
sources to meet its cash needs resulting from such activities and losses.
Nextel's aggregate cash, cash equivalents and marketable securities at
September 30, 1996 totaled approximately $224,506,000.
Nextel, Nextel Finance Company, a wholly owned subsidiary of Nextel
("NFC"), and certain subsidiaries of Nextel entered into definitive agreements,
which became effective on September 30, 1996, with respect to a secured credit
facility arranged by Chase Securities, Inc., J.P. Morgan Securities, Inc. and
Toronto-Dominion Securities (USA), Inc. (the "Bank Credit Facility").
Concurrently therewith, Nextel, NFC and certain subsidiaries of Nextel entered
into definitive agreements, which also became effective on September 30, 1996,
with respect to the amendment, restatement and consolidation of the previously
existing financing arrangements with Motorola and NTFC Capital Corporation
("NTFC") (the "Vendor Credit Facility").
The Credit Agreement relating to the Bank Credit Facility (the "Bank
Credit Agreement") provides for up to $1,655,000,000 of secured financing,
consisting of a $1,085,000,000 revolving loan and $570,000,000 in term loans.
The Amended, Restated and Consolidated Credit Agreement relating to the Vendor
Credit Facility (the "Vendor Credit Agreement") provides for up to $345,000,000
of secured financing, consisting of a $195,000,000 revolving loan and
$150,000,000 in term loans. Borrowings under the Bank Credit Facility and the
Vendor Credit Facility are ratably secured by liens on assets of Nextel's
subsidiaries that are "restricted" subsidiaries under the terms of Nextel's
public indentures. At September 30, 1996, Nextel had drawn approximately
$368,000,000 of its available financing under the Bank Credit Facility, leaving
an aggregate of approximately $1,287,000,000 available for borrowing under such
facility, and had drawn $150,000,000 of its available financing under the
Vendor Credit Facility, leaving an aggregate of approximately $195,000,000
available for borrowing under such facility, subject in each case to the
satisfaction or waiver of applicable borrowing conditions.
Nextel believes that it has sufficient funds currently available or
reasonably expected to be accessible to it under its existing financing
facilities to meet its cash needs through the planned completion of its first
stage nationwide Digital Mobile networks build-out in 1998, in light of its
current (and currently committed) business and investment activities and
assuming a conservative ramp-up in Digital Mobile system subscriber growth.
Nextel currently anticipates that the funds available pursuant to the Bank
Credit Facility and the Vendor Credit Facility, together with the proceeds that
would be received by Nextel assuming the exercise of the currently outstanding
warrants and options to acquire shares of Common Stock described below (which
warrants and options are scheduled to expire unless exercised during such time
period), would be sufficient to permit both the full-scale implementation of
its nationwide Digital Mobile networks and the pursuit of its other strategic
objectives, including additional spectrum acquisition activities and
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<PAGE> 14
currently committed international investment opportunities. There can be no
assurance, however, that all such outstanding warrants and options will be
exercised. Moreover, Nextel's public indentures contain provisions that
operate to limit the amount of borrowings available under the Bank Credit
Facility and the Vendor Credit Facility in certain circumstances. In addition,
Nextel's capital needs, and its ability to adequately address those needs
through debt or equity funding sources, are subject to a variety of factors
that cannot presently be predicted with certainty, such as the commercial
success of Nextel's Digital Mobile networks incorporating the Reconfigured iDEN
technology, the amount and timing of Nextel's capital expenditures and operating
losses, and the market price of the Common Stock. See "--Forward Looking
Statements."
Nextel currently is aware of numerous factors and considerations, any
one or more of which could have a material effect on the timing and/or amount
of the future funding to be required by Nextel, but Nextel cannot currently
quantify with precision either the magnitude or the certainty of the effects
associated with any such factors. These factors include: (i) the timing of
the anticipated 800 MHz spectrum auction process, and the amounts required to
be bid to acquire any or all of the available spectrum blocks in the major
metropolitan market areas where Nextel currently operates, or currently plans
to operate, its Digital Mobile network and the amounts that may be required to
accomplish retuning or acquisition of 800 MHz incumbent channels in spectrum
blocks that may be acquired by Nextel in the 800 MHz spectrum auction process;
(ii) the uncertainty with respect to the success and/or timing of the remaining
development activities relating to the Reconfigured iDEN technology format and,
assuming successful and timely completion of such efforts, the uncertainty with
respect to the success of commercial introduction and customer acceptance of
Nextel's Digital Mobile services that utilize such Reconfigured iDEN
technology; (iii) the potential commercial opportunities and risks associated
with implementation of Nextel's revised business plan premised on an
anticipated aggressive campaign to convert existing Digital Mobile networks to,
and/or to construct new Digital Mobile networks utilizing, the Reconfigured
iDEN technology format; and (iv) the net impact on Nextel's capital budget of
certain developments currently expected to increase capital needs (e.g., the
additional capital needed if Nextel acquires for cash additional spectrum in
certain markets to increase the capacity and/or efficiency of Nextel's
operating Digital Mobile networks in such markets, the additional capital
needed for more extensive construction of Digital Mobile networks in additional
market areas acquired in the Dial Page Transaction, the OneComm Transaction and
the AMS Transaction and in connection with the conversion of existing Digital
Mobile networks to the Reconfigured iDEN technology format, the short-term
expenditures associated with analog SMR station construction requirements under
the currently effective FCC 800 MHz channel licensing approach) that may be
offset (whether wholly or partially) by other developments anticipated to (or
to have the potential to) reduce capital needs (e.g., co-location of antenna
and/or transmitter sites with other providers of wireless services in the
relevant markets, reductions in infrastructure and subscriber unit prices
obtained from Motorola pursuant to the Second Equipment Agreement Amendment,
alternative and more economical means for increasing system capacity, other
than constructing additional cell sites and/or installing additional base
radios, such as use of so-called "smart antennas," mini-cells and
software-driven and/or system design performance enhancements). Many of the
foregoing involve elements wholly or partly beyond Nextel's control or
influence. See "--Forward Looking Statements."
Other considerations in addition to the factors identified above may
significantly affect Nextel's decisions to seek additional financing, including
general economic conditions, conditions in the telecommunications and/or
wireless communications industry and the feasibility and attractiveness of
structuring particular financings for specific purposes (e.g., separate
capital-raising activities with respect to international activities and
opportunities). Finally, Nextel could obtain significant additional funds in
connection with the exercise of outstanding warrants and options, and the amount
and timing of receipt of such funds also would play a role in Nextel's
determinations concerning the need for or attractiveness of other potentially
available sources of financing. As Nextel has disclosed previously, full
exercise of the options granted to the McCaw Investor at the July 1995 closing
of the McCaw Transaction would result in the receipt by Nextel of approximately
$232,000,000, $277,500,000 and $107,500,000 of additional funds prior to July 29
in the years 1997, 1999 and 2001, respectively, full exercise of the warrants
issued to Comcast for 25,000,000 shares of Common Stock would result in the
receipt by Nextel of approximately $400,000,000 prior to September 16, 1997 and
full exercise of the warrants initially issued to Motorola for 3,000,000 shares
of Common Stock would result in the receipt by Nextel of approximately
$45,000,000. Finally, proceeds from the exercise by the McCaw Investor and/or
by Comcast of such parties' anti-dilutive rights to acquire additional Nextel
equity in connection with certain issuances by Nextel of its capital stock and
proceeds from the exercise of other warrants and options currently outstanding
and held by third parties, including options granted pursuant to the Nextel
Amended and Restated Incentive Equity Plan (including its predecessor plans) and
the Nextel Associate Stock Purchase Plan, may provide other available sources of
funding.
The foregoing discussion concerning potential exercise of various
third party rights to acquire shares of Common Stock is subject to the
qualification that no assurance can be given that any of such rights will be
exercised
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<PAGE> 15
or, if exercised, that the contemplated investment will in fact be consummated.
In the case of the Bank Credit Facility and the Vendor Credit Facility, there
can be no assurance that the conditions to access such facilities will be met.
To the extent any of the aforementioned proceeds from option and warrant
exercises or financing arrangements are not available when required, it will be
necessary for Nextel to obtain alternate sources of financing to meet its
anticipated funding needs.
Nextel has had and may in the future have discussions with other
parties regarding potential equity investments and debt financing arrangements
to satisfy actual or anticipated financing needs. Pursuant to the Motorola
Transaction, Nextel has agreed, under certain circumstances, not to grant
superior governance rights to any third-party investor without Motorola's
consent, which may make securing equity investments more difficult. Motorola
consented with respect to the grant of superior governance rights by Nextel in
connection with the McCaw Transaction. The ability of Nextel to incur
additional indebtedness (including, in certain circumstances, indebtedness
incurred under the Bank Credit Agreement and/or under the Vendor Credit
Facility) is and will be limited by the terms of (1) the indentures for
Nextel's senior redeemable discount notes due 2003 and 2004, respectively
(collectively, the "Nextel Indentures"), OneComm's Indenture for its Senior
Redeemable Discount Notes due 2004 (the "OneComm Indenture") and Dial Page's
Indentures for its Senior Redeemable Discount Notes due 2004 and its Senior
Redeemable Discount Notes due 2005 (collectively, the "Dial Call Indentures"),
which notes were initially issued by Dial Call Communications, Inc., a wholly
owned subsidiary of Dial Page that was merged with and into Dial Page in
connection with the Dial Page Transaction and (2) the Bank Credit Agreement and
the Vendor Credit Agreement. The Bank Credit Agreement and the Vendor Credit
Agreement also require Nextel and its relevant subsidiaries to satisfy certain
financial covenants or ratios including those specifically related to leverage.
At present, other than the existing equity or debt financing
arrangements that have been consummated and/or disclosed, Nextel has no
commitments or understandings with any third parties to obtain any material
amount of additional equity or debt financing. Moreover, no assurances can be
made that Nextel will be able to obtain any such additional financing in the
amounts or at the times such financing may be required, nor that, if obtained,
any such financing would be on acceptable terms. Nextel also anticipates that
it will continue to experience significant net losses during the ongoing start
up phase of the Digital Mobile networks over the next several years.
Accordingly, there can be no assurances as to whether or when the operations of
Nextel will become profitable. As a result of Nextel's anticipated continuing
losses, the uncertainty regarding the exercise of options and warrants, the
availability of financing under the Bank Credit Facility and the Vendor Credit
Facility and the impact of Reconfigured iDEN and other matters discussed above,
there can be no assurance that Nextel will have adequate capital to implement
the nationwide build-out of its Digital Mobile networks without obtaining
additional financing and/or alternative financing sources. See "--Forward
Looking Statements."
SUCCESS OF NEXTEL IS DEPENDENT ON ITS ABILITY TO COMPETE
Nextel's success depends on its Digital Mobile networks' ability to
compete with other wireless communications systems in each relevant market and
its ability to successfully market integrated wireless communication services.
Nextel is continuing to focus its marketing efforts on attracting
customers from its previously-identified targeted groups of potential
subscribers, chiefly its existing analog SMR dispatch system subscribers and
other business users including current users of multiple wireless
communications services and those new users who may be attracted to the
combination of services made possible by its Digital Mobile networks. Nextel's
strategy is to focus principally on multi-service business users
in its markets with Digital Mobile networks. As of September 30, 1996
approximately 228,000 Digital Mobile units were in service.
Prior to the second quarter of 1996, Nextel implemented its Digital
Mobile networks in its market areas using Motorola's "first generation" iDEN
technology. During that time frame, Nextel encountered certain technology and
system performance issues relating to the "first generation" iDEN technology
that resulted in delays in the implementation of its plans to deploy its
Digital Mobile networks and in the commencement of aggressive marketing efforts
with respect to its communications products and services, particularly its
mobile telephone services. These technology and system performance issues
related primarily to the voice transmission quality of the mobile telephone
service.
In response to these issues, Nextel and Motorola have undertaken, and
continue to undertake, system enhancement efforts to address various
circumstances believed to adversely affect system performance and customer
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satisfaction, particularly those associated with voice transmission quality.
Nextel anticipates that such system enhancement efforts will be a continuing
component of the normal ongoing technology optimization process. Additionally,
independent of such system enhancement efforts, Nextel, together with Motorola,
is pursuing a significant program directed toward the development and
deployment of modifications to the "first generation" iDEN technology platform,
known as Reconfigured iDEN, designed principally to produce improvements in
voice transmission quality. Nextel and Motorola have been encouraged by their
experience to date in the Reconfigured iDEN development and deployment process.
All significant technology performance benchmarks, development progress targets
and key event schedules relating to the development and deployment of
Reconfigured iDEN have been achieved or satisfied to date substantially as
contemplated and originally agreed to by Nextel and Motorola.
Based on its experiences with the Reconfigured iDEN technology,
including the feedback received in customer trials and various other inputs and
considerations, the Company announced the first full-scale commercial launch of
the Reconfigured iDEN Digital Mobile network in the Chicago market late in the
third quarter of 1996, accompanied by the commencement of a more
broadly-focused marketing campaign in that market area. In October and
November 1996, Nextel announced full-scale commercial launches, accompanied by
more broadly-focused marketing campaigns, in the Atlanta, Boston, Denver,
Detroit and Las Vegas markets. Nextel's commercial launch activities in these
markets represent the first phase of an anticipated rapid nationwide deployment
of the Reconfigured iDEN technology in Nextel's significant Digital Mobile
markets. Nextel currently is developing and refining a nationwide build-out
plan for Digital Mobile networks incorporating the Reconfigured iDEN technology
based on an anticipated implementation schedule during 1996 to 1998, which it
currently expects will involve budgeted capital expenditures totaling
approximately $1.2 billion. In this connection, Nextel anticipates that
purchases of Motorola-manufactured infrastructure equipment will represent the
largest category of capital spending. Since June 1996, Nextel has placed
orders with Motorola totaling more than $300 million of products incorporating
the Reconfigured iDEN technology, including system infrastructure equipment and
related software and the new, compact Reconfigured iDEN handsets that Nextel
plans to market nationally, principally under the "PowerFone"(R)(TM) brand
name. Assuming the successful and timely completion of such build-out plan,
Nextel expects that its Digital Mobile networks would provide coverage to areas
representing approximately 85% of the United States population by the end of
1998. Implementation of such a rapid nationwide deployment strategy for
Reconfigured iDEN would likely significantly accelerate Nextel's use of and
needs for capital resources and would therefore be dependent on, among other
things, availability of necessary capital. See also "--Nextel to Require
Financing" and "--Forward-Looking Statements."
The Company believes that its ability to provide a full line of mobile
communications services in an integrated package on its Digital Mobile networks
will distinguish it from other providers of wireless communications services.
The focus and the progress of Nextel's Digital Mobile network services
marketing efforts is and will continue to be dependent on a number of factors,
including system performance, subscriber equipment performance and the ability
to provide services that satisfy customer needs and expectations. Nextel
reviews its business and marketing plans in light of a variety of factors,
including perceived opportunities, actual experiences in the marketplace,
availability of financial and other resources and overall economic and/or
competitive considerations, and may from time to time determine to change,
refine or redirect such plans. See "--Forward Looking Statements."
Following implementation of its Digital Mobile networks and completion
of related system optimization activities, the Company's Digital Mobile networks
will compete with established and future wireless operators in its efforts to
attract mobile telephone customers, dealers and possibly resellers to its
service in each of the markets in which it operates a Digital Mobile network.
The Company believes that, following software upgrades and additional
system optimization efforts and equipment and technology enhancements, which
occurred during 1996, and the development and commercial deployment of
Reconfigured iDEN, Nextel's Digital Mobile networks will have the capacity,
functionality and quality of service necessary to be competitive with current
wireless communications services in the markets in which the Company operates
Reconfigured iDEN Digital Mobile networks. Nextel's ability to compete
effectively with other wireless communications service providers, however, will
depend on a number of factors, including the successful deployment of the
Reconfigured iDEN technology platform in its market areas, the continued
satisfactory performance of such Reconfigured iDEN systems, the establishment of
roaming service among such market areas and the development of cost effective
direct and indirect channels of distribution for its products and services, and
no assurance can be given that such objectives will be achieved. See "--Forward
Looking Statements."
While Nextel believes that the mobile telephone service to be
provided on its Digital Mobile networks utilizing the Reconfigured iDEN
technology will be similar to other current wireless communications services in
certain respects, as discussed under "--Implementation of Digital Mobile
Networks Subject to Risks of Developing Technology," there are (and will in
certain cases continue to be) differences between the services provided by
Nextel
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and by cellular operators and the performance of their respective systems. As
a result of these differences, there can be no assurance that Digital Mobile
network mobile telephone services will be competitive with other providers of
mobile telephone services. As part of its marketing strategy, Nextel will
attempt to emphasize the benefits to its subscribers of obtaining an integrated
package of services consisting of dispatch radio, paging services and mobile
telephone, and in the future, data transmission. Cellular operators currently
do not provide such integrated services, but recent FCC rulings permit cellular
operators to offer two-way dispatch services. If cellular operators do provide
dispatch services in the future, Nextel's competitive advantage from using such
a marketing strategy may be impaired.
Nextel will not be able to provide roaming service comparable to that
currently available from cellular operators, which have roaming agreements
among each other, unless and until system build-out is completed. Moreover,
the cellular systems in each of Nextel's markets, as well as in the markets in
which Nextel expects to provide services in the future, have been operational
for a number of years and such operators currently service a significant
subscriber base and typically have significantly greater financial and other
resources than those available to Nextel. As is true for cellular operators,
the interconnection of subscriber units with the public switched telephone
network requires Nextel to purchase certain exchange and inter-exchange
services from telephone companies and certain other common carriers.
Subscriber units on the Digital Mobile networks will not be compatible
with cellular systems, and vice versa. This lack of interoperability may impede
the Company's ability to attract cellular subscribers or those new mobile
telephone subscribers that desire the ability to access different service
providers in the same market. Nextel currently markets a multi-function
subscriber unit that is significantly more expensive than analog or digital
cellular handsets that do not incorporate multi-function capability. The prices
expected to be charged to Nextel for the subscriber handsets to be used by
Nextel's customers will be higher than those charged to operators for analog
cellular handsets and may be higher than those charged to operators for digital
cellular handsets. During the transition to digital technology, certain
participants in the United States cellular industry are offering subscriber
units with dual mode (analog and digital) compatibility. There can be no
assurances that existing analog SMR customers will be willing to invest in new
subscriber equipment necessary to migrate to the Digital Mobile networks.
Moreover, because many of the cellular operators in Nextel's markets have
substantially greater financial resources than Nextel, such operators may be
able to offer prospective customers equipment subsidies or discounts that are
substantially greater than those, if any, that could be offered by Nextel. Thus,
Nextel's ability to compete based on the price of subscriber equipment will be
limited. Nextel cannot predict the competitive effect that any of these
factors, or any combination thereof, will have on Nextel. See "--Forward
Looking Statements."
Cellular operators and certain entities that have been awarded PCS
licenses each control more spectrum than is allocated for SMR service in each
of the relevant market areas. Each cellular operator is licensed to operate 25
MHz of spectrum and certain PCS licensees have been licensed for 30 MHz of
spectrum in the markets in which they are licensed, while no more than 21.5 MHz
is available in the 800 MHz band to all SMR systems, including Nextel's
systems, in those markets. The control of more spectrum gives cellular
operators and such PCS licensees the potential for more system capacity, and,
therefore, more subscribers, than SMR operators, including the Company. The
Company believes that it generally has adequate spectrum to provide the
capacity needed on its Digital Mobile networks for the foreseeable future.
See "-- Forward Looking Statements."
Nextel expects to face competition from other technologies and
services introduced in the future, including PCS. The FCC has described PCS as
a digital, wireless communications system consisting of a variety of new mobile
and portable services and technologies, using small, lightweight units. PCS
services may include portable, two-way voice and data services. The FCC has
allocated 120 MHz of spectrum in the 1.8-2.2 GHz band for the provision of PCS,
which may include mobile wireless communications services similar to those
provided over Nextel's Digital Mobile networks. Three 30 MHz and three 10 MHz
FCC licenses for this spectrum have been awarded on either a Major Trading Area
("MTA") or a Basic Trading Area ("BTA") basis (each as defined in the Rand
McNally Commercial Atlas) through a competitive bidding process. The auction of
the final three licenses in each market was completed on January 15, 1997. A
substantial number of the entities that have been awarded PCS licenses are
current cellular communications service providers and joint ventures of current
and potential wireless communications service providers, many of which have
financial resources greater than those of Nextel.
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Although certain limited PCS offerings have commenced, it is not clear how PCS
will develop or when such services will be available in all of Nextel's
markets. PCS will likely compete with some or all of the services provided
over Nextel's Digital Mobile networks. See "--Forward Looking Statements."
Pursuant to the Omnibus Appropriations Act of 1997, the FCC must
reallocate 30 MHz of 2.3 GHz spectrum to wireless services and assign that
spectrum via an auction that must commence no later than April 15, 1997. The
FCC is proposing to allow these licensees to offer a broad range of fixed and
mobile services, but no final rules have been adopted.
In addition, the FCC has reallocated 220 MHz of radio spectrum for use
by "emerging telecommunications technologies," such as PCS, low-earth orbit
satellites and mobile satellite systems. The FCC has authorized a consortium
of communications companies to provide nationwide mobile satellite services.
Nextel cannot predict how these technologies will develop or what impact, if
any, they will have on Nextel's ability to compete for wireless communications
customers.
RELIANCE ON ONE PRINCIPAL SUPPLIER IN IMPLEMENTATION OF DIGITAL MOBILE NETWORKS
Pursuant to existing equipment purchase agreements (the "Equipment
Purchase Agreements") between Nextel and Motorola, first entered into in 1991,
as subsequently amended by the amendment entered into in connection with the
Motorola Transaction (the "Prior Equipment Agreement Amendment") and by the
Second Equipment Agreement Amendment entered into in connection with the McCaw
Transaction, Motorola provides the iDEN infrastructure and subscriber handset
equipment to Nextel throughout its markets. The Company expects that it will
need to rely on Motorola for the manufacture of a substantial portion of the
equipment necessary to construct its Digital Mobile networks for the
foreseeable future. The Equipment Purchase Agreements, as amended, include a
commitment from Nextel to purchase from Motorola a significant amount of system
infrastructure equipment, which will be subject to financing arrangements with
Motorola. Nextel has, among other things, agreed (subject to certain
conditions) to purchase and install iDEN equipment during the four-year and
six-year periods beginning on August 4, 1994 sufficient to cover 70% and 85%,
respectively, of the United States population. In addition, subject to the
applicable terms and conditions under the Second Equipment Agreement
Amendment, Nextel has agreed to deploy Reconfigured iDEN and, until August 4,
1999 and subject to certain conditions, to purchase from Motorola at least 50%
of the base radios Nextel purchases in any calendar year. Motorola estimated
at the time the Second Equipment Agreement Amendment was entered into that such
commitments to purchase base radios and associated infrastructure equipment
could have an aggregate purchase price in excess of approximately $750,000,000,
although the amount may be higher or lower depending on circumstances such as
systems design, changes in the producer price index, the timing of purchases or
other cost adjustments or the success of Nextel's marketing plan. See
"--Success of Nextel is Dependent on its Ability to Compete" and "--Forward
Looking Statements." Such commitments are in addition to amounts purchased
from Motorola or for which Nextel, OneComm or Dial Page had placed orders with
Motorola prior to August 4, 1994, which orders, in the case of OneComm and Dial
Page, have become obligations of Nextel. See "--Nextel to Require Financing."
The Second Equipment Agreement Amendment places certain limits on
Nextel's ability to use other technologies as an alternative to first
generation iDEN or Reconfigured iDEN. See "--Implementation of Digital Mobile
Networks Subject to Risks of Developing Technology."
It is expected that for the first few years of Digital Mobile network
operations by Nextel, Motorola and competing manufacturers who are licensed by
Motorola (including Matsushita Communication Industrial Co., Ltd.
("Matsushita"), which has executed a definitive license agreement with Motorola
to employ Motorola's proprietary technology) will be the only manufacturers of
subscriber equipment that is compatible with Nextel's Digital Mobile networks.
The Prior Equipment Agreement Amendment provides for the licensing by Motorola
of interfaces relating to infrastructure and subscriber equipment and of
additional manufacturers for subscriber equipment. In connection with the
Second Equipment Agreement Amendment, Motorola further agreed to negotiate to
enter into licenses with at least one alternative manufacturer of iDEN
infrastructure equipment.
-14-
<PAGE> 19
NEXTEL'S PROSPECTS ARE DEPENDENT ON GOVERNMENTAL REGULATION
The licensing, operation, acquisition and sale of Nextel's SMR
businesses are regulated by the FCC. Nextel's subsidiaries currently hold FCC
licenses to use SMR radio channels in each of their markets. Traditionally,
these licenses have been granted by the FCC on a site-by-site basis. Under
current regulations, SMR base stations generally must be a minimum of 70 miles
away from all other SMR base stations operating on the same frequencies. The
licenses typically must be constructed and operational within one year of grant
or the licenses will cancel automatically.
To use its SMR channels to provide Digital Mobile network service,
Nextel currently is required to obtain additional site authorizations from the
FCC for transmitter sites in each of its markets. Assuming such site
authorizations are obtained initially, they will be subject to renewal, but may
be cancelled if the respective sites for Digital Mobile networks are not
constructed in the relevant markets within a prescribed time after issuance,
typically one year or five years. There can be no assurance that any such SMR
license will be renewed upon the expiration of its ten-year term. Each SMR
license also may be revoked for cause at any time such a determination is made
by the FCC.
Since August 1994, the FCC has suspended the SMR licensing process (1)
due to an extraordinarily large backlog of license applications, and (2) to
stabilize the licensing landscape in preparation for new SMR licensing rules
and regulations. Although the FCC established a waiver process whereby parties
could obtain SMR licenses if they could show that their application (a) affects
only channels on which the applicant is already permanently licensed and (b)
affects coverage only within the applicant's geographic area, the FCC has
failed to act on a single waiver application of Nextel or, to Nextel's
knowledge, any other SMR licensee. However, on October 23, 1996, the Chief of
the Wireless Telecommunications Bureau issued an order directing the FCC's
Licensing Division to process the applications. At this time, to Nextel's
knowledge, the applications are still being processed.
During the suspension of the licensing process, the FCC was able, with
the assistance of industry trade groups, to process the backlogged
applications. Although many of the license grants and denials are subject to
petitions for reconsideration, it appears that a number of Nextel's
applications have been granted, all of which further the implementation of
Nextel's Digital Mobile networks. The FCC has also suspended acceptance of
applications proposing new or modified stations on any of the 150 general
category (prospectively SMR-only) channels, pending implementation of the new
SMR licensing rules described below.
On December 15, 1995, the FCC released new 800 MHz SMR licensing rules
that provide geographic-area based licenses for SMR operators. According to
these rules, the prospective licensing of Nextel's systems may no longer be
made on the site-by-site basis described above. The new rules require the use
of auctions to license the top 200 SMR channels on an Economic Area ("EA")
basis in three blocks: a 120-channel block, a 60-channel block, and a
20-channel block. Successful bidding in such auctions will be required to
obtain an EA-based block license. Once an EA license is obtained, the EA
licensee will have the ability to construct, operate and modify its systems
within the licensed geographic area without first obtaining FCC approval. All
EA licensees will be required to construct and operate their systems to provide
service to one-third of the population within two years, and two-thirds of the
population within five years using more than 50% of the EA licensee's channels.
Failure to meet these EA license requirements will likely result in the loss of
the EA license.
An EA licensee will have the authority to relocate incumbents in the
EA licensed area to the lower 80 SMR channels and the 150 general category
channels (which the FCC will prospectively license only to SMR operators). Any
incumbent that is not relocated out of the top 200 channels will be provided
co-channel protection by the EA licensee. Those incumbents will not be allowed
to expand their systems within the EA licensed area, but they will be permitted
to make modifications that do not expand their current interference contour.
These incumbents will also be offered an opportunity to convert their current
site-by-site licenses to a single license encompassing their existing
authorized service area contours. Consequently, Nextel may be subject to
relocation on any of the top 200 SMR channels for which it currently holds
licenses if it is unsuccessful in obtaining the EA license for those channels.
In addition, Nextel's ability to expand its systems may be limited on those
channels for which it does not obtain an EA license.
The FCC adopted the new 800 MHz SMR licensing rules to fulfill its
mandate under the Omnibus Budget Reconciliation Act of 1993, which reclassified
interconnected SMR services as "Commercial Mobile Radio Services" ("CMRS"), a
common carrier service, and required that such services be regulated similarly
to cellular and PCS.
-15-
<PAGE> 20
Petitions for reconsideration of the new 800 MHz SMR licensing rules were filed
with the FCC on March 18, 1996. Oppositions to those petitions, including one
filed by Nextel, were filed with the FCC on April 16, 1996, and replies to such
oppositions were filed on May 1, 1996. These petitons are pending at the FCC,
and their resolution could adversely affect the impact of those rules on
Nextel. The ultimate outcome of the FCC's 800 MHz SMR rule makings, including
actions by third parties taken in accordance therewith, could be adverse to
Nextel.
In conjunction with the release of the new 800 MHz SMR licensing
rules, the FCC issued a Second Further Notice of Proposed Rule Making (the
"Notice") to establish operational rules and auction procedures for the lower
80 SMR channels and the 150 general category (now SMR-only) channels. The
Notice proposes EA licensing for these channels through auctions and proposes
no relocation of incumbents to alternate channels. The proposed auction rules
would set aside these channels for "entrepreneur blocks" for small businesses.
The bidding for such blocks of channels would be restricted to entities of a
certain economic size. As proposed, those auction rules would likely exclude
Nextel from eligibility to bid on the "entrepreneur block" EA licenses.
Nextel has filed comments and reply comments, including a joint
pleading with SMR WON (a trade association of small but traditional SMR
operators) and the American Mobile Telecommunications Association ("AMTA"),
each of which initially opposed the FCC's new licensing rules for the upper 200
SMR channels. The joint pleading is a consensus proposal that, among other
things, opposes a set aside for small businesses of all the lower channels.
The consensus proposal also includes a pre-auction settlement process for the
lower channels whereby incumbents, including licensees who have been relocated
out of the upper 200 channels, could enter into, among other things,
partnerships, consortia or buyouts to determine who would be licensed on each
individual channel on the lower channels on an EA basis. Any channel that is
not settled, i.e., continues to have more than one unaffiliated party licensed
on it in a particular EA, would be subject to an auction. The Personal
Communications Industry Association has joined Nextel, SMR WON and AMTA in the
consensus proposal. The FCC is still considering its proposed rules for the
lower channels, and has indicated that it may issue final rules in early 1997.
Among the other regulatory changes the FCC has made in the last two
years to ensure that SMR operators are provided regulatory parity with cellular
and PCS operators are: (1) a 45 MHz CMRS spectrum cap for all CMRS providers
(with a 10 MHz limit on the amount of SMR spectrum that can be attributed to a
single entity); (2) elimination of the prohibition on wireline participation in
SMR services; (3) elimination of the restriction on cellular licensees
providing dispatch services; (4) a duty not to restrict unreasonably resale of
services; (5) a duty to provide telephone number portability; and (6) a duty to
provide enhanced 911 services and roaming capabilities. As a CMRS provider,
Nextel is subject to limitations in the Communications Act of 1934, as amended
(the "Communications Act"), concerning foreign investment in and ownership of
FCC licenses. Certain of these regulatory changes could require operational or
technological changes in Nextel's Digital Mobile networks.
Future changes in regulation or legislation affecting Digital Mobile
network service or the allocation by the FCC or the United States Congress of
additional spectrum for services that compete with such service could
materially adversely affect Nextel's business.
NEXTEL'S ASSETS PRIMARILY CONSIST OF INTANGIBLE FCC LICENSES
Nextel's assets consist primarily of intangible assets, principally
FCC licenses, the value of which will depend significantly upon the success of
Nextel's business and the growth of the SMR and wireless communications
industries in general. In the event of default on indebtedness or liquidation
of Nextel, there can be no assurance that the value of these assets will be
sufficient to satisfy its obligations. Nextel had a negative net tangible book
value of $934,767,000 as of September 30, 1996.
NEXTEL SUSCEPTIBLE TO CONTROL BY SIGNIFICANT STOCKHOLDERS
Based on securities ownership information relating to Nextel as of
November 30, 1996, and giving effect to the conversion of the outstanding
shares of Nextel's preferred stock and the exercise in full of (i) three
separate options held by the McCaw Investor exercisable for periods of two,
four and six years, respectively, from July 28, 1995, to acquire an aggregate
of up to 35,000,000 shares of Common Stock at exercise prices ranging from
$15.50 to $21.50 per share (the "McCaw Options"), (ii) the option held by Eagle
River, Inc., an affiliate of the McCaw Investor, to purchase an aggregate of
1,000,000 shares of Common Stock at an exercise price of $12.25, which option
vests over a five-year period from April 4, 1995 (the "Incentive Option"),
(iii) the options granted on July 28, 1995 to the McCaw Investor by Motorola to
purchase up to 9,000,000 shares of Common Stock over a six-year period (the
"McCaw Investor/Motorola
-16-
<PAGE> 21
Options"), (iv) a warrant held by Motorola to purchase 2,890,000 shares, and
(v) the option held by Comcast and its affiliates to purchase up to 25,000,000
shares of Common Stock at a per share exercise price of $16.00, a portion of
which is currently exercisable (the "Comcast Option"), the McCaw Investor would
hold approximately 23.8%, Motorola would hold approximately 16.3%, and Comcast
(together with Comcast FCI) would hold approximately 8.9% (4.8% without giving
effect to the exercise of options which by their terms are not presently
exercisable but, in each case, after giving effect to sales of shares of Common
Stock by Comcast as described in "--Potential Dilution From Pending and Future
Transactions") of the Common Stock outstanding as of such date.
In connection with the consummation of the McCaw Transaction and
pursuant to the Securities Purchase Agreement dated as of April 4, 1995, as
amended, among Nextel, the McCaw Investor and Mr. Craig O. McCaw (the "McCaw
Securities Purchase Agreement"), the McCaw Investor has the right to designate
not less than 25% of the Board of Directors of Nextel (the "Nextel Board").
Additionally, the McCaw Investor is entitled to have a majority of the members
of the Operations Committee of the Nextel Board selected from the McCaw
Investor's representatives on the Nextel Board. The Operations Committee has
the authority to formulate key aspects of Nextel's business strategy, including
decisions relating to the technology used by Nextel (subject to existing
equipment purchase agreements), acquisitions, the creation and approval of
operating and capital budgets and marketing and strategic plans, approval of
financing plans, endorsement of nominees to the Nextel Board and committees
thereof and nomination and oversight of certain executive officers. As a
result, based upon the McCaw Investor's stock ownership position, as well as
its ability to designate at least 25% of the members of the Nextel Board and
control the Operations Committee, the McCaw Investor is in a position to exert
significant influence over Nextel's affairs. The Nextel Board retains the
authority to override actions taken or proposed to be taken by the Operations
Committee, subject, in certain circumstances, to certain financial
consequences. The creation and existence of the Operations Committee does not
change the normal fiduciary duties of the Nextel Board, including fiduciary
duties in connection with any proposal to override any action of or to
terminate the Operations Committee, whether or not such action would give rise
to such financial consequences. In addition, Comcast as a Nextel stockholder
has certain contractual rights to designate one or more members (depending on
its ownership percentage) to the Nextel Board, although at present no Comcast
designee is a member of the Nextel Board. Although Motorola is entitled to
nominate two directors to the Nextel Board, presently only one person
designated by Motorola is a Nextel director. Pursuant to an amendment to the
Agreement and Plan of Contribution and Merger dated as of April 4, 1995, by and
among Nextel, Motorola and certain subsidiaries of Motorola (the "Motorola
Amendment"), Motorola has agreed to support the decisions and recommendations
of the Operations Committee and to vote the shares of Common Stock held by it
accordingly, subject to (1) the right of any Motorola-designated Nextel
directors to vote in a manner consistent with their fiduciary duties and (2)
the right of Motorola to vote its shares as it determines necessary with
respect to issues that conflict with Motorola's corporate ethics or that
present conflicts of interest, or in order to protect the value or
marketability of the shares of Common Stock held by it.
Based upon their respective ownership positions, if the McCaw Investor
and Motorola chose to act together, such parties could have a sufficient voting
interest in Nextel, among other things, to (1) exert effective control over the
approval of amendments to Nextel's Certificate of Incorporation (the "Nextel
Charter"), mergers, sales of assets or other major corporate transactions as
well as other matters submitted for stockholder vote, (2) defeat a takeover
attempt, and (3) otherwise control whether particular matters are submitted for
a vote of the stockholders of Nextel. Although Motorola has made certain
commitments as described in the last sentence of the preceding paragraph,
Nextel is not aware of any current agreements among the McCaw Investor and
Motorola with respect to the ownership or voting of Common Stock and neither of
Motorola nor the McCaw Investor has indicated to Nextel that it has any present
intention to seek to exercise such control. Pursuant to the McCaw Securities
Purchase Agreement, the McCaw Investor has agreed that it will not vote for any
nominee to the Nextel Board other than persons it is entitled to designate
under the terms of the securities it owns or of the McCaw Securities Purchase
Agreement. Upon request of Nextel, the McCaw Investor has also agreed to cause
shares of Common Stock, the voting of which is controlled by it or its
affiliates, to be voted in a manner proportionate to the votes of other holders
of Common Stock in the election of directors so designated by the Nextel Board.
Each of the McCaw Investor and Motorola has and (subject to the terms
of applicable agreements between such parties and Nextel) may have an
investment or interest in entities that provide wireless telecommunications
services that could potentially compete with Nextel. Under the McCaw
Securities Purchase Agreement, the McCaw Investor, Mr. McCaw and their
Controlled Affiliates (as defined in the McCaw Securities Purchase Agreement)
may not, for a period of time after consummation of the McCaw Transaction,
participate in other two-way terrestrial-based mobile wireless communications
systems in the region that includes any part of North America or South America
unless such opportunities have first been presented to and rejected by Nextel
in accordance with the provisions of the
-17-
<PAGE> 22
McCaw Securities Purchase Agreement. Such limitation is subject to certain
limited exceptions, including certain existing securities holdings and
relationships (and expressly including Mr. McCaw's investment in AT&T resulting
from AT&T's acquisition of McCaw Cellular Communications, Inc., which
investment may not exceed 3% of the outstanding stock of AT&T). Such
restrictions terminate on the later to occur of July 28, 2000 or one year after
the termination of the Operations Committee.
POTENTIAL DILUTION FROM PENDING AND FUTURE TRANSACTIONS
As indicated elsewhere in this Prospectus, Nextel has commitments, and
from time to time may enter into additional commitments, to issue a substantial
number of new shares of Common Stock.
As of November 30, 1996, there were approximately 252,106,000 shares
of Common Stock outstanding (assuming the conversion of the outstanding shares
of Nextel's preferred stock), on a primary, rather than a fully diluted, basis,
and approximately 342,137,000 shares of Common Stock outstanding assuming the
exercise of all options (including employee options, the Comcast Option for
25,000,000 shares, which expires in September 1997, Motorola's warrant to
purchase 2,890,000 shares, and the options to purchase an aggregate of
36,000,000 shares pursuant to the McCaw Options and the Incentive Option),
warrants and other existing rights to acquire Common Stock.
On April 29, 1996, the Commission declared effective the Company's
registration statement on Form S-4, covering 10,000,000 shares of Common Stock,
or warrants to acquire such shares, which contemplates issuances from time to
time on a "shelf" basis in accordance with Rule 415(a)(1)(viii) promulgated
under the Securities Act in connection with acquisitions of other businesses,
properties or securities in business combination transactions. As of the date
hereof, the Company has not issued any of such Common Stock or warrants.
Additionally, on April 29, 1996, the Commission declared effective the
Company's registration statement on Form S-3, covering 8,848,469 shares of
Common Stock, which was filed by Nextel on behalf of Comcast and Comcast FCI in
satisfaction of the Company's obligations pursuant to the registration rights
of Comcast and Comcast FCI. According to the most recent amendment to the
Schedule 13D of Comcast filed on October 1, 1996, Comcast and Comcast FCI have
sold an aggregate of 5,570,000 of such shares of Common Stock pursuant to
brokerage transactions.
Pursuant to the McCaw Securities Purchase Agreement, the McCaw
Investor was granted anti-dilutive rights with respect to certain Nextel share
issuances, which rights and related terms are largely comparable to the Comcast
Purchase Right (the "McCaw Purchase Right"). In connection with the issuance
of shares constituting the First Tranche (see "Selling Stockholders"), the
McCaw Investor exercised its anti-dilutive rights, which resulted in the sale of
373,846 treasury shares of Common Stock to the McCaw Investor on November 26,
1996. Each of the McCaw Investor and Comcast has the right to acquire
additional shares of Common Stock as a result of future issuances of shares of
Common Stock. Although such anti-dilutive rights include the right to acquire
additional shares as a result of the issuance of shares of Common Stock in
connection with the Second Tranche (see "Selling Stockholders"), Comcast has
waived its anti-dilutive rights with respect thereto. An increase in the
number of shares of Common Stock that will become available for sale in the
public market may adversely affect the market price of Common Stock and could
impair Nextel's ability to raise additional capital through the sale of its
equity securities.
SHARES ELIGIBLE FOR FUTURE SALE
Existing holders of Common Stock generally may freely resell their
shares except to the extent that they are deemed to be affiliates of Nextel or
certain predecessor companies for purposes of Rule 144 ("Rule 144") or Rule 145
promulgated under the Securities Act. Nextel has also granted registration
rights with respect to a significant number of its shares outstanding, on a
fully diluted basis including shares of Common Stock issuable upon conversion
of securities issued in, or upon exercise of options granted in, the Motorola
Transaction and the McCaw Transaction. The exercise of registration rights by
affiliates of Nextel would permit such persons to sell such shares without
regard to the limitations of Rule 144. Registration rights covering a total of
approximately 190,000,000 shares of Common Stock (including the shares of
Common Stock being registered herein) have been granted to, among others, the
McCaw Investor and certain of its affiliates, Comcast FCI, Matsushita, Nippon
Telegraph and Telephone Corporation ("NTT") and Motorola. An increase in the
number of shares of Common Stock that will become available for sale in the
public market may adversely affect the market price of Common Stock and could
impair Nextel's ability to raise additional capital through the sale of its
equity securities.
-18-
<PAGE> 23
DIVIDEND POLICY LIMITS EXPECTATION OF FUTURE DIVIDENDS
Except for certain dividends paid with respect to preferred stock that
was converted into Common Stock in connection with Nextel's initial public
offering in 1992, Nextel has not paid any dividends on Common Stock. Nextel
does not plan to pay dividends on Common Stock for the foreseeable future.
The Nextel Indentures, the Dial Call Indentures, the OneComm
Indenture, the Bank Credit Agreement and the Vendor Credit Agreement place
significant restrictions on Nextel's ability to pay dividends. In addition,
the collateral security mechanisms and related provisions associated with the
Bank Credit Agreement and the Vendor Credit Agreement may be expected to limit
the amount of cash available to make dividends, loans and cash distributions to
Nextel from Nextel's subsidiaries that will operate Digital Mobile networks in
Nextel's existing markets, so that, while such limitations are in place,
profits generated by such subsidiaries will not be available to Nextel for,
among other purposes, the payment of dividends on shares of Common Stock.
POTENTIAL CONFLICT OF INTEREST RELATIONSHIP WITH MOTOROLA MAY AFFECT NEXTEL'S
PROSPECTS
Motorola and its affiliates have and currently are engaged in wireless
communications businesses, and may in the future engage in additional such
businesses, which are or may be competitive with some or all of the services
offered by Nextel's Digital Mobile networks, although the Motorola Land Mobile
Products Sector ("Motorola LMPS") may not, for three years after consummation
of the Motorola Transaction, make use (with certain limited exceptions) of the
customer lists conveyed by Motorola to ESMR in connection therewith to solicit
subscribers for any 800 MHz SMR commercial mobile voice business owned or
managed by Motorola LMPS in the continental United States. Pursuant to the
Second Equipment Agreement Amendment, Motorola has agreed that from the date
thereof until 18 months after certain development targets for Reconfigured iDEN
have been achieved, Motorola LMPS will not solicit other iDEN customers and
neither Motorola LMPS nor Motorola's credit corporation subsidiary will make
any equity investment in, or provide equipment/vendor financing to, certain
iDEN customers with respect to purchases of iDEN equipment.
In light of the competitive posture of Motorola, Nextel and Motorola
have agreed that any information relating to Nextel's business plans and
projections will be used by Motorola only for purposes of ensuring compliance
with Nextel's obligations under the various equipment purchase agreements and
financing agreements between Nextel and Motorola. Motorola has designated one
director to the Nextel Board and, hence, such director has access to Nextel's
business plans subject to certain confidentiality restrictions.
Although Nextel believes that its equipment purchase and financing
relationship with Motorola has been structured to reflect the realities of
purchasing and borrowing from a competitor, there can be no assurance that the
potential conflict of interest will not adversely affect Nextel in the future.
Moreover, Motorola's role as a significant stockholder of Nextel, in addition
to its role as a major creditor and supplier, also create potential conflicts
of interest, particularly with regard to significant transactions.
CONCERNS ABOUT MOBILE COMMUNICATIONS HEALTH RISK MAY AFFECT PROSPECTS OF NEXTEL
Allegations have been made by certain individuals that serious health
risks have resulted from the use of portable mobile communications devices.
The Cellular Telecommunications Industry Association has undertaken studies
concerning the health risk from using mobile communications devices and has
publicly announced its belief that no such risk exists. The actual or
perceived risk of mobile communications devices could adversely affect Nextel
through a reduced subscriber growth rate, a reduction in subscribers, reduced
network usage per subscriber or through reduced financing available to the
mobile communications industry.
FORWARD LOOKING STATEMENTS
"SAFE HARBOR" STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: A number of the matters and subject areas discussed in the
foregoing "Risk Factors" section that are not historical or current facts deal
with potential future circumstances and developments. The discussion of such
matters and subject areas is qualified by the inherent risks and uncertainties
surrounding future expectations generally, and also may materially differ from
Nextel's actual future experience involving any one or more of such matters and
subject areas. Nextel has attempted to identify, in context, certain of the
factors that it currently believes may cause actual future experience and
results to differ from Nextel's current expectations regarding the relevant
matter or subject area. The operation and results of
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<PAGE> 24
Nextel's wireless communications business also may be subject to the effect of
other risks and uncertainties in addition to the relevant qualifying factors
identified elsewhere in the foregoing "Risk Factors" section, including, but
not limited to, general economic conditions in the geographic areas and
occupational market segments (such as, for example, construction, delivery, and
real estate management services) that Nextel is targeting for its Digital
Mobile network service, the availability of adequate quantities of system
infrastructure and subscriber equipment and components to meet Nextel's service
deployment and marketing plans and customer demand, the success of efforts to
improve and satisfactorily address issues relating to Digital Mobile system
performance, the successful deployment of the Reconfigured iDEN technology, the
ability to achieve market penetration and average subscriber revenue levels
sufficient to provide financial viability to the Digital Mobile network
business, access to sufficient debt or equity capital to meet Nextel's
operating and financing needs, the quality and price of similar or comparable
wireless communications services offered or to be offered by Nextel's
competitors, including providers of cellular and PCS service, future
legislative or regulatory actions relating to SMR services, other wireless
communications services or telecommunications generally and other risks and
uncertainties described from time to time in Nextel's reports filed with the
Commission, including the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and the Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
USE OF PROCEEDS
The Company will not receive any proceeds directly from the sale of
any of the Shares offered hereby. The Selling Stockholders have advised Nextel
that a portion of the proceeds of the sale of the Shares will be delivered to
Grupo Comunicaciones San Luis, S.A. de C.V. ("Grupo"), which is controlled by
the Selling Stockholders, to facilitate satisfaction of Grupo's outstanding
indebtedness of approximately $3.4 million in principal amount as of the date
hereof in addition to unpaid accrued interest under a promissory note issued by
Grupo to a subsidiary of the Company.
SECURITIES OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of November 30, 1996 (the
"Ownership Date") (unless otherwise indicated), the amount and percentage of
shares of each class of the Company's capital stock that are deemed under the
rules of the Commission to be "beneficially owned" by (i) each director of the
Company, (ii) the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for the year ended
December 31, 1995 who were employed by the Company as of the Ownership Date,
(iii) all directors and executive officers of the Company as a group and (iv)
each person or "group" (as such term is used in Section 13(d)(3) of the
Exchange Act) known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of each class of the Company's capital stock.
<TABLE>
<CAPTION>
Title of Class of Amount and Nature Approximate
the Company's of Beneficial %
Name of Beneficial Owner Capital Stock Ownership(1) of Class(2)
------------------------ ------------------------ ----------------- -----------
<S> <C> <C> <C>
Daniel F. Akerson . . . . . . . . . . Class A Common Stock 1,000,000(3) *
Brian D. McAuley . . . . . . . . . . Class A Common Stock 1,757,883(4) *
Morgan E. O'Brien . . . . . . . . . . Class A Common Stock 1,366,211(5) *
Keith J. Bane . . . . . . . . . . . . Class A Common Stock 0(6) *
Robert Cooper . . . . . . . . . . . . Class A Common Stock 50,000 *
Timothy M. Donahue . . . . . . . . . Class A Common Stock 1,000 *
</TABLE>
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<PAGE> 25
<TABLE>
<S> <C> <C> <C>
Craig O. McCaw . . . . . . . . . . . Class A Common Stock 65,083,723(7) 22.7%
Keisuke Nakasaki . . . . . . . . . . Class A Common Stock 0(8) *
Masaaki Torimoto . . . . . . . . . . Class A Common Stock 0(9) *
Dennis M. Weibling . . . . . . . . . Class A Common Stock 65,083,723(10) 22.7%
Robert S. Foosaner . . . . . . . . . Class A Common Stock 180,000(11) *
All directors and executive
officers as a group (20 persons) . Class A Common Stock 69,631,295(12) 23.9%
5% Stockholders:
---------------
Digital Radio, L.L.C. . . . . . . . . Class A Common Stock 65,083,723(13) 22.7%
2320 Carillon Point
Kirkland, Washington 98033 Class A Preferred Stock 8,163,265 100.0%
Class B Preferred Stock 82 100.0%
Motorola, Inc. . . . . . . . . . . . Class A Common Stock 60,590,000(14) 23.8%
1303 East Algonquin Road
Schaumburg, Illinois 60196 Class B Common Stock 17,830,000 100.0%
Comcast Corporation . . . . . . . . . Class A Common Stock 15,278,469(15) 5.8%
1500 Market Street
Philadelphia, Pennsylvania 19102
</TABLE>
- ------------
* Less than one percent (1%).
(1) Under the rules of the Commission, a person is deemed to be the
beneficial owner of a security if such person, directly or indirectly,
has or shares the power to vote or direct the voting of such security or
the power to dispose or direct the disposition of such security. A
person is also deemed to be a beneficial owner of any securities if that
person has the right to acquire beneficial ownership within 60 days of
the Ownership Date. Accordingly, more than one person may be deemed to
be a beneficial owner of the same securities. Unless otherwise indicated
by footnote, the named individuals have sole voting and investment power
with respect to the shares of the Company's capital stock beneficially
owned.
(2) Represents the voting power of the number of shares of each of class of
capital stock beneficially owned as of the Ownership Date by each named
person or group, expressed as a percentage of (a) all shares of the
Company's capital stock of the indicated class actually outstanding as of
such date (in the case of the Class A Common Stock, giving effect to the
conversion of the Company's preferred stock and the Company's Class B
Non-Voting Common Stock, par value $0.001 per share (the "Class B Common
Stock")), plus (b) all other shares of capital stock deemed outstanding
as of such date pursuant to Rule 13d-3(d)(1) under the Exchange Act.
(3) Comprised of 1,000,000 shares of Class A Common Stock which are the
subject of a deferred share grant made to Mr. Akerson in connection
with his employment by Nextel.
-21-
<PAGE> 26
(4) Includes 764,634 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. McAuley upon the
exercise of nonqualified stock options. Also includes ownership of
18,000 shares of Class A Common Stock that are held by Mr. McAuley's
minor children.
(5) Includes 866,063 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. O'Brien upon the
exercise of nonqualified stock options.
(6) Mr. Bane, who is Executive Vice President and Chief Corporate Officer of
Motorola, disclaims beneficial ownership of all securities of the Company
held by Motorola. See note 14.
(7) Mr. McCaw, who is an equity owner and controlling person of the McCaw
Investor, disclaims beneficial ownership of all securities of the Company
held by the McCaw Investor, except to the extent of his pecuniary
interest therein. See note 13.
(8) Mr. Nakasaki, who is President and Chief Executive Officer of NTT
America, Inc., a subsidiary of NTT, disclaims beneficial ownership of all
shares of Class A Common Stock held by NTT. As of the Ownership Date,
NTT held 1,532,959 shares.
(9) Mr. Torimoto, who is employed by Matsushita as Chief Liaison between
Matsushita and the Company, disclaims beneficial ownership of all shares
of Class A Common Stock held by Matsushita. As of the Ownership Date,
Matsushita held 3,000,000 shares.
(10) Mr. Weibling, who is President of Eagle River, an affiliate of the McCaw
Investor, disclaims beneficial ownership of all securities of the Company
held by the McCaw Investor, except to the extent of his pecuniary
interest therein. See note 13.
(11) Includes 140,000 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. Foosaner upon the
exercise of nonqualified stock options.
(12) Includes an aggregate of 3,958,425 shares of Class A Common Stock
obtainable as of the Ownership Date or within 60 days thereafter by
directors and executive officers as a group upon the exercise of
nonqualified stock options or other stock purchase rights. See also note
13.
(13) Comprised of (i) 5,593,846 shares of Class A Common Stock beneficially
owned by the McCaw Investor, (ii) 35,000,000 shares of Class A Common
Stock obtainable as of the Ownership Date or within 60 days thereafter
upon the exercise of certain options, and (iii) 24,489,877 shares of
Class A Common Stock, which represents the conversion of the 8,163,265
shares of Class A Preferred Stock and the 82 shares of the Company's
Class B Convertible Preferred Stock, par value $0.01 per shares (the
"Class B Preferred Stock") held by the McCaw Investor.
(14) Assuming conversion of the Class B Common Stock held by Motorola.
Comprised of (i) 40,170,000 shares of Class A Common Stock beneficially
owned by Motorola, (ii) 17,830,000 shares of Class B Common Stock
beneficially owned by Motorola and (iii) 2,590,000 shares of Class A
Common Stock obtainable as of the Ownership Date or within 60 days
thereafter upon exercise of a warrant. Excludes 300,000 shares of Class
A Common Stock as to which such warrant is not exercisable during such
period. Motorola granted the McCaw Investor an option to acquire
9,000,000 shares included herein, which option is not currently
exercisable.
(15) Comprised of 3,728,469 shares of Class A Common Stock beneficially owned
by Comcast, as reported in the most recent amendment to the Schedule 13D
of Comcast filed on October 1, 1996, and 12,000,000 shares of Class A
Common Stock obtainable as of the Ownership Date or within 60 days
thereafter upon the exercise of the option held by Comcast covering an
aggregate of 25,000,000 shares of Class A Common Stock.
SELLING STOCKHOLDERS
Corporacion Mobilcom S.A. de C.V. ("Mobilcom") was formed to pursue
trunked SMR and related opportunities and commenced providing commercial SMR
service in 1993. In March 1995, Nextel Investment Company ("NIC"), a wholly
owned subsidiary of Nextel, acquired an approximate 16.5% equity interest in
Mobilcom. In connection with such transaction, NIC became entitled to
designate a sufficient number of persons to serve as members of the
-22-
<PAGE> 27
Mobilcom board of directors (the "Mobilcom Board") to preclude the Mobilcom
Board from taking certain significant actions without the consent of such NIC
designees. In August 1995 NIC increased its interest by an additional 1.5% to
an approximate 18.0% equity interest in Mobilcom, which acquisition was
contemplated at the time of NIC's initial investment.
On August 23, 1996, NIC entered into certain agreements (the "Mobilcom
Agreements") to purchase up to approximately 19.8% of the equity
interest of Mobilcom (as of January 31, 1996) from the Selling Stockholders
and Grupo in two tranches. Approximately 11.6% of the shares of Mobilcom (as
of January 31, 1996) (the "First Tranche") was acquired on October 24, 1996 by
NIC at the closing of the First Tranche, increasing as of such date NIC's
equity interest in Mobilcom to approximately 30.1% and reducing as of such date
Grupo's interest to approximately 28.8%. As of the closing of the First
Tranche, NIC became entitled to designate a majority of the Mobilcom Board,
while Grupo became entitled to preclude Mobilcom from taking certain
significant actions without its consent. It is expected that this Mobilcom
governance structure will not be affected by the closing of the Second Tranche
(as defined below). NIC will have acquired an additional approximately 8.2% of
the shares of Mobilcom (as of January 31, 1996) (the "Second Tranche") from the
Selling Stockholders at the closing of the Second Tranche, bringing its
aggregate interest as of such closing date to approximately 38.0%, and
decreasing Grupo's interest as of such closing date to approximately 21.0%. The
Mobilcom shares being acquired by NIC from the Selling Stockholders were or
will be acquired by the Selling Stockholders from Grupo. The shares of Nextel
Common Stock being offered hereby were issued by delivery to the Selling
Stockholders in private placements and Nextel has filed the Registration
Statement in satisfaction of its obligations to register such shares for resale
by the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act. In addition, NIC has agreed to reimburse the Selling
Stockholders for up to one-half of certain selling expenses, including
underwriting discounts and commissions, but in no event in an amount exceeding
one percent of the total proceeds to the Selling Stockholders. Grupo has
outstanding indebtedness to NIC of approximately $3.4 million in principal
amount as of the date hereof in addition to unpaid accrued interest. Such
indebtedness is expected to be repaid in its entirety by the direct or indirect
application of a portion of the proceeds from the Selling Stockholders' sale of
the shares of Nextel Common Stock being offered hereby.
The following table sets forth certain information as of the date of this
Prospectus regarding the beneficial ownership of Common Stock by the Selling
Stockholders:
-23-
<PAGE> 28
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering (1)
--------------------- ----------------------
Number of Percentage of Number of Percentage of
Shares of Common Shares Shares of Common
Name Common Stock(1) Stock Offered(2) Common Stock(2) Stock
---- ------------ ----- ---------- ------------ -----
<S> <C> <C> <C> <C> <C>
Miguel Valladares Garcia 653,457 * 653,457 0 *
Carlos Guerrero Gonzalez 158,086 * 158,086 0 *
Rosa Maria Garcia de
Valladares 111,274 * 111,274 0 *
Rosa Maria Valladares
Garcia 91,274 * 91,274 0 *
Juan Carlos Valladares
Garcia 86,274 * 86,274 0 *
Josefina Valladares de
Muriel 96,274 * 96,274 0 *
Rosario Valladares de
Gavino 101,274 * 101,274 0 *
Pablo Valladares Garcia 101,274 * 101,274 0 *
Benigno Perez Lizaur 111,274 * 111,274 0 *
Mauricio Meade Laing 70,189 * 70,189 0 *
Total --------- --------- ---
1,580,650 1,580,650 0
</TABLE>
_____________________
* Less than one percent.
(1) Includes shares of Common Stock obtainable as of the date of this
Prospectus or within 60 days thereafter.
(2) Assumes that each Selling Stockholder sells all of the Shares owned by
such person in this offering.
Grupo has the right to designate two directors to the Mobilcom Board.
Messrs. Miguel Valladares and Perez are the two members of the Mobilcom Board
designated by Grupo and Mr. Guerrero is the alternate for Mr. Perez.
NIC is also a party to an "Exit Rights Agreement" with Grupo pursuant to
which on or after January 1, 1999, if Grupo makes a request, NIC will be
required to effectuate a "Liquidity Event" for Grupo with respect to Mobilcom
shares it currently owns or acquires from Mobilcom or certain employees of
Mobilcom. The Liquidity Event may consist of a public offering of the Mobilcom
shares or a sale of Grupo's Mobilcom shares to any person for "Fair Cash Value"
as determined in accordance with the procedure described in the Exit Rights
Agreement. If NIC elects to purchase such shares, it has the option of
delivering Nextel Common Stock to the sellers as consideration for the purchase
of such shares, provided, among other things, that such shares of Nextel Common
Stock could be resold under an effective registration statement for a thirty
day period and that NIC reimburses Grupo for half of certain expenses Grupo
incurred in reselling such shares of Nextel Common Stock. Under the Exit
Rights Agreement, if NIC fails to cause a Liquidity Event to close within one
year after the delivery of a request therefor, Grupo is entitled to demand the
registration of its Mobilcom shares by Mobilcom.
The Selling Stockholders, NIC and other parties have entered into an agreement
for the subscription by NIC, the Selling Stockholders and others of shares of
Grupo's subsidiary, Telecommunicaciones Globales, S.A. de C.V. ("Globales"), a
corporation organized under the laws of Mexico, which intends to provide long
distance and related services in Mexico. Pursuant to such agreement, the Selling
Stockholders and NIC acquired approximately 53% and 22%, respectively, of the
outstanding capital stock of Globales, and NIC has designated one member of the
Globales Board of Directors. The Selling Stockholders have designated four of
the other five members of the Board of Directors of Globales. The Globales
subscription agreement contemplates that additional parties will invest in
Globales which would dilute the equity interest of NIC and the Selling
Stockholders in Globales. Prior to NIC's acquisition of its equity interest in
Globales, Globales acquired Grupo's subsidiary, Investcom, S.A. de C.V., which
holds a license from the Mexican government to provide long distance
telecommunications services in Mexico.
Other than their direct and indirect involvement in the Mobilcom and
Globales transactions and the arrangements for the acquisition of Nextel Common
Stock described above, none of the Selling Stockholders has had any material
relationship with Nextel within the past three years.
-24-
<PAGE> 29
Because the Selling Stockholders may offer all or only some of the Shares
described above and because there are currently no agreements, arrangements or
understandings to sell any of the Shares offered hereby, no estimate can be
given about the number of Shares that will be held by the Selling Stockholders
after the completion of this offering.
The Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, in which case any profit on the resale of the
Securities may be deemed to be underwriting commissions or discounts under the
Securities Act.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell or distribute the Shares in and/or
outside of the United States in transactions through underwriters, brokers,
dealers or agents, or through privately negotiated transactions, including
sales or distributions to stockholders or partners or other persons affiliated
with one or more of the Selling Stockholders and direct sales or distributions
to one or more purchasers.
The sale or distribution of the Shares may be effected from time to time
in one or more transactions (which may involve crosses or block transactions)
in the over-the-counter market, on a national securities exchange or otherwise
at fixed prices which may be changed, at market prices prevailing at the time
of sale, at prices related to such market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through underwriters, brokers, dealers or agents who may receive compensation
in the form of discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the Shares for whom such underwriters,
brokers, dealers or agents may act.
At the time a particular sale or distribution is made, a Prospectus
Supplement, to the extent required, will be distributed which will set forth
the aggregate amount of Shares being offered, the names of the Selling
Stockholders, the purchase price, the amount of expenses and the terms of the
sale or distribution, including the name or names of any underwriters, brokers,
dealers or agents, any discounts, commissions and other items constituting
compensation from the Selling Stockholders and any discounts, commissions or
concessions allowed or paid to underwriters, brokers, dealers or agents.
If any Selling Stockholders enter into agreements with any underwriters,
brokers, dealers or agents in connection with any sale or distribution, then a
Prospectus Supplement, to the extent required, will set forth the names of such
underwriters, brokers, dealers or agents, the conditions of the transaction
(including discounts and commissions and other items constituting compensation
and discounts and commissions to be allowed or paid).
Underwriters, brokers, dealers and agents may be entitled under
agreements entered into with the Selling Stockholders to indemnification by the
Company and the Selling Stockholders against certain civil liabilities,
including liabilities under the Securities Act. Such underwriters, brokers,
dealers and agents may be customers of, may engage in transactions with, or
perform services for the Selling Stockholders in the ordinary course of
business.
Any underwriter, broker, dealer or agent participating in the sale or
distribution of the Shares may be deemed to be an underwriter, as that term is
defined in the Securities Act, of the offered Shares so offered and sold, and
any discounts or commissions received by it from the Selling Stockholders and
any profit realized by it on the distribution, sale or resale of the Shares may
be deemed to be underwriting discounts and commissions under the Securities
Act.
VALIDITY OF SHARES
The validity of the Shares offered hereby will be passed upon for the
Company by Jones, Day, Reavis & Pogue, counsel for the Company.
-25-
<PAGE> 30
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this Prospectus by reference from Nextel's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Dial Page, Inc. and subsidiaries
as of December 31, 1995 and for the year then ended, incorporated in this
Prospectus by reference from Nextel's Form 8-K/A filed on April 26, 1996, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Dial Page, Inc. and subsidiaries
as of December 31, 1993 and 1994 and for each of the years in the three-year
period ended December 31, 1994, which are included as part of the Form 8-K
dated February 6, 1996, as amended, of Nextel Communications, Inc., have been
incorporated by reference herein in reliance upon the report, dated February
17, 1995, of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
-26-
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses in connection with the issuance and distribution of
the securities to be registered, other than underwriting discounts and
commissions, are as follows:
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,437
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,563
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
=========
</TABLE>
All such expenses will be paid by Nextel.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Set forth below is a description of certain provisions of the Restated
Certificate of Incorporation, (the "Nextel Charter"), of Nextel Communications,
Inc. ("New Nextel," and, together with "Old Nextel," its predecessor
corporation of the same name, "Nextel"), the Amended and Restated By-laws of
Nextel (the "Nextel By-laws") and the Delaware General Corporation Law (the
"DGCL"). This description is intended as a summary only and is qualified in
its entirety by reference to the Nextel Charter, the Nextel By-laws and the
DGCL.
Elimination of Liability in Certain Circumstances. The Nextel Charter
provides that, to the full extent provided by law, a director will not be
personally liable to Nextel or its stockholders for or with respect to any acts
or omissions in the performance of his or her duties as a director. The DGCL
provides that a corporation may limit or eliminate a director's personal
liability for monetary damages to the corporation or its stockholders, except
for liability (i) for any breach of the director's duty of loyalty to such
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for paying a dividend or approving a stock repurchase in violation of Section
174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit.
While Article 7 of the Nextel Charter provides directors with protection
from awards for monetary damages for breaches of the duty of care, it does not
eliminate the directors' duty of care. Accordingly, Article 7 will have no
effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of the duty of care. The provisions of
Article 7 as described above apply to officers of Nextel only if they are
directors of Nextel and are acting in their capacity as directors, and does not
apply to officers of Nextel who are not directors.
Indemnification and Insurance. Under the DGCL, directors and officers as
well as other employees and individuals may be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation as a derivative action) if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Article 6 of the Nextel Charter and Article VII of the Nextel By-laws
provide to directors and officers indemnification to the full extent provided
by law, thereby affording the directors and officers of Nextel the protections
available to directors and officers of Delaware corporations. Article VII of
the Nextel By-laws also provides that expenses incurred by a person in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he or she is or was a director or officer shall be paid in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by Nextel as authorized by relevant Delaware law. Nextel has
obtained directors and officers liability insurance providing coverage to its
directors and officers.
II-1
<PAGE> 32
On September 12, 1991, the Board of Directors of Nextel unanimously
adopted resolutions authorizing Nextel to enter into an Indemnification
Agreement (the "Indemnification Agreement") with each director of Nextel.
Nextel has entered into an Indemnification Agreement with each of the directors
other than its two most recently elected directors, Daniel F. Akerson and
Timothy M. Donahue.
One of the purposes of the Indemnification Agreements is to attempt to
specify the extent to which persons entitled to indemnification thereunder (the
"Indemnitees") may receive indemnification under circumstances in which
indemnity would not otherwise be provided by the DGCL. Pursuant to the
Indemnification Agreements, an Indemnitee is entitled to indemnification as
provided by Section 145 of the DGCL and to indemnification for any amount which
the Indemnitee is or becomes legally obligated to pay relating to or arising
out of any claim made against such person because of any act, failure to act or
neglect or breach of duty, including any actual or alleged error, misstatement
or misleading statement, which such person commits, suffers, permits or
acquiesces in while acting in the Indemnitee's position with Nextel. The
Indemnification Agreements are in addition to and are not intended to limit any
rights of indemnification which are available under the Nextel Charter or the
Nextel By-laws, any policy of insurance or otherwise. Nextel is not required
under the Indemnification Agreements to make payments in excess of those
expressly provided for in the DGCL in connection with any claim against the
Indemnitee:
(i) which results in a final, nonappealable order directing the
Indemnitee to pay a fine or similar governmental imposition which Nextel
is prohibited by applicable law from paying; or
(ii) based upon or attributable to the Indemnitee gaining in fact a
personal profit to which he was not legally entitled including, without
limitation, profits made from the purchase and sale by the Indemnitee of
equity securities of Nextel which are recoverable by Nextel pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and profits arising from transactions in publicly traded
securities of Nextel which were effected by the Indemnitee in violation
of Section 10(b) of the Exchange Act or Rule 10b-5 promulgated
thereunder.
In addition to the rights to indemnification specified therein, the
Indemnification Agreements are intended to increase the certainty of receipt by
the Indemnitee of the benefits to which he or she is entitled by providing
specific procedures relating to indemnification.
The Indemnification Agreements are also intended to provide increased
assurance of indemnification by prohibiting Nextel from adopting any amendment
to the Nextel Charter or the Nextel By-laws which would have the effect of
denying, diminishing or encumbering the Indemnitee's rights pursuant thereto or
to the DGCL or any other law as applied to any act or failure to act occurring
in whole or in part prior to the effective date of such amendment.
ITEM 16. EXHIBITS.
Pursuant to Item 601 of Regulation S-K, 17 C.F.R. Section
229.601(b)(4)(iii)(A), Nextel has excluded from Exhibit No. 4 instruments
defining the rights of holders of long-term debt with respect to debt that does
not exceed 10% of the total assets of Nextel. Nextel agrees to furnish copies
of such instruments to the Commission upon request.
II-2
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<S> <C>
4.1 - Restated Certificate of Incorporation of Nextel (filed on July 31, 1995 as Exhibits No. 4.1.1 and
4.1.2 to Nextel's Post-Effective Amendment No. 1 on Form S-8 to Registration Statement No. 33-91716
on Form S-4 (the "Nextel S-8 Registration Statement") and incorporated herein by reference).
4.2 - Amended and Restated By-laws of Nextel (filed on July 31, 1995 as Exhibit No. 4.2 to the Nextel S-8
Registration Statement and incorporated herein by reference).
4.3 - Financing and Security Agreement between Motorola, Inc., Smart SMR of California, Inc. and Old
Nextel, dated as of November 1, 1991 (filed on November 15, 1991 as Exhibit No. 10.49 to Registration
Statement No. 33-43415 on Form S-1 of Old Nextel filed on October 18, 1991 (the "S-1 Registration
Statement") and incorporated herein by reference).
4.4 - Financing and Security Agreement between Motorola, Inc., Smart SMR of Illinois, Inc. and Old Nextel,
dated as of November 1, 1991 (filed on November 15, 1991 as Exhibit No. 10.50 to the S-1 Registration
Statement and incorporated herein by reference).
4.5 - Financing and Security Agreement between Motorola, Inc., Smart SMR of Texas, Inc. and Old Nextel,
dated as of November 1, 1991 (filed on November 15, 1991 as Exhibit No. 10.51 to the S-1 Registration
Statement and incorporated herein by reference).
4.6 - Financing and Security Agreement between Motorola, Inc., Smart SMR of New York, Inc. and Old Nextel,
dated as of November 1, 1991 (filed on November 15, 1991 as Exhibit No. 10.52 to the S-1 Registration
Statement and incorporated herein by reference).
4.7 - Financing and Security Agreement between Northern Telecom Finance Corporation, Smart SMR of
California, Inc. and Old Nextel, dated as of November 1, 1991 (filed on November 15, 1991 as Exhibit
No. 10.54 to the S-1 Registration Statement and incorporated herein by reference).
4.8 - Financing and Security Agreement between Northern Telecom Finance Corporation, Smart SMR of Illinois,
Inc., and Old Nextel, dated as of November 15, 1991 (filed on November 15, 1991 as Exhibit No. 10.55
to the S-1 Registration Statement and incorporated herein by reference).
4.9 - Financing and Security Agreement between Northern Telecom Finance Corporation, Smart SMR of Texas,
Inc. and Old Nextel, dated as of November 15, 1991 (filed on November 15, 1991 as Exhibit No. 10.56
to the S-1 Registration Statement and incorporated herein by reference).
4.10 - Financing and Security Agreement between Northern Telecom Finance Corporation, Smart SMR of New York,
Inc. and Old Nextel, dated as of November 15, 1991 (filed on November 15, 1991 as Exhibit No. 10.57
to the S-1 Registration Statement and incorporated herein by reference).
4.11 - Amendment No. 2, dated as of August 2, 1994, to Financing and Security Agreements, dated as of
November 1, 1991, by and among Motorola, Smart SMR of California, Inc., Smart SMR of New York, Inc.,
Smart SMR of Illinois, Inc., Smart SMR of Texas, Inc. and Old Nextel (filed as Exhibit 10.01 to the
ESMR S-4 Registration Statement and incorporated herein by reference).
4.12 - Indenture between Old Nextel and The Bank of New York, as Trustee, dated August 15, 1993 (the "August
Indenture") (filed on December 23, 1993 as Exhibit No. 4.13 to the Registration Statement on Form S-4
of the Company, No. 33-73388 (the "PowerFone S-4 Registration Statement") and incorporated herein by
reference).
4.13 - Form of Note issued pursuant to the August Indenture (included in Exhibit No. 4.12).
4.14 - Indenture between Old Nextel and The Bank of New York, as Trustee, dated as of February 15, 1994 (the
"February Indenture") (filed on March 1, 1994 as Exhibit No. 4.1 to the Form 8-K Current Report of
Old Nextel dated February 16, 1994 and incorporated herein by reference).
4.15 - Form of Note issued pursuant to the February Indenture (included in Exhibit No. 4.14).
</TABLE>
II-3
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<S> <C>
4.16 - Supplemental Indenture, dated as of June 30, 1995 to the August Indenture between Old Nextel and The
Bank of New York (filed on November 14, 1995 as Exhibit 4.1 to the Quarterly Report on Form 10-Q of
Nextel for the quarter ended September 30, 1995 and incorporated herein by reference).
4.17 - Supplemental Indenture, dated as of June 30, 1995 to the February Indenture between Old Nextel and
The Bank of New York (filed on November 14, 1995 as Exhibit 4.2 to the Quarterly Report on Form 10-Q
of Nextel for the quarter ended September 30, 1995 and incorporated herein by reference).
4.18 - Second Supplemental Indenture, dated as of July 28, 1995 between ESMR (now known as Nextel), as
Successor by Merger to Old Nextel and The Bank of New York (relating to the August Indenture) (filed
on November 14, 1995 as Exhibit 4.3 to the Quarterly Report on Form 10-Q of Nextel for the quarter
ended September 30, 1995 and incorporated herein by reference).
4.19 - Second Supplemental Indenture, dated as of July 28, 1995 between ESMR (now known as Nextel), as
Successor by Merger to Old Nextel and The Bank of New York (relating to the February Indenture)
(filed on November 14, 1995 as Exhibit 4.4 to the Quarterly Report on Form 10-Q of Nextel for the
quarter ended September 30, 1995 and incorporated herein by reference).
4.20 - Indenture for Senior Redeemable Discount Notes due 2004, dated as of January 13, 1994, between
OneComm (formerly called CenCall Communications Corp.) and The Bank of New York (the "OneComm
Indenture") (filed on June 7, 1995 as Exhibit No. 99.2 to Old Nextel's Registration Statement No. 33-
93182 on Form S-4 (the "OneComm S-4 Registration Statement") and incorporated herein by reference).
4.21 - Form of Note issued pursuant to the OneComm Indenture (included in Exhibit 4.20).
4.22 - Supplemental Indenture dated as of June 30, 1995 to the OneComm Indenture between OneComm (formerly
called CenCall Communications Corp.) and The Bank of New York (filed on November 14, 1995 as Exhibit
10.12 to the Form 10-Q for the quarter ended September 30, 1995 and incorporated herein by
reference).
4.23 - Second Supplemental Indenture dated as of July 28, 1995 between Nextel (formerly known as ESMR,
Inc.), as successor to OneComm, and The Bank of New York (relating to the OneComm Indenture) (filed
on November 14, 1995 as Exhibit 10.13 to the Form 10-Q for the quarter ended September 30, 1995 and
incorporated herein by reference).
4.24 - Indenture for Senior Redeemable Discount Notes due 2004, dated as of April 25, 1994, between Dial
Call and The Bank of New York (the "2004 Indenture") (filed on June 7, 1995 as Exhibit 99.4 to the
OneComm S-4 Registration Statement and incorporated herein by reference).
4.25 - Supplemental Indenture, dated as of August 7, 1995, to the 2004 Indenture between Dial Call and The
Bank of New York (filed on December 5, 1995 as Exhibit 99.3 to Nextel's Registration Statement No.
33-80021 on Form S-4 (the "Dial Page S-4 Registration Statement") and incorporated herein by
reference).
4.26 - Second Supplemental Indenture, dated as of January 30, 1996, to the 2004 Indenture between Dial Page
(as successor to Dial Call) and The Bank of New York (filed on April 1, 1996 as Exhibit 4.26 to the
Annual Report on Form 10-K of Nextel for the year ended December 31, 1995 (the "1995 Form 10-K") and
incorporated herein by reference).
4.27 - Third Supplemental Indenture, dated as of January 30, 1996, to the 2004 Indenture between Nextel (as
successor to Dial Page) and The Bank of New York (filed on April 1, 1996 as Exhibit 4.27 to the 1995
Form 10-K and incorporated herein by reference).
4.28 - Indenture for Senior Discount Notes due 2005, dated as of December 22, 1993, between Dial Call and
The Bank of New York (the "2005 Indenture") (filed as Exhibit 99.3 to the OneComm S-4 Registration
Statement and incorporated herein by reference).
</TABLE>
II-4
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<S> <C>
4.29 - Supplemental Indenture, dated as of April 15, 1994, to the 2005 Indenture between Dial Call and The
Bank of New York (filed on April 1, 1996 as Exhibit 4.29 to the 1995 Form 10-K and incorporated
herein by reference).
4.30 - Supplemental Indenture, dated as of June 30, 1995, to the 2005 Indenture between Dial Call and The
Bank of New York (filed on December 5, 1995 as Exhibit 99.4 to the Dial Page S-4 Registration
Statement and incorporated herein by reference).
4.31 - Third Supplemental Indenture, dated as of January 30, 1996, to the 2005 Indenture between Dial Page
(as successor to Dial Call) and The Bank of New York (filed on April 1, 1996 as Exhibit 4.31 to the
1995 Form 10-K and incorporated herein by reference).
4.32 - Fourth Supplemental Indenture, dated as of January 30, 1996, to the 2005 Indenture between Nextel
(as successor to Dial Page) and The Bank of New York (filed on April 1, 1996 as Exhibit 4.32 to the
1995 Form 10-K and incorporated herein by reference).
4.33 - Registration Agreement, dated as of August 23, 1996, by and among Nextel, Grupo Communicaciones, San
Luis S.A. de C.V. and each of the persons listed in Schedule 1 thereto (filed on September 11, 1996
as Exhibit 4.33 to Nextel's Registration Statement No. 333-11733 on Form S-4 and incorporated herein
by reference).
4.34 - Amendment to Registration Agreement dated as of November 22, 1996 by and among Nextel, Grupo
Comunicanciones, San Luis S.A. de C.V. and each of the persons listed in Schedule 1 thereto (filed on
November 26, 1996 as Exhibit 99.1 to the Form 8-K dated November 22, 1996 and incorporated by
reference).
**4.35 - Further Amendment to Registration Agreement dated December 20, 1996 by and among Nextel, Grupo
Comunicanciones, San Luis S.A. de C.V. and each of the persons listed in Schedule 1 thereto.
4.36 - Agreement and Plan of Merger among Nextel, Dial Call Indimich, Inc. and Wireless Ventures of Brazil,
Inc., dated as of October 28, 1996, as amended (filed on December 23, 1996 as Exhibits 2.1 and 2.2 to
the Registration Statement on Form S-4 of Nextel, No. 333-17173 and incorporated herein by
reference).
*5 - Opinion of Jones, Day, Reavis & Pogue re: validity.
*23.1 - Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5).
*23.2 - Consents of Deloitte & Touche LLP.
*23.3 - Consent of KPMG Peat Marwick LLP.
**24 - Powers of Attorney.
</TABLE>
- -----------------------
* Filed herewith.
** Previously filed.
II-5
<PAGE> 36
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the registrant
pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-6
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment to its registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of McLean, in the
Commonwealth of Virginia, on January 23, 1997.
Nextel Communications, Inc.
By: /s/ Thomas J. Sidman
------------------------
Thomas J. Sidman
Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its registration statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
* Chairman of the Board, Chief Executive Officer
- ------------------------------- and Director (Principal Executive Officer)
Daniel F. Akerson
* Senior Vice President and Chief Financial
- ------------------------------- Officer (Principal Financial Officer)
Steven M. Shindler
* Vice President and Corporate Controller
- ------------------------------- (Principal Accounting Officer)
Stephen M. Bailor
* Vice Chairman of the Board and Director
- -------------------------------
Morgan E. O'Brien
President, Chief Operating Officer and Director
- -------------------------------
Timothy M. Donahue
Director
- -------------------------------
Keith J. Bane
* Director
- -------------------------------
Robert Cooper
Director
- -------------------------------
Craig O. McCaw
* Director
- -------------------------------
Keisuke Nakasaki
* Director
- -------------------------------
Masaaki Torimoto
* Director
- -------------------------------
Dennis M. Weibling
/s/ Thomas J. Sidman Attorney-in-fact January 23, 1997
- -------------------------------
*Thomas J. Sidman
</TABLE>
II-7
<PAGE> 38
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE
------ ----------------------- ----
<S> <C> <C> <C>
4.1 - Restated Certificate of Incorporation of Nextel (filed on July 31, 1995 as Not applicable
Exhibits No. 4.1.1 and 4.1.2 to Nextel's Post-Effective Amendment No. 1 on
Form S-8 to Registration Statement No. 33-91716 on Form S-4 (the "Nextel S-8
Registration Statement") and incorporated herein by reference).
4.2 - Amended and Restated By-laws of Nextel (filed on July 31, 1995 as Exhibit 4.2 Not applicable
to the Nextel S-8 Registration Statement and incorporated herein by
reference).
4.3 - Financing and Security Agreement between Motorola, Inc., Smart SMR of Not applicable
California, Inc. and Old Nextel, dated as of November 1, 1991 (filed on
November 15, 1991 as Exhibit No. 10.49 to Registration Statement No. 33-43415
on Form S-1 of Old Nextel (the "S-1 Registration Statement") and incorporated
herein by reference).
4.4 - Financing and Security Agreement between Motorola, Inc., Smart SMR of Not applicable
Illinois, Inc. and Old Nextel, dated as of November 1, 1991 (filed on
November 15, 1991 as Exhibit No. 10.50 to the S-1 Registration Statement and
incorporated herein by reference).
4.5 - Financing and Security Agreement between Motorola, Inc., Smart SMR of Texas, Not applicable
Inc. and Old Nextel, dated as of November 1, 1991 (filed on November 15, 1991
as Exhibit No. 10.51 to the S-1 Registration Statement and incorporated herein
by reference).
4.6 - Financing and Security Agreement between Motorola, Inc., Smart SMR of New Not applicable
York, Inc. and Old Nextel, dated as of November 1, 1991 (filed on November 15,
1991 as Exhibit No. 10.52 to the S-1 Registration Statement and incorporated
herein by reference).
4.7 - Financing and Security Agreement between Northern Telecom Finance Corporation, Not applicable
Smart SMR of California, Inc. and Old Nextel, dated as of November 1, 1991
(filed on November 15, 1991 as Exhibit No. 10.54 to the S-1 Registration
Statement and incorporated herein by reference).
4.8 - Financing and Security Agreement between Northern Telecom Finance Corporation, Not applicable
Smart SMR of Illinois, Inc., and Old Nextel, dated as of November 15, 1991
(filed on November 15, 1991 as Exhibit No. 10.55 to the S-1 Registration
Statement and incorporated herein by reference).
4.9 - Financing and Security Agreement between Northern Telecom Finance Corporation, Not applicable
Smart SMR of Texas, Inc. and Old Nextel, dated as of November 15, 1991 (filed
on November 15, 1991 as Exhibit No. 10.56 to the S-1 Registration Statement
and incorporated herein by reference).
4.10 - Financing and Security Agreement between Northern Telecom Finance Corporation, Not applicable
Smart SMR of New York, Inc. and Old Nextel, dated as of November 15, 1991
(filed on November 15, 1991 as Exhibit No. 10.57 to the S-1 Registration
Statement and incorporated herein by reference).
4.11 - Amendment No. 2, dated as of August 2, 1994, to Financing and Security Not applicable
Agreements, dated as of November 1, 1991, by and among Motorola, Smart SMR of
California, Inc., Smart SMR of New York, Inc., Smart SMR of Illinois, Inc.,
Smart SMR of Texas, Inc. and Old Nextel (filed as Exhibit 10.01 to the ESMR S-4
Registration Statement and incorporated herein by reference).
</TABLE>
-i-
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE
------ ----------------------- ----
<S> <C> <C>
4.12 - Indenture between Old Nextel and The Bank of New York, as Trustee, dated Not applicable
August 15, 1993 (the "August Indenture") (filed on December 23, 1993 as
Exhibit No. 4.13 to the Registration Statement on Form S-4 of the Company, No.
33-73388 (the "PowerFone S-4 Registration Statement") and incorporated herein
by reference).
4.13 - Form of Note issued pursuant to the August Indenture (included in Exhibit Not applicable
No. 4.12).
4.14 - Indenture between Old Nextel and The Bank of New York, as Trustee, dated as of Not applicable
February 15, 1994 (the "February Indenture") (filed on March 1, 1994 as
Exhibit No. 4.1 to the Form 8-K of Old Nextel dated February 16, 1994 and
incorporated herein by reference).
4.15 - Form of Note issued pursuant to the February Indenture (included in Exhibit Not applicable
No. 4.14).
4.16 - Supplemental Indenture, dated as of June 30, 1995 to the August Indenture Not applicable
between Old Nextel and The Bank of New York (filed on November 14, 1995 as
Exhibit 4.1 to the Quarterly Report on Form 10-Q of Nextel for the quarter
ended September 30, 1995 and incorporated herein by reference).
4.17- Supplemental Indenture, dated as of June 30, 1995 to the February Indenture Not applicable
between Old Nextel and The Bank of New York (filed on November 14, 1995 as
Exhibit 4.2 to the Quarterly Report on Form 10-Q of Nextel for the quarter
ended September 30, 1995 and incorporated herein by reference).
4.18 - Second Supplemental Indenture, dated as of July 28, 1995 between ESMR (now Not applicable
known as Nextel), as Successor by Merger to Old Nextel and The Bank of New
York (relating to the August Indenture) (filed on November 14, 1995 as Exhibit
4.3 to the Quarterly Report on Form 10-Q of Nextel for the quarter ended
September 30, 1995 and incorporated herein by reference).
4.19 - Second Supplemental Indenture, dated as of July 28, 1995 between ESMR (now Not applicable
known as Nextel), as Successor by Merger to Old Nextel and The Bank of New
York (relating to the February Indenture) (filed on November 14, 1995 as
Exhibit 4.4 to the Quarterly Report on Form 10-Q of Nextel for the quarter
ended September 30, 1995 and incorporated herein by reference).
4.20 - Indenture for Senior Redeemable Discount Notes due 2004, dated as of Not applicable
January 13, 1994, between OneComm (formerly called CenCall Communications
Corp.) and The Bank of New York (the "OneComm Indenture") (filed on June 7,
1995 as Exhibit No. 99.2 to Old Nextel's Registration Statement No. 33-93182
on Form S-4 (the "OneComm S-4 Registration Statement") and incorporated herein
by reference).
4.21 - Form of Note issued pursuant to the OneComm Indenture (included in Exhibit Not applicable
4.20).
4.22 - Supplemental Indenture dated as of June 30, 1995 to the OneComm Indenture Not applicable
between OneComm (formerly called CenCall Communications Corp.) and The Bank of
New York (filed on November 14, 1995 as Exhibit 10.12 to the Form 10-Q for the
quarter ended September 30, 1995 and incorporated herein by reference).
</TABLE>
-ii-
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE
------ ----------------------- ----
<S> <C> <C> <C>
4.23 - Second Supplemental Indenture dated as of July 28, 1995 between Nextel Not applicable
(formerly known as ESMR, Inc.), as successor to OneComm, and The Bank of New
York (relating to the OneComm Indenture) (filed on November 14, 1995 as
Exhibit 10.13 to the Form 10-Q for the quarter ended September 30, 1995 and
incorporated herein by reference).
4.24 - Indenture for Senior Redeemable Discount Notes due 2004, dated as of April 25, Not applicable
1994, between Dial Call and The Bank of New York (the "2004 Indenture") (filed
on June 7, 1995 as Exhibit 99.4 to the OneComm S-4 Registration Statement and
incorporated herein by reference).
4.25 - Supplemental Indenture, dated as of August 7, 1995, to the 2004 Indenture Not applicable
between Dial Call and The Bank of New York (filed on December 5, 1995 as
Exhibit 99.3 to Nextel's Registration Statement No. 33-80021 on Form S-4 (the
"Dial Page S-4 Registration Statement") and incorporated herein by reference).
4.26 - Second Supplemental Indenture, dated as of January 30, 1996, to the 2004 Not applicable
Indenture between Dial Page (as successor to Dial Call) and The Bank of New
York (filed on April 1, 1996 as Exhibit 4.26 to the Annual Report on Form 10-K
of Nextel for the year ended December 31, 1995 (the "1995 Form 10-K") and
incorporated herein by reference).
4.27 - Third Supplemental Indenture, dated as of January 30, 1996, to the 2004 Not applicable
Indenture between Nextel (as successor to Dial Page) and The Bank of New York
(filed on April 1, 1996 as Exhibit 4.27 to the 1995 Form 10-K and incorporated
herein by reference).
4.28 - Indenture for Senior Discount Notes due 2005, dated as of December 22, 1993, Not applicable
between Dial Call and The Bank of New York (the "2005 Indenture") (filed as
Exhibit 99.3 to the OneComm S-4 Registration Statement and incorporated herein
by reference).
4.29 - Supplemental Indenture, dated as of April 15, 1994, to the 2005 Indenture Not applicable
between Dial Call and The Bank of New York (filed on April 1, 1996 as Exhibit
4.29 to the 1995 Form 10-K and incorporated herein by reference).
4.30 - Supplemental Indenture, dated as of June 30, 1995, to the 2005 Indenture Not applicable
between Dial Call and The Bank of New York (filed on December 5, 1995 as
Exhibit 99.4 to the Dial Page S-4 Registration Statement and incorporated
herein by reference).
4.31 - Third Supplemental Indenture, dated as of January 30, 1996, to the 2005 Not applicable
Indenture between Dial Page (as successor to Dial Call) and The Bank of New
York (filed on April 1, 1996 as Exhibit 4.31 to the 1995 Form 10-K and
incorporated herein by reference).
4.32 - Fourth Supplemental Indenture, dated as of January 30, 1996, to the 2005 Not applicable
Indenture between Nextel (as successor to Dial Page) and The Bank of New York
(filed on April 1, 1996 as Exhibit 4.32 to the 1995 Form 10-K and incorporated
herein by reference).
4.33 - Registration Agreement, dated as of August 23, 1996, by and among Nextel, Not applicable
Grupo Communicaciones, San Luis, S.A. de C.V. and each of the persons listed
on Schedule 1 thereto (filed on September 11, 1996 as Exhibit 4.33 to Nextel's
Registration Statement No. 333-11733 on Form S-4 and incorporated herein by
reference).
</TABLE>
-iii-
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE
------ ----------------------- ----
<S> <C> <C>
4.34 - Amendment to Registration Agreement dated as of November 22, 1996 by and among Not applicable
Nextel, Grupo Comunicanciones, San Luis S.A. de C.V. and each of the persons
listed in Schedule 1 thereto (filed on November 26, 1996 as Exhibit 99.1 to
the Form 8-K dated November 22, 1996 and incorporated by reference).
**4.35 - Further Amendment to Registration Agreement dated December 20, 1996 by and
among Nextel, Grupo Comunicanciones, San Luis S.A. de C.V. and each of the
persons listed in Schedule 1 thereto.
4.36 - Agreement and Plan of Merger among Nextel, Dial Call Indimich, Inc. and Not applicable
Wireless Ventures of Brazil, Inc., dated as of October 28, 1996, as amended
(filed on December 23, 1996 as Exhibits 2.1 and 2.2 to the Registration
Statement on Form S-4 of Nextel, No. 333-17173 and incorporated herein by
reference).
*5 - Opinion of Jones, Day, Reavis & Pogue re validity.
*23.1 - Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5). Not applicable
*23.2 - Consents of Deloitte & Touche LLP.
*23.3 - Consent of KPMG Peat Marwick LLP.
**24 - Powers of Attorney.
</TABLE>
_________________________
* Filed herewith.
** Previously filed.
-iv-
<PAGE> 1
EXHIBIT 5
JONES, DAY REAVIS & POGUE
3500 ONE PEACHTREE CENTER
303 PEACHTREE STREET
ATLANTA, GEORGIA 30308
January 23, 1997
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
Gentlemen:
We have acted as counsel to Nextel Communications, Inc., a
Delaware corporation (the "Company"), in connection with the registration of
1,580,650 shares of Common Stock, $.001 par value per share, of the Company
(the "Shares"), to be issued by the Company pursuant to a Registration
Statement on Form S-3 (File No. 333-19333) (the "Registration Statement"),
filed with the Securities and Exchange Commission to which this opinion appears
as Exhibit 5.
We have examined originals or certified or photostatic copies
of such records of the Company, certificates of officers of the Company, and
public officials and such other documents as we have deemed relevant or
necessary as the basis of the opinion set forth below in this letter. In such
examination, we have assumed the genuineness of all signatures, the conformity
to original documents submitted as certified or photostatic copies, and the
authenticity of originals of such latter documents. Based on the foregoing, we
are of the following opinion:
The Shares are duly authorized, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement and the reference to this Firm under the heading
"Certain Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Sincerely,
/s/ Jones, Day, Reavis & Pogue
JONES, DAY, REAVIS & POGUE
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-19333 of Nextel Communications, Inc., on Form
S-3, of our report dated March 25, 1996, appearing in the Annual Report on Form
10-K of Nextel Communications, Inc. for the year ended December 31, 1995, and
to the reference to us under the heading "Experts" in such Prospectus, which is
part of this Registration Statement.
/s/Deloitte & Touche LLP
McLean, Virginia
January 22, 1997
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to this
Registration Statement No. 333-19333 of Nextel Communications, Inc., on Form
S-3, of our report dated March 20, 1996, relating to the consolidated financial
statements of Dial Page, Inc. for the year ended December 31, 1995, appearing
in the Form 8-K dated February 6, 1996 and filed with the Securities Exchange
Commission on February 7, 1996 as amended by Form 8-K/A, filed on April 26,
1996 and to the reference to us under the heading "Experts" in such Prospectus,
which is part of this Registration Statement.
/s/Deloitte & Touche LLP
McLean, Virginia
January 22, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Dial Page, Inc.
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement (No. 333-19333) on Form S-3 of Nextel Communications,
Inc. of our report dated February 17, 1995, with respect to the consolidated
balance sheets of Dial Page, Inc. and subsidiaries as of December 31, 1993 and
1994, and the related consolidated statements of operations,
stockholders'/partners' equity (deficit) and cash flows for each of the years
in the three-year period ended December 31, 1994, which report appears in the
Form 8-K of Nextel Communications, Inc. dated February 6, 1996 and filed on
February 7, 1996, as amended by Form 8-K/A filed on April 26, 1996.
/s/ KPMG Peat Marwick
---------------------
KPMG Peat Marwick LLP
Greenville, South Carolina
January 20, 1997
