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Filed pursuant to Rules 429 and 424(b)(4)
Registration Statement Nos. 333-89429 and 333-90125
PROSPECTUS
30,000,000 Shares
[Nextel Logo]
Nextel Communications, Inc.
CLASS A COMMON STOCK
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Nextel Communications, Inc. is offering 30,000,000 shares of its Class A common
stock.
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The Class A common stock is quoted on the Nasdaq National Market under the
symbol "NXTL." On November 1, 1999, the reported last sale price of the common
stock on the Nasdaq National Market was $83 13/16 per share.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.
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PRICE $83 13/16 A SHARE
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<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Nextel
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share........................ $ 83.8125 $ 2.3050 $ 81.5075
Total............................ $2,514,375,000 $69,150,000 $2,445,225,000
</TABLE>
Nextel Communications, Inc., has granted the underwriters the right to purchase
up to an additional 3,781,785 shares to cover over-allotments.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on
November 5, 1999.
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MORGAN STANLEY DEAN WITTER GOLDMAN, SACHS & CO.
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CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
November 1, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary..................................................... 3
Risk Factors................................................ 9
Use of Proceeds............................................. 19
Price Range of Common Stock and Dividend Policy............. 21
Capitalization.............................................. 22
Dilution.................................................... 23
Description of Capital Stock................................ 24
Principal United States Federal Tax Consequences to Non-U.S.
Holders................................................... 30
Underwriters................................................ 33
Legal Matters............................................... 35
Experts..................................................... 35
Where You Can Get More Information.......................... 36
</TABLE>
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You should rely only on the information contained in this prospectus.
Nextel has not authorized anyone to provide you with information different from
that contained in this prospectus. Nextel is offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or any sale of the common stock. In this
prospectus, "Nextel" refers to Nextel Communications, Inc. and its subsidiaries,
except where the context otherwise suggests.
NEXTEL HAS NOT TAKEN ANY ACTION TO PERMIT A PUBLIC OFFERING OF THE
SHARES OF COMMON STOCK OUTSIDE THE UNITED STATES OR TO PERMIT THE POSSESSION OR
DISTRIBUTION OF THIS PROSPECTUS OUTSIDE THE UNITED STATES. PERSONS OUTSIDE THE
UNITED STATES WHO COME INTO POSSESSION OF THIS PROSPECTUS MUST INFORM THEMSELVES
ABOUT AND OBSERVE ANY RESTRICTIONS RELATING TO THE OFFERING OF THE SHARES OF
COMMON STOCK AND THE DISTRIBUTION OF THIS PROSPECTUS OUTSIDE OF THE UNITED
STATES.
Unless otherwise specifically stated, the information throughout this
prospectus does not take into account the possible issuance of additional shares
of common stock to the underwriters pursuant to their rights to purchase
additional shares to cover over-allotments.
------------------------
"Nextel" and "Nextel Direct Connect" are trademarks or service marks of
Nextel. "Motorola," "i1000plus," "i500plus" and "i700plus" are trademarks or
service marks of Motorola, Inc.
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SUMMARY
This summary highlights basic information about Nextel and the common
stock offered, but does not contain all information important to you. You should
read the more detailed information and consolidated financial statements and the
related notes appearing elsewhere and incorporated by reference in this
prospectus.
NEXTEL
Nextel provides a wide array of digital and analog wireless
communications services throughout the United States. Nextel offers a
differentiated, integrated package of digital wireless communications services
under the Nextel brand name, primarily to business users. Nextel's digital
mobile network constitutes one of the largest integrated wireless communications
systems utilizing a single transmission technology in the United States.
Nextel's digital network uses integrated digital enhanced network, also referred
to as iDEN, technology.
A customer using Nextel's digital mobile network is able to access:
- digital mobile telephone service;
- digital two-way radio dispatch service, which provides
instant conferencing capabilities and is marketed as "Nextel
Direct Connect" service;
- paging; and
- short-messaging service.
Nextel refers to the handset device on which it delivers these services
as a subscriber unit.
As of September 30, 1999:
- Nextel provided service to about 4,050,900 digital subscriber
units in the United States; and
- Nextel's digital mobile network or the compatible digital
mobile network of Nextel Partners, Inc., a joint venture in
which Nextel is a participant, was operational in areas in
and around 92 of the top 100 metropolitan statistical areas
in the United States.
Nextel has announced its plans to offer customers access to new digital
two-way mobile data and Internet connectivity services. Three new handsets
developed and manufactured by Motorola, the "i1000plus," the "i500plus" and the
"i700plus," have been introduced since May 1999. These new handsets are expected
to be the first in a product line that incorporates micro-browsers and wireless
Internet capability, which is planned to be combined with other mobile data
applications to be used in connection with Nextel's planned wireless data
service offering. Nextel has begun testing the underlying technology for these
services in several U.S. markets and currently plans to commercially launch the
wireless data service offering in mid-2000.
In addition to its domestic operations, Nextel has ownership interests
in international wireless companies through its subsidiary, Nextel
International, Inc. The subsidiaries of Nextel International, Inc., or other
entities in which Nextel International, Inc. holds equity or equivalent
interests, own and operate wireless communications systems in and around various
major metropolitan market areas in Latin America, Asia and Canada. Nextel
International, Inc., together with Nextel, provides services in ten of the
world's 25 largest cities.
RECENT DEVELOPMENTS
Third Quarter Results. Nextel recently announced its third quarter
operating results.
Nextel ended the third quarter of 1999 with approximately 4,050,900
domestic digital subscriber units in service on its digital mobile network, an
increase from 2,417,400 domestic digital subscriber units,
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or 68 percent, over the past twelve months. Nextel also reported a net increase
of approximately 458,000 domestic digital subscriber units during the third
quarter of 1999 and continued strength in monthly average revenue per domestic
digital subscriber unit of about $74.
In addition, domestic system usage during the third quarter of 1999
increased to about 4.9 billion minutes of use, up 82 percent over third quarter
1998 total domestic system minutes of use of 2.7 billion.
Total consolidated revenue grew about 76 percent to $889 million for the
third quarter of 1999, as compared with $506 million in the third quarter of
1998. Domestic revenue grew 73 percent over the third quarter of 1998 to $862
million during the third quarter of 1999. Consolidated earnings before interest,
taxes, depreciation and amortization, or "EBITDA", for the third quarter of 1999
increased 61 percent over the second quarter of 1999 to $175 million. This
improvement consists of $210 million in positive EBITDA from domestic
operations, a 36 percent increase over the second quarter, and a $35 million
EBITDA loss from international operations, a 24 percent decrease over the second
quarter. EBITDA is a measure commonly used by analysts, investors and others in
the telecommunications industry. However, EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
considered as an alternative to net income or loss as a measure of performance,
or to cash flow as a measure of liquidity.
The net loss attributable to common stockholders for the third quarter
of 1999 was $361 million, or $1.10 per share. Of this net loss, $.05 per share
is attributable to foreign currency transaction losses associated with Brazilian
currency weakness.
Nextel's consolidated capital expenditures during the third quarter of
1999 were $484 million, including $453 million for domestic operations and $31
million for international operations.
Third Quarter 1999 Management and Subsequent Board Developments. On July
17, 1999, Timothy M. Donahue, formerly Nextel's President and Chief Operating
Officer, succeeded Daniel F. Akerson as Nextel's Chief Executive Officer. Mr.
Akerson stepped down from his position at Nextel to become Co-Chairman of Eagle
River, Inc., an entity controlled by Craig O. McCaw, a principal stockholder of
Nextel. Mr. Akerson continues to serve as Chairman of Nextel's board of
directors and also as a member of the operations committee of the board. On
September 22, 1999, Mr. Akerson became Chairman and Chief Executive Officer of
NEXTLINK Communications, Inc., a publicly held competitive local exchange
carrier controlled by Mr. McCaw. NEXTLINK has significant fiber optic network
capacity currently under construction nationwide and significant holdings of
local multipoint distribution system fixed wireless spectrum in many major
metropolitan markets in the United States.
In addition, on October 15, 1999, Mr. Keisuke Nakasaki resigned from his
position on Nextel's board of directors, reducing the board's size to nine. Mr.
Nakasaki had occupied his position on the board as a result of rights granted to
an affiliate of Nippon Telegraph and Telephone Corp. in connection with and
linked to that affiliate's equity investment in Nextel. The contractual rights
to representation on Nextel's board may continue in effect for some time under
the terms of the relevant agreement. Nippon Telegraph and Telephone Corp. has
advised Nextel that it does not intend to exercise those rights by designating a
replacement for Mr. Nakasaki to Nextel's board.
Bank Facility Increase. At September 30, 1999 Nextel had drawn about
$1.8 billion of the $3.295 billion in secured borrowings available under its
bank credit agreement as in effect on that date. On September 23, 1999, Nextel
obtained a commitment from a group of lenders, including some of the lenders
under the current bank facility, to increase the borrowings available under the
bank facility by $1.705 billion to a total of $5.0 billion. The commitment also
provides for the extension of the maturity of the borrowings under the bank
facility and contemplates that the facility may be further increased by up to an
additional $1.0 billion in incremental borrowings. Availability of the
additional borrowings contemplated by the commitment is subject to a number of
conditions, including the successful syndication of the facility, the
negotiation and execution of definitive agreements and compliance with any
limitations imposed on Nextel's access to these borrowings under the indentures
pursuant to which some of Nextel's senior notes were issued.
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Activities Involving NextWave. On August 12, 1999, Nextel announced that
it had reached agreement with the United States Department of Justice and the
Federal Communications Commission concerning the terms and conditions that would
apply to the resolution of the claims of the United States government asserted
against NextWave Personal Communications, Inc. and some of its affiliates in the
context of a plan of reorganization for the NextWave entities contemplated to be
proposed and sponsored by Nextel. Information concerning these arrangements and
copies of the agreement and related term sheet between Nextel and the United
States government are included in Nextel's Current Reports on Form 8-K dated and
filed with the Securities and Exchange Commission on August 12, 1999 and August
18, 1999. NextWave and its affiliates hold personal communications services
spectrum licenses granted by the Federal Communications Commission. In June
1998, the NextWave entities holding such licenses commenced a voluntary
bankruptcy proceeding.
Since reaching that agreement, Nextel has engaged in negotiations with
representatives of the creditor and equity groups of the NextWave entities and
representatives of the Department of Justice and the Federal Communications
Commission regarding a potential Nextel-sponsored plan of reorganization. Nextel
has not yet reached agreement with these parties in interest, and Nextel cannot
predict whether or when it will do so. Even if such agreement were to be
reached, any plan of reorganization that ultimately may be developed and
sponsored by Nextel would be subject to various conditions to its successful
implementation, including consideration and approval of that plan in the
NextWave bankruptcy proceedings and receipt of all required regulatory
approvals, consents and waivers. Nextel does not intend to update its
disclosures concerning this matter unless and until it determines that future
developments, if any, warrant such updating disclosures or it determines that it
is required to do so to comply with its disclosure obligations under applicable
laws.
------------------
Nextel's principal executive and administrative facility is located at
2001 Edmund Halley Drive, Reston, Virginia 20191, and its telephone number is
(703) 433-4000.
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THE OFFERING
Nextel is offering 25,000,000 shares of common stock initially in the
United States and Canada and 5,000,000 shares of common stock initially outside
the United States and Canada. The closing of each of these offerings is
conditioned on the closing of the other.
Common stock offered in:
U.S. offering................ 25,000,000 shares
International offering....... 5,000,000 shares
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Total..................... 30,000,000 shares
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Common stock to be outstanding
after the offering............. 345,065,052 shares based on 315,065,052 shares
outstanding as of September 30, 1999. This
does not include 90,162,491 shares of Nextel
common stock subject to issuance upon exercise
or conversion of outstanding options, warrants
and convertible securities.
Over-allotment option.......... 3,781,785 shares
Use of Proceeds................ Nextel intends to use the net proceeds from
the offering to fund capital expenditures,
investments, working capital needs and for
other general corporate purposes.
Nasdaq National Market
Symbol......................... NXTL
Risk Factors................... You should read the "Risk Factors" section
beginning on page 9 of this prospectus, as
well as the other cautionary statements
throughout the entire prospectus, to ensure
that you understand the risks associated with
an investment in the common stock.
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The financial information below for the nine months ended December 31,
1994, which reflects the change in Nextel's fiscal year end from March 31 to
December 31, and the years ended December 31, 1995, 1996, 1997 and 1998, have
been derived from the audited consolidated financial statements of Nextel. The
financial information for the nine months ended September 30, 1998 and 1999 has
been derived from the unaudited financial information of Nextel and reflects
only normal recurring adjustments necessary for the fair presentation of this
information. You should not expect the results of operations of interim periods
to be an indication of results for a full year. This information is only a
summary and should be read in conjunction with Nextel's historical financial
statements for periods ending on or prior to June 30, 1999 contained in reports
filed with the Securities and Exchange Commission.
Acquisitions. Nextel's results were affected by business combinations,
acquisitions and investments involving both domestic and international
companies. In July 1995, Nextel completed the acquisition of substantially all
of Motorola's 800 MHz specialized mobile radio licenses in the continental
United States and mergers with OneComm Corporation and American Mobile Systems,
Incorporated. Additional information regarding acquisitions completed in 1996,
1997 and 1998 can be found in note 2 to the consolidated financial statements in
Nextel's Annual Report on Form 10-K for the year ended December 31, 1998.
Income Tax Provision. As a result of operating results and the change in
useful lives of some intangible assets, Nextel increased its valuation allowance
for deferred tax assets resulting in a tax provision of about $259 million in
1997. Additional information can be found in note 10 to the consolidated
financial statements in Nextel's Annual Report on Form 10-K for the year ended
December 31, 1998.
As Adjusted. At September 30, 1999, the as adjusted balance sheet data
reflects the receipt of the estimated net proceeds from the sale of 30,000,000
shares of common stock.
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<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ----------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
------------ -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues........ $ 75 $ 172 $ 333 $ 739 $ 1,847 $ 1,255 $ 2,346
Cost of revenues.......... 52 152 248 289 516 371 504
Selling, general and
administrative.......... 85 194 330 862 1,551 1,101 1,523
Expenses related to
corporate
reorganization.......... -- 17 -- -- -- -- --
Depreciation and
amortization............ 94 236 401 526 832 583 732
-------- -------- -------- -------- -------- -------- --------
Operating loss............ (156) (427) (646) (938) (1,052) (800) (413)
Interest expense, net..... (41) (90) (206) (378) (622) (439) (599)
Other income (expense)
net..................... -- (15) (11) 7 (37) (37) (32)
Income tax benefit
(provision)............. 71 201 307 (259) 192 128 25
-------- -------- -------- -------- -------- -------- --------
Loss before extraordinary
item.................... (126) (331) (556) (1,568) (1,519) (1,148) (1,019)
Extraordinary item--loss
on early retirement of
debt, net of tax of
$0...................... -- -- -- (46) (133) (133) --
Mandatorily redeemable
preferred stock
dividends............... -- -- -- (29) (149) (107) (142)
-------- -------- -------- -------- -------- -------- --------
Loss attributable to
common stockholders..... $ (126) $ (331) $ (556) $ (1,643) $ (1,801) $ (1,388) $ (1,161)
======== ======== ======== ======== ======== ======== ========
Loss per share
attributable to common
stockholders, basic and
diluted:
Loss before
extraordinary item
attributable to common
stockholders.......... $ (1.25) $ (2.31) $ (2.50) $ (6.41) $ (5.98) $ (4.56) $ (3.78)
Extraordinary item...... -- -- -- (0.18) (0.48) (0.48) --
-------- -------- -------- -------- -------- -------- --------
$ (1.25) $ (2.31) $ (2.50) $ (6.59) $ (6.46) $ (5.04) $ (3.78)
======== ======== ======== ======== ======== ======== ========
Weighted average number of
common shares
outstanding (in
thousands).............. 100,639 143,283 222,779 249,320 278,643 275,584 307,286
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
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ACTUAL AS ADJUSTED
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(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents, including restricted portion of
$78....................................................... $1,379 $ 3,823
Intangible assets, net...................................... 4,610 4,610
Total assets................................................ 13,157 15,601
Long-term debt, excluding current portion................... 8,444 8,444
Mandatorily redeemable preferred stock...................... 1,720 1,720
Stockholders' equity........................................ 54 2,498
</TABLE>
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RISK FACTORS
You should carefully consider the specific factors listed below, as well
as the other information included and incorporated by reference in this
prospectus, before making an investment decision.
RISK FACTORS RELATING TO NEXTEL
NEXTEL HAS A HISTORY OF NET LOSSES AND NEGATIVE CASH FLOW AND MAY NEVER BE ABLE
TO SATISFY ITS CASH NEEDS FROM OPERATIONS.
Nextel has never been profitable and has experienced negative cash flow
since its start in 1987. If these losses continue, the value of the common stock
may be adversely affected. Nextel had net losses attributable to common
stockholders of about $1.8 billion during 1998 and about $1.2 billion for the
nine months ended September 30, 1999. Nextel's accumulated deficit was about
$5.4 billion at September 30, 1999. Nextel expects that losses will continue
over the next several years. Nextel cannot know when, if ever, net cash
generated by its internal business operations will support its growth and
continued operations.
IF NEXTEL DOES NOT OBTAIN SUFFICIENT ADDITIONAL FINANCING COMMITMENTS TO MEET
ITS LONG-TERM NEEDS, YOUR INVESTMENT MAY BE ADVERSELY AFFECTED.
REASONS NEXTEL WILL NEED CASH.
Nextel anticipates that it will need substantial amounts of cash for:
- capital expenditures to build and enhance its digital mobile
network;
- operating expenses relating to its specialized mobile radio
business;
- potential acquisitions, including acquisition of rights to radio
spectrum, which Nextel requires to conduct its wireless
communications business;
- debt service requirements; and
- other general corporate purposes.
If Nextel can't fund these needs, its growth plans and operations, and
the value of the common stock, may be adversely affected. Nextel expects its
cash needs will exceed its cash flows from operating activities through 2000. In
addition, Nextel may need to revise its business plan to respond to competitive
and other factors, so its need for cash may increase.
NEXTEL'S CURRENT CREDIT FACILITIES ARE LIMITED AND CONTAIN
RESTRICTIONS ON ADDITIONAL FINANCINGS THAT MAY RESTRICT GROWTH AND
ADVERSELY AFFECT OPERATIONS.
Nextel's long-term cash needs are much greater than its availability
under its existing financing agreements. As a result, Nextel will have to raise
substantial amounts of additional funds, in the form of equity or debt, in the
future to support its growth and operations. If it is unable to do so, Nextel
may not be able to expand the coverage and capacity of its network to meet the
demands of Nextel's anticipated growth. Nextel's inability to achieve
contemplated levels of growth would adversely affect its financial results and
may adversely affect the value of the common stock.
Under its bank credit agreement as in effect on September 30, 1999,
Nextel may borrow up to $3.295 billion in secured financing from its bank
lenders provided that Nextel satisfies financial and other conditions. As of
September 30, 1999, about $1.8 billion of this secured financing had been drawn.
The availability of this financing is also subject to Nextel satisfying
covenants under indentures relating to Nextel's public notes. Nextel's access to
additional funds may be limited by the terms of its existing financing
agreements, including:
- covenants that restrict the amount of additional borrowings,
including additional borrowings under existing financing
arrangements;
- covenants that restrict Nextel's grant of liens on assets that
affect Nextel's ability to obtain new secured financing; and
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- existing debt service requirements.
Nextel recently obtained a commitment to increase the size of its
existing bank facility to $5.0 billion, subject to syndication of the facility
and negotiation and execution of definitive agreements. Nextel cannot assure you
that the increase will be successfully syndicated or if and when the increased
facility will be put in place.
FUNDING REQUIREMENTS FOR INTERNATIONAL OPERATIONS AND GROWTH MAY
CAUSE EVEN GREATER CASH NEEDS, WHICH MAY RESULT IN LESS FUNDING
AVAILABLE FOR NEXTEL'S DOMESTIC GROWTH AND OPERATIONS.
Based on Nextel International, Inc.'s assessment of the business
activity and related cash needs of its operating subsidiaries that are
controlled by or that rely substantially on Nextel International, Inc. for
further funding, Nextel International, Inc. believes that it will have adequate
funding to continue its operations only through the end of 1999. If sufficient
additional financing does not become available at times or in amounts required
to meet Nextel International, Inc.'s needs that are not met by its existing
funding sources, Nextel may fund some or all of Nextel International, Inc.'s
cash needs. Nextel currently expects that it will fund a significant portion of
Nextel International, Inc.'s funding needs in 2000. This would increase Nextel's
own cash needs, which could result in a lesser amount of cash available to
Nextel for domestic use.
FUNDING REQUIREMENTS FOR A NEXTEL-SPONSORED REORGANIZATION OF THE
NEXTWAVE ENTITIES MAY REQUIRE NEXTEL TO RAISE ADDITIONAL CAPITAL.
If a Nextel-sponsored plan of reorganization of the NextWave entities is
implemented, Nextel anticipates that it would need to raise a substantial amount
of additional capital to finance the cash distributions under that plan and to
pursue the business opportunities arising from the transaction. Nextel cannot
assure you that the necessary additional capital will be available on acceptable
terms, or at all. If sufficient additional capital is not available, Nextel may
be unable to complete the reorganization or the amount of funding available to
Nextel for its existing businesses would be reduced.
OTHER FACTORS MAY ADVERSELY AFFECT NEXTEL'S ACCESS TO ADDITIONAL
FINANCING AND NEXTEL MAY HAVE TO CURTAIL ITS BUSINESS IF IT CANNOT
ACCESS ADDITIONAL FUNDING.
Nextel's access to additional funds also may be limited by:
- general market conditions that adversely affect the availability
or cost of financings;
- market conditions affecting the telecommunications industry in
general; and
- specific factors affecting Nextel's attractiveness as a borrower
or investment vehicle, including:
1. the terms of Nextel's arrangements with Motorola that relate
to Motorola's ownership interest in Nextel, and the terms of
options and warrants issued to others, that may make equity
financings more difficult;
2. the ability to relocate current spectrum licensees from some
frequencies in order to remove them from spectrum as to which
Nextel was the highest bidder at an auction;
3. the potential commercial opportunities and risks associated
with implementation of Nextel's business plan;
4. the market's perception of Nextel's performance and assets;
and
5. the actual amount of cash needed by Nextel to pursue its
business strategy.
FUNDING FOR NEXTEL'S CAPITAL NEEDS IS NOT ASSURED AND NEXTEL MAY
HAVE TO CURTAIL ITS BUSINESS IF IT CANNOT FIND ADEQUATE FUNDING.
Currently, other than with respect to its existing bank facility, Nextel
has no legally binding commitments or understandings with any third parties to
obtain any material amount of additional equity or
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debt financing. Although Nextel is in the process of increasing the size of its
existing bank facility to $5.0 billion, Nextel cannot assure you that the
increase will be successfully syndicated or if and when the increased facility
will be put in place. Nextel cannot assure you that it will be able to obtain
any additional financing in the amounts or at the times that it may require the
financing, or if Nextel does obtain any financing, that it would be on
acceptable terms. As a result, Nextel cannot assure you that it will have
adequate capital to implement the contemplated expansion and enhancement of its
digital mobile network, to maintain its current levels of operation or to pursue
strategic acquisitions or other opportunities to increase its spectrum holdings.
Nextel's failure to obtain sufficient additional financing could result in the
delay or abandonment of some or all of its development, expansion and
acquisition plans and expenditures, which could have an adverse effect on Nextel
and on the value of the common stock.
NEXTEL HAS A HIGH LEVEL OF INDEBTEDNESS.
Nextel's high level of indebtedness could have important consequences to
purchasers of the common stock, including limiting Nextel's ability to do the
following:
- obtain additional financing for acquisitions, working capital,
capital expenditures or other purposes;
- use operating cash flow in other areas of its business because it
must dedicate a substantial portion of these funds to make cash
interest payments and fund required principal payments on its
debt;
- borrow additional funds or dispose of assets;
- compete with others in its industry who are not as highly
leveraged; and
- react to changing market conditions, changes in its industry and
economic downturns.
NEXTEL'S FUTURE PERFORMANCE, AND THE VALUE OF YOUR INVESTMENT, WILL DEPEND ON
ITS ABILITY TO SUCCEED IN THE HIGHLY COMPETITIVE WIRELESS COMMUNICATIONS
INDUSTRY.
Nextel's ability to compete effectively with established and prospective
wireless communications service providers depends on many factors, including:
- IF NEXTEL'S WIRELESS COMMUNICATIONS TECHNOLOGY DOES NOT PERFORM IN
A MANNER THAT MEETS CUSTOMER EXPECTATIONS, NEXTEL WILL BE UNABLE
TO ATTRACT AND RETAIN CUSTOMERS, WHICH WOULD ADVERSELY AFFECT YOUR
INVESTMENT. Customer acceptance of the services Nextel offers is
and will continue to be affected by technology-based differences
and by the operational performance and reliability of system
transmissions on Nextel's digital mobile network. If Nextel is
unable to address and resolve satisfactorily performance or other
transmission quality issues as they arise, or if these issues
limit Nextel's ability to expand its network coverage or capacity
as currently planned, or if these issues were to place Nextel at a
competitive disadvantage to other wireless service providers in
its markets, Nextel may have difficulty attracting and retaining
customers, which would adversely affect the value of the common
stock.
- IF NEXTEL CANNOT EXPAND, PROVIDE AND MAINTAIN ITS SYSTEM COVERAGE,
THEN ITS GROWTH AND OPERATIONS, AND THE VALUE OF YOUR INVESTMENT,
WOULD BE ADVERSELY AFFECTED. Nextel will not be able to provide
roaming system coverage comparable to that currently available
through roaming arrangements from cellular and some personal
communication services operators, unless and until a nationwide
digital mobile network build-out is substantially completed. This
places Nextel at a competitive disadvantage, as some other
providers currently have roaming agreements that provide coverage
of each other's markets throughout the United States, including
areas where Nextel's network has not been or will not be built. In
addition, some of Nextel's competitors provide their customers
with subscriber units with both digital and analog capability,
which expands their coverage, while Nextel has only digital
capability. Nextel cannot assure you that it will be able to
achieve sufficient system coverage or that a sufficient number of
customers
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or potential customers will be willing to accept system coverage
limitations as a trade-off for the enhanced multi-function
wireless communications package Nextel provides on its nationwide
digital mobile network.
- NEXTEL DOES NOT HAVE THE EXTENSIVE DIRECT AND INDIRECT CHANNELS OF
DISTRIBUTION FOR ITS DIGITAL MOBILE NETWORK PRODUCTS AND SERVICES
THAT SOME OF ITS COMPETITORS HAVE, WHICH MAY ADVERSELY AFFECT
NEXTEL'S OPERATING RESULTS AND COULD ADVERSELY AFFECT THE VALUE OF
YOUR INVESTMENT. Many of Nextel's competitors have established
extensive networks of retail locations and multiple distribution
channels, and so enjoy a competitive advantage over Nextel in
these areas. Nextel has increased the proportion of its digital
mobile network customers that it obtains through its indirect
distributor network, and Nextel currently anticipates that it will
rely more heavily on indirect distribution channels to achieve
greater market penetration for its digital wireless service
offerings. However, as Nextel expands its retail subscriber base
through increased reliance on indirect distribution channels and
as price competition in the wireless industry intensifies,
Nextel's average revenue per digital subscriber unit may decrease
and Nextel's customer retention may be adversely affected.
- NEXTEL'S INABILITY TO MAINTAIN PRICING PACKAGES ATTRACTIVE TO
CUSTOMERS MAY ADVERSELY AFFECT OPERATING RESULTS, WHICH COULD
ADVERSELY AFFECT THE VALUE OF YOUR INVESTMENT.
SOME OF NEXTEL'S COMPETITORS ARE FINANCIALLY STRONGER THAN NEXTEL,
WHICH ALLOWS THEM TO PRICE THEIR SERVICE PACKAGES AT LEVELS BELOW
THOSE THAT NEXTEL CAN OR IS WILLING TO MATCH.
Nextel's ability to compete based on the price of its digital mobile
network subscriber units and service offerings will be limited. This could
adversely affect Nextel's growth and the value of the common stock.
NEXTEL'S EQUIPMENT IS MORE EXPENSIVE THAN SOME COMPETITORS', WHICH
MAY ADVERSELY AFFECT GROWTH AND OPERATING RESULTS.
Nextel currently markets multi-function digital subscriber handsets,
providing mobile telephone and private and group dispatch service, in addition
to paging and alphanumeric short-text messaging. Nextel's handsets are, and are
likely to remain, significantly more expensive than analog handsets and are, and
are likely to remain, somewhat more expensive than digital cellular or personal
communication services handsets that do not incorporate a comparable
multi-function capability. Although Nextel believes that its multi-function
subscriber handsets currently are competitively priced compared to
multi-function digital cellular and personal communication services handsets,
the higher cost of Nextel's equipment may make it more difficult or less
profitable to attract customers who do not place a high value on Nextel's unique
multi-service offering. This may reduce Nextel's growth opportunities or
profitability and may adversely affect the value of the common stock.
NEXTEL MAY FACE CONTINUING PRESSURE TO REDUCE PRICES, WHICH WOULD
ADVERSELY AFFECT OPERATING RESULTS AND THE VALUE OF YOUR INVESTMENT.
Over the past several years as the number of wireless communications
providers in Nextel's market areas has increased, its competitors' prices in
these markets have generally decreased. Nextel may encounter further market
pressures to:
- reduce its digital mobile network service offering prices;
- restructure its digital mobile network service offering packages
to offer more value;
- respond to particular short term, market specific situations, for
example, special introductory pricing or packages that may be
offered by new providers launching their service in a particular
market; or
- remain competitive if wireless service providers generally
continue to reduce the prices charged to their customers.
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<PAGE> 13
- NEXTEL'S EFFORTS TO KEEP PACE WITH TECHNOLOGICAL CHANGE MAY BE
UNSUCCESSFUL OR MAY ADVERSELY AFFECT OPERATING RESULTS, WHICH WOULD
ADVERSELY AFFECT THE VALUE OF YOUR INVESTMENT. Nextel's digital
technology could become obsolete. Nextel relies on digital technology
that is not compatible with, and competes with, other forms of digital
and non-digital voice communication technology. Competition among
these differing technologies can:
- segment the user markets, which could reduce demand for specific
technologies, including Nextel's;
- reduce the resources devoted by third party suppliers, including
Motorola, which supplies all of Nextel's current digital
technology, in developing or improving the technology for Nextel's
systems; and
- adversely affect market acceptance of Nextel's services.
Nextel cannot assure you that its digital voice technology will
successfully compete with the other forms of digital and non-digital voice
communication systems. Further, new digital or non-digital voice communication
transmission technology may develop that will cause Nextel's existing systems
technology to be obsolete or otherwise impair market acceptance of its
technology.
- NEXTEL'S GROWTH MAY EXCEED THE CAPABILITIES OF ITS SYSTEMS, HURTING
ITS PERFORMANCE, AND THE VALUE OF YOUR INVESTMENT.
NEXTEL FACES LIMITATIONS ON ITS ABILITY TO INCREASE SUBSCRIBERS,
WHICH CAN LIMIT ITS GROWTH AND PERFORMANCE.
Nextel's ability to continue to increase the number of subscribers on
its digital mobile network depends on a variety of factors, including:
- the ability to successfully plan for additional system capacity at
levels needed to meet anticipated new subscribers and the related
increases in system usage;
- the ability to obtain additional radio spectrum when and where
required; and
- the availability of a sufficient quantity of cell sites, system
infrastructure equipment and subscriber units, of the appropriate
models and types, to meet the demands and preferences of potential
subscribers to the digital mobile network.
NEXTEL MAY FACE LIMITATIONS ON AVAILABILITY OF CELL SITES AND
EQUIPMENT, WHICH MAY ADVERSELY AFFECT ITS GROWTH AND PERFORMANCE.
Although Nextel believes it has secured sufficient cell sites at
appropriate locations in its markets to meet planned system coverage and
capacity targets, Nextel cannot assure you that it will meet those needs in the
future. Nextel generally has been able to obtain adequate quantities of base
radios and other system infrastructure equipment from Motorola and other
suppliers, and adequate volumes and mix of subscriber units and related
accessories from Motorola, to meet subscriber and system loading rates, but
Nextel cannot assure you that quantities will be sufficient in the future.
Additionally, Nextel has contractual arrangements with Nextel International,
Inc. and Nextel Partners, Inc. that contemplate that, in the event of shortages
of that equipment, available supplies would be allocated proportionately among
Nextel and those entities.
NEXTEL HAS POTENTIAL SYSTEMS LIMITATIONS ON ADDING CUSTOMERS, WHICH
MAY ADVERSELY AFFECT ITS GROWTH AND PERFORMANCE.
Other factors affecting Nextel's ability to successfully add customers
to its digital mobile network include:
- the adequacy and efficiency of Nextel's information systems,
business processes and related support functions;
- the length of time between customer order to activation of service
on the digital mobile network, which currently is much longer than
that of some of its competitors; and
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<PAGE> 14
- Nextel's ability to improve the efficiency and speed of the
processes for Nextel's customer service and accounts receivable
collection functions.
Customer reliance on Nextel's customer service functions may increase as
Nextel adds digital mobile network customers through indirect distribution
channels and through direct sales channels not involving direct face-to-face
contact with a sales representative, for example, phone order sales or sales
through web sites. Nextel's inability to timely and efficiently meet the demands
for its services could decrease or postpone subscriber growth, or delay or
otherwise impede billing and collection of amounts owed, which would adversely
affect Nextel, and could adversely affect the value of the common stock.
- IF COMPETITORS PROVIDE TWO-WAY RADIO DISPATCH SERVICES, NEXTEL
WILL LOSE A COMPETITIVE ADVANTAGE. Nextel's two-way radio dispatch
services are currently not available through traditional cellular
or personal communication services providers; however, if either
personal communication services or cellular operators provide
two-way radio dispatch or comparable services in the future,
Nextel's competitive advantage may be impaired.
Nextel cannot predict the competitive effect that any of these factors,
or any combination of these factors, will have on it or whether it will compete
successfully in the future.
REGULATORY AND OTHER FACTORS COULD DELAY OR PREVENT NEXTEL FROM OFFERING
SERVICES IN NEW MARKET AREAS, WHICH MAY ADVERSELY AFFECT NEXTEL'S GROWTH AND THE
VALUE OF YOUR INVESTMENT.
Before fully implementing Nextel's digital mobile network in a new
market area or expanding coverage in an existing market area, Nextel must
complete systems design work, find appropriate sites and construct necessary
transmission structures, receive regulatory approvals, free up frequency
channels now devoted to non-digital transmissions and begin systems
optimization. These processes take weeks or months to complete, and may be
hindered or delayed by many factors, including unavailability of antenna sites
at optimal locations, land use and zoning controversies and limitations of
available frequencies. Nextel cannot know when, if ever, its digital technology
will be available for commercial use in new markets.
NEXTEL RELIES ON MOTOROLA FOR SUBSTANTIALLY ALL OF ITS EQUIPMENT AND TECHNOLOGY
AND ANY FAILURE OF MOTOROLA TO PERFORM WOULD ADVERSELY AFFECT NEXTEL'S OPERATING
RESULTS AND THE VALUE OF YOUR INVESTMENT.
There is a risk that the failure by Motorola to deliver necessary
technology improvements and enhancements and system infrastructure and
subscriber equipment on a timely, cost-effective basis would have an adverse
effect on Nextel's growth and operations and would adversely affect your
investment. Motorola is currently Nextel's sole source for the infrastructure
and subscriber handset equipment used by Nextel throughout its markets. Nextel
expects to rely on Motorola for the manufacture of a substantial portion of the
equipment necessary to construct its digital mobile network and handset
equipment for the next several years. If Motorola does not provide the necessary
equipment to Nextel, then Nextel may not be able to service its existing
subscribers or add new subscribers. Nextel expects that for the next few years,
Motorola and competing manufacturers who are licensed by Motorola will be the
only manufacturers of subscriber equipment that is compatible with Nextel's
digital mobile network.
AGREEMENTS WITH MOTOROLA REDUCE NEXTEL'S OPERATIONAL FLEXIBILITY AND MAY
ADVERSELY AFFECT ITS GROWTH, OR OPERATING RESULTS, WHICH WOULD ADVERSELY AFFECT
THE VALUE OF YOUR INVESTMENT.
Nextel's agreements with Motorola impose limitations and conditions on
Nextel's ability to use other technologies. These terms may operate to delay or
prevent Nextel from employing new or different technologies that perform better
or are available at a lower cost because of the additional economic costs and
other impediments to change arising under the Motorola agreements. For example,
Nextel's equipment purchase agreement with Motorola provides that Nextel must
provide Motorola with notice of its determination that Motorola's technology is
no longer suited to Nextel's needs at least six months before publicly
announcing or entering into a contract to purchase an alternate technology.
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<PAGE> 15
In addition, if Motorola manufactures, or elects to manufacture, the
alternate technology that Nextel elects to deploy, Nextel must give Motorola the
opportunity to supply 50% of its infrastructure requirements for the alternate
technology for three years. Finally, if after a switch to an alternate
technology Nextel does not maintain operational Motorola infrastructure
equipment at the majority of its cell sites that are deployed at the date the
switch to an alternate technology is first publicly announced, Motorola may
require that all financing provided by Motorola to Nextel be repaid.
NEXTEL'S INTERESTS MAY CONFLICT WITH THOSE OF MOTOROLA. ANY CONFLICT COULD
ADVERSELY AFFECT NEXTEL'S GROWTH, OPERATING RESULTS OR STRATEGIC FLEXIBILITY AND
THE VALUE OF YOUR INVESTMENT.
Motorola and its affiliates engage in wireless communications
businesses, and may in the future engage in additional businesses, which do or
may compete with some or all of the services Nextel offers through its digital
mobile network. Although Nextel believes that its relationship with Motorola
reflects the realities of purchasing from a competitor, Nextel cannot assure you
that the potential conflict of interest will not adversely affect Nextel in the
future. In addition, Motorola is a significant stockholder of Nextel, which
creates potential conflicts of interest, particularly with regard to significant
transactions.
YOUR INVESTMENT IN NEXTEL, WHICH OPERATES IN A REGULATED INDUSTRY, MAY BE
ADVERSELY AFFECTED BY GOVERNMENTAL REGULATION.
The Federal Communications Commission regulates the licensing,
operation, acquisition and sale of Nextel's specialized mobile radio businesses.
Future changes in regulation or legislation and Congress' and the Federal
Communications Commission's continued allocation of additional commercial mobile
radio services spectrum could impose significant additional costs on Nextel
either in the form of direct out of pocket costs or additional compliance
obligations. These regulations can also have the effect of introducing
additional competitive entrants to the already crowded wireless communications
marketplace.
Nextel International, Inc.'s operations are subject to similar effects
caused by operating in a regulated industry, since its operations are regulated
by the foreign countries in which its business is conducted and are also subject
to regional and local regulation. Additional information regarding government
regulation can be found in Nextel's Annual Report on Form 10-K for the year
ended December 31, 1998.
NEXTEL HAS SIGNIFICANT INTANGIBLE ASSETS, WHICH MAY NOT BE ADEQUATE TO SATISFY
ITS OBLIGATIONS IN THE EVENT OF A LIQUIDATION.
If Nextel defaults on debt or if Nextel were liquidated, Nextel cannot
assure you that the value of its assets will be sufficient to satisfy its
obligations. Nextel has a significant amount of intangible assets, such as
licenses granted by the Federal Communications Commission. The value of these
licenses will depend significantly upon the success of Nextel's digital mobile
network business and the growth of the specialized mobile radio and wireless
communications industries in general. Nextel had a net tangible book value
deficit of about $4.8 billion as of September 30, 1999.
NEXTEL IS SUSCEPTIBLE TO CONTROL BY SIGNIFICANT STOCKHOLDERS, WHO HAVE RIGHTS
THAT MAY ADVERSELY AFFECT THE MARKET PRICE OF NEXTEL'S COMMON STOCK.
Significant blocks of Nextel's outstanding stock are held by Motorola
and entities controlled by Mr. Craig O. McCaw. In addition, an affiliate of Mr.
McCaw may designate at least one fourth of the board of directors of Nextel and
may select, from their representatives on the board of directors, a majority of
the operations committee of Nextel's board of directors, which has significant
authority relating to Nextel's business strategy, budgets, financing
arrangements and in the nomination and oversight of specified executive
officers. As a result, Mr. McCaw may exert significant influence over Nextel's
affairs. Presently, three of the nine members of Nextel's board of directors are
designees of Mr. McCaw's affiliate. In addition, Daniel F. Akerson, formerly an
executive officer of Nextel, currently holds positions with two companies
controlled by Mr. McCaw. Mr. Akerson continues to serve as chairman of Nextel's
board of directors and as a member of the operations committee of the board, but
he is not a designee of
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<PAGE> 16
Mr. McCaw's affiliate. Under its agreements with Nextel, Motorola may nominate
two directors to the board of directors of Nextel. In addition, Motorola has
agreed to support the decisions and recommendations of the operations committee
and to vote its shares of common stock accordingly, subject to specified
limitations.
If Mr. McCaw and Motorola choose to act together, they could have a
sufficient number of members on Nextel's board of directors and voting interest
in Nextel to, among other things:
- exert effective control over the approval of amendments to
Nextel's certificate of incorporation, mergers, sales of assets
or other major corporate transactions as well as other matters
submitted for stockholder vote;
- defeat a takeover attempt; and
- otherwise control whether particular matters are submitted for a
vote of the stockholders of Nextel.
Mr. McCaw and his affiliates have and, subject to the terms of
applicable agreements, may acquire an investment or other interest in entities
that provide wireless telecommunications services that could potentially compete
with Nextel. Under the relevant agreements, Mr. McCaw and his controlled
affiliates may not, for a period of time, 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 these opportunities
have first been presented to and waived or rejected by Nextel.
CONCERNS ABOUT HEALTH RISKS RELATING TO THE USE OF PORTABLE HANDSETS MAY AFFECT
NEXTEL'S PROSPECTS AND THE VALUE OF YOUR INVESTMENT.
Portable communications devices have been alleged to pose health risks
due to radio frequency emissions from these devices. Studies performed by
wireless telephone equipment manufacturers have investigated these allegations,
and a major industry trade association and governmental agencies have stated
publicly that the use of these phones poses no undue health risk. The actual or
perceived risk of portable 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.
IF NEXTEL'S OPERATIONS ARE DISRUPTED DUE TO YEAR 2000 READINESS ISSUES, THERE
WOULD BE AN ADVERSE EFFECT ON ITS GROWTH AND OPERATING RESULTS AND ON THE VALUE
OF YOUR INVESTMENT.
Nextel may be subject to risks associated with Year 2000 readiness,
including those associated with third parties. Nextel has not yet finally
determined its need for, or, if and where likely to be needed, finally
developed, contingency plans for resolving issues that may be identified and for
which remediation is not possible on a timely or cost-effective basis. If any of
these third parties, or Nextel, is unable to resolve material Year 2000
readiness issues on a timely or cost-effective basis, there would be an adverse
effect on Nextel, and on the value of your investment.
RISKS RELATING TO NEXTEL'S JOINT INVESTMENTS MAY ADVERSELY AFFECT NEXTEL'S
GROWTH AND OPERATING RESULTS AND THE VALUE OF YOUR INVESTMENT.
Nextel has entered into a contractual joint venture regarding its
ownership interests in and arrangements with Nextel Partners, Inc. and may enter
into other joint ventures or similar arrangements in the future. Outside the
United States, several of Nextel's international operations are conducted
through entities having one or more third-party owners, and some of these
entities are not controlled by Nextel. There are risks in participating in
arrangements of these types, including the risk that the other participants may
at any time have economic, business or legal interests or goals that are
inconsistent with those of the joint enterprise or Nextel. There also is the
risk that a participant may be unable to meet its economic or other obligations
to the joint enterprise and that Nextel may be required to fulfill some or all
of those obligations. Nextel also may be or become obligated to acquire all or a
portion of the ownership interest of some or all of the other participants in
these joint enterprises. In addition, to the extent that Nextel
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<PAGE> 17
participates in international arrangements of these types, the operations of the
relevant entity will be subject to various additional risks not present in
domestic joint enterprises.
RISKS RELATING TO NEXTEL'S FOREIGN OPERATIONS MAY ADVERSELY AFFECT NEXTEL'S
GROWTH AND OPERATING RESULTS AND THE VALUE OF YOUR INVESTMENT.
Nextel owns interests in and operates international wireless companies
through Nextel International, Inc. The risks that relate to these foreign
operations include:
- political, economic and social conditions in the foreign countries
where Nextel conducts operations;
- currency risks and exchange controls;
- potential inflation in the applicable foreign economies;
- the impact of import duties on the cost or prices of
infrastructure equipment and subscriber handsets;
- foreign taxation of earnings and payments received by Nextel
International, Inc. from its operating subsidiaries;
- regulatory changes affecting the telecommunications industry and
wireless communications; and
- operations being disrupted due to Year 2000 readiness issues
affecting Nextel International, Inc.
Nextel cannot assure you that the risks associated with its foreign
operations will not adversely affect its or Nextel International, Inc.'s
operating results or prospects, particularly as these operations expand in
scope, scale and significance.
RISK FACTORS RELATING TO THE COMMON STOCK
VOLATILITY IN THE PRICE OF THE COMMON STOCK COULD RESULT IN A LOWER TRADING
PRICE THAN YOUR PURCHASE PRICE.
The market price of the common stock may be adversely affected by
factors such as actual or anticipated fluctuations in Nextel's operating
results, acquisition activity, the impact of international markets, changes in
financial estimates by securities analysts, general market conditions, rumors
and other factors. Broad market fluctuations may adversely affect the market
price of the common stock. Nextel cannot assure you that the market price of the
common stock will not decline below the levels prevailing at the time of this
offering.
NEXTEL'S COMMITMENTS TO ISSUE ADDITIONAL COMMON STOCK MAY ADVERSELY AFFECT THE
MARKET PRICE OF ITS COMMON STOCK OR MAY IMPAIR NEXTEL'S ABILITY TO RAISE
CAPITAL.
Nextel currently has outstanding commitments in various forms, including
warrants, options and convertible securities, to issue a substantial number of
new shares of its common stock. The shares subject to these issuance
commitments, to some degree, will be issued in registered transactions and thus
will be freely tradeable. In many other instances, these shares will be subject
to grants of registration rights that, if and when exercised, would result in
those shares becoming freely tradeable. Nextel has also granted registration
rights with respect to a significant number of its outstanding shares, including
shares of common stock issuable upon conversion of securities issued in some
transactions. The exercise of registration rights by persons holding those
shares would permit those persons to sell those shares without regard to the
limitations of Rule 144 under the Securities Act of 1933. An increase in the
number of shares of Nextel's common stock that are or become freely tradeable
could adversely affect the price of the common stock and could impair Nextel's
ability to raise additional capital through the sale of its equity securities.
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PURCHASERS OF NEXTEL'S COMMON STOCK WILL SUFFER IMMEDIATE AND SUBSTANTIAL
DILUTION.
Purchasers of Nextel's common stock will suffer immediate and
substantial dilution of $90.32 per share and will experience further dilution
upon exercise or conversion of outstanding options, warrants and convertible
securities.
NEXTEL'S FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A VARIETY OF FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM CURRENT BELIEFS.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: A number of statements made in, or incorporated by reference into,
this prospectus are not historical or current facts, but deal with potential
future circumstances and developments. Those statements are qualified by the
inherent risks and uncertainties surrounding expectations generally, and also
may materially differ from Nextel's actual future experience involving any one
or more of these matters and subject areas. Nextel has attempted to identify, in
context, some 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 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 above "Risk Factors" section and elsewhere in this
prospectus, including, but not limited to:
- general economic conditions in the geographic areas and
occupational market segments 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 any
issues relating to, Nextel's digital mobile network performance;
- the continued successful performance of the technology being
deployed in Nextel's various market areas;
- the ability to achieve and maintain market penetration and average
subscriber revenue levels sufficient to provide financial
viability to Nextel's digital mobile network business;
- Nextel's ability to timely and successfully accomplish required
scale-up of its billing, collection, customer care and similar
back-room operations to keep pace with customer growth, increased
system usage rates and growth in levels of accounts receivables
being generated by the digital mobile network customer base;
- 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 personal
communication services;
- the ability to successfully develop or obtain from third parties,
and implement, Year 2000 readiness solutions in systems that are
critical to Nextel's business operations;
- future legislation or regulatory actions relating to specialized
mobile radio services, other wireless communications services or
telecommunications generally; and
- other risks and uncertainties described from time to time in
Nextel's reports and, with specific reference to risk factors
relating to international operations, in Nextel International,
Inc.'s reports, filed with the Securities and Exchange Commission,
including the Annual Reports on Form 10-K for the year ended
December 31, 1998 and the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999, of Nextel and
Nextel International, Inc.
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USE OF PROCEEDS
THE OFFERING
The net proceeds of the offering received by Nextel, after deducting the
underwriting discounts and commissions and other expenses of the offering, are
approximately $2.4 billion, or approximately $2.8 billion if the underwriters'
over-allotment option is exercised in full. Nextel intends to use the net
proceeds from the offering to fund capital expenditures, investments, working
capital needs and for other general corporate purposes.
LIQUIDITY AND NEED FOR FUNDING
Nextel and Nextel International, Inc. each are currently in the early
stages of developing their detailed business plans and related budgets for
calendar year 2000. These processes, and the resulting detailed business plans
and related budgets, are not likely to be finalized until late 1999 or early
2000. Moreover, any such plans and budgets that are developed and finalized by
Nextel and Nextel International, Inc. may later be revised by them in light of
competitive factors in the relevant markets, new business opportunities,
including additional spectrum acquisitions and other strategic or opportunistic
transactions or investments, prevailing conditions in domestic and international
debt and equity capital markets and the actual operating results and apparent
prospects of their respective businesses.
Currently, Nextel expects to increase the level of domestic and
international capital expenditures in the balance of 1999 and during 2000. This
increase is expected to be driven by several factors, including:
- the contemplated expansion of digital mobile network coverage around
most major domestic and selected international market areas;
- the contemplated construction of additional cell sites to increase
system capacity and improve system quality, and the installation of
related switching equipment, in the existing core market coverage
areas of Nextel and Nextel International, Inc., including the
installation of system infrastructure and cell sites sufficient to
meet expected increases in system demand four to six months ahead of
anticipated growth;
- the carrying over of certain planned system capital expenditures from
late 1999 to early 2000; and
- the installation of system capital hardware and software items in
connection with the planned initial commercial launch of the domestic
wireless data service offering nationwide in 2000.
Taking such anticipated capital expenditures into account in both the
Nextel and Nextel International, Inc., organizations, including an assumption
that the bulk of the Nextel International, Inc. funding needs for calendar year
2000 will be satisfied with funds invested or advanced by Nextel, and factoring
in anticipated operating cash flow performance of the existing and planned
wireless businesses, both domestic and international, Nextel believes that it
will be able to fully fund both its and Nextel International, Inc.'s operations
through calendar year 2000. This conclusion is premised on the availability of
funds from the following sources:
- consolidated cash on hand as of September 30, 1999 of approximately
$1.4 billion;
- the continued availability of the approximately $1.5 billion of
undrawn capacity as of September 30, 1999 under Nextel's bank credit
facility;
- an increase of at least $1.7 billion in additional available capacity
through an increase of the facility, which is, as of November 1, 1999,
currently in syndication and is expected to be concluded in November
1999; and
- the net proceeds of this offering.
Nextel cannot assure you that the conditions to accessing funding under
the current or contemplated increased bank facility will be satisfied. In
addition, if Nextel's and/or Nextel International,
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Inc.'s business plans change, or if economic conditions in either of their
markets generally or competitive practices in the mobile wireless
telecommunications industry change materially from those currently prevailing or
from those now anticipated in the next calendar year, or if other presently
unexpected circumstances are encountered that have a material effect on the cash
flow and/or profitability of the domestic or international mobile wireless
businesses conducted by Nextel and/or Nextel International, Inc., the
anticipated cash needs of those businesses, and the conclusions as to the
adequacy of the available sources, each also could change significantly.
Finally, the above estimate and conclusions specifically exclude the impact of
any significant acquisition transaction, or the pursuit of any significant new
business opportunity not now contemplated, by Nextel or Nextel International,
Inc. in the periods referenced above. Any such acquisition or new business
opportunity could involve significant additional funding needs in excess of the
identified currently arranged sources, and thus could require Nextel and/or
Nextel International, Inc. to raise additional equity and/or debt funding to
meet those needs.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Nextel's common stock is quoted on the Nasdaq National Market under the
trading symbol "NXTL." The following table lists, on a per share basis for the
periods indicated, the high and low closing sale prices for the common stock as
reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
1997 ------- -------
<S> <C> <C>
First Quarter............................................... $15.750 $12.875
Second Quarter............................................ 19.188 12.250
Third Quarter............................................. 29.438 19.688
Fourth Quarter............................................ 31.000 22.500
1998
First Quarter............................................. 33.750 22.125
Second Quarter............................................ 33.750 23.375
Third Quarter............................................. 31.000 18.063
Fourth Quarter............................................ 23.750 17.313
1999
First Quarter............................................. 38.438 25.875
Second Quarter............................................ 50.188 34.625
Third Quarter............................................. 75.188 46.000
Fourth Quarter (through November 1, 1999)................. 87.000 70.250
</TABLE>
As of October 29, 1999, there were about 3,515 holders of record of the
common stock. On November 1, 1999, the last reported sale price of the common
stock as quoted on the Nasdaq National Market was $83 13/16 per share.
Nextel has not paid any dividends on its common stock, and does not plan
to pay dividends on its common stock for the foreseeable future. Except as
provided in the following paragraph, Nextel does not intend to declare or pay
any dividends on any of its preferred stock. Financing agreements to which
Nextel is a party prohibit, and are expected to operate so as to continue to
prohibit, Nextel from paying cash dividends except in compliance with specified
financial covenants. In addition, the terms of Nextel's bank credit agreement
limits the amount of cash available to make dividends, loans and cash
distributions to Nextel from Nextel's subsidiaries that operate the digital
mobile network in Nextel's markets. Provisions in the indentures to which Nextel
International, Inc. is a party also place significant restrictions on Nextel's
ability to receive cash from Nextel International, Inc. or any of Nextel
International, Inc.'s subsidiaries. Accordingly, while these restrictions are in
place, any profits generated by these subsidiaries will not be available to
Nextel for, among other things, payment of dividends.
Nextel anticipates that for the foreseeable future any cash flow
generated from its operations will be used to develop and expand its business.
Any future determination as to the payment of dividends on the common stock will
be at the discretion of Nextel's board of directors and will depend upon
Nextel's operating results, financial condition and capital requirements,
contractual restrictions, general business conditions and other factors that the
board of directors deems relevant. There can be no assurance that Nextel will
pay cash dividends at any time in the future. Under specified limited
circumstances, Nextel may be obligated to pay cash dividends on its class A
preferred stock and, after specified dates, will be obligated to pay cash
dividends on its series D preferred stock and series E preferred stock.
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<PAGE> 22
CAPITALIZATION
The following table presents the capitalization of Nextel as of
September 30, 1999, based on common stock outstanding on that date of
315,065,052 shares, on an actual basis and as adjusted to reflect the issuance
by Nextel of the 30,000,000 shares of common stock offered hereby, after
deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the net proceeds from this offering. The
capitalization information set forth in the table below should be read together
with the more detailed consolidated financial statements and related notes
incorporated by reference in this prospectus. The shares of common stock to be
outstanding after this offering exclude 90,162,491 shares of Nextel common stock
issuable upon the exercise or conversion of outstanding options, warrants and
convertible securities.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents (1)............................... $ 1,379 $ 3,823
======== ========
Current portion of long-term debt and finance obligation.... $ 28 $ 28
======== ========
Long-term debt, net of current portion:
11.5% Senior redeemable discount notes due 2003........... $ 36 $ 36
9.75% Senior redeemable discount notes due 2004........... 1,127 1,127
10.125% Senior redeemable OneComm discount notes due
2004................................................... 352 352
12.25% Senior redeemable Dial Page discount notes due
2004................................................... 8 8
10.25% Senior redeemable Dial Page discount notes due
2005................................................... 94 94
13.0% Senior redeemable Nextel International discount
notes due 2007......................................... 677 677
10.65% Senior redeemable discount notes due 2007.......... 618 618
9.75% Senior serial redeemable discount notes due 2007.... 842 842
9.95% Senior serial redeemable discount notes due 2008.... 1,174 1,174
12.125% Senior redeemable Nextel International discount
notes due 2008......................................... 481 481
12% Senior serial redeemable notes due 2008............... 296 296
4.75% Convertible senior notes due 2007................... 600 600
Domestic bank credit facility, interest payable quarterly
at an adjusted rate calculated based either on the
prime rate or LIBOR.................................... 1,795 1,795
Nextel International vendor credit facility, interest
payable semiannually at 2.5% over the prime rate....... 242 242
Nextel Argentina bank credit facility, interest payable
quarterly at an adjusted rate calculated based either
on the prime rate or LIBOR............................. 102 102
-------- --------
Total long-term debt................................... 8,444 8,444
Finance obligation, net of current portion.................. 547 547
Series D Exchangeable Preferred Stock, Mandatorily
Redeemable 2009........................................... 662 662
Series E Exchangeable Preferred Stock, Mandatorily
Redeemable 2010........................................... 897 897
Zero Coupon Convertible Preferred Stock, Mandatorily
Redeemable 2013........................................... 161 161
Stockholders' equity:
Preferred stock, Class A convertible redeemable, 7,905,981
shares issued and outstanding.......................... 291 291
Preferred stock, Class B convertible, 82 shares issued and
outstanding............................................ -- --
Common stock, Class A, 315,451,507 shares issued and
315,065,052 shares outstanding, and 345,451,507 shares
issued and 345,065,052 shares outstanding, as
adjusted............................................... -- --
Common stock, Class B, non-voting convertible, 17,830,000
shares issued and outstanding.......................... -- --
Paid-in capital............................................. 5,303 7,747
Accumulated deficit......................................... (5,420) (5,420)
Treasury shares, at cost, 386,455 shares (Class A common
stock).................................................... (8) (8)
Deferred compensation, unrealized gain on investment and
cumulative translation adjustment......................... (112) (112)
-------- --------
Total stockholders' equity............................. 54 2,498
-------- --------
Total capitalization.............................. $ 10,765 $ 13,209
======== ========
</TABLE>
- ---------------
(1) Included in cash and cash equivalents is about $78 million held by Nextel
International, Inc. and its subsidiaries as of September 30, 1999, which are
not available to fund any of the cash needs of Nextel's domestic digital
mobile and analog specialized mobile radio businesses due to restrictions
contained in Nextel International, Inc.'s indentures.
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<PAGE> 23
DILUTION
The following table provides information concerning net tangible book
value and pro forma dilution as of September 30, 1999. The net tangible book
value deficit of the common stock as of September 30, 1999 was about $4.8
billion or $14.44 per share. Net tangible book value deficit per share
represents the amount of Nextel's stockholders' equity, less intangible assets,
divided by 332,895,052 shares of common stock outstanding on September 30, 1999,
after giving effect to the conversion of the outstanding shares of Nextel's
non-voting common stock.
For purposes of the following table, net tangible book value dilution
per share represents the difference between $83.81 and the pro forma net
tangible book value deficit per share of common stock as of September 30, 1999.
After giving effect to the offering of the common stock and taking into account
the expenses to Nextel, the net tangible book value deficit per share of Nextel
as of September 30, 1999 would have been $6.51. The following table illustrates
this pro forma per share dilution:
<TABLE>
<S> <C> <C>
Offering price of the common stock.......................... $ 83.81
Net tangible book value deficit per share as of September
30, 1999............................................... (14.44)
Increase per share attributable to new investors.......... 7.93
-------
Pro forma net tangible book value deficit per share after
the offering.............................................. (6.51)
-------
Dilution of net tangible book value per share to new
investors................................................. $ 90.32
=======
</TABLE>
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<PAGE> 24
DESCRIPTION OF CAPITAL STOCK
The following summary is not complete and is subject to, and qualified
in its entirety by, Nextel's certificate of incorporation and by-laws.
GENERAL
Under its certificate of incorporation, Nextel has the authority to
issue 613,883,948 shares of capital stock, which are currently divided into nine
classes or series as follows:
- 515,000,000 shares of class A common stock, par value $0.001 per
share (referred to in this prospectus as the "common stock");
- 35,000,000 shares of class B nonvoting common stock, par value
$0.001 per share (referred to in this prospectus as the "nonvoting
common stock");
- 26,941,933 shares of class A convertible redeemable preferred
stock, stated value $36.75 per share (referred to in this
prospectus as the "class A preferred stock");
- 82 shares of class B convertible preferred stock, stated value
$1.00 per share; (referred to in this prospectus as the "class B
preferred stock");
- 26,941,933 shares of class C convertible redeemable preferred
stock, stated value $36.75 per share; (referred to in this
prospectus as the "class C preferred stock");
- 1,600,000 shares of series D preferred stock;
- 2,200,000 shares of series E preferred stock;
- 800,000 shares of zero coupon convertible preferred stock; and
- 5,400,000 shares of undesignated preferred stock.
Equiserve LLP acts as transfer agent and registrar for the common stock.
COMMON STOCK
VOTING
Except as required by law with respect to shares of each of class A
preferred stock, class B preferred stock and class C preferred stock, and except
with respect to matters as to which shares of a class or series of preferred
stock vote separately as a class, the holders of common stock are entitled to
one vote per share on all matters to be voted on by the stockholders of Nextel.
The holders of the nonvoting common stock have no right to vote on any matters
to be voted on by the stockholders of Nextel, except as follows and as otherwise
required by law. The holders of the nonvoting common stock do have the right to
vote as a separate class, with each share having one vote, on:
- any merger, consolidation, reorganization or reclassification of
Nextel or its shares of capital stock;
- any amendment to the certificate of incorporation; or
- any liquidation, dissolution or winding up of Nextel;
(each of these events being a "Class B Fundamental Change") in which shares of
the nonvoting common stock would be treated differently than shares of the
common stock, other than a Class B Fundamental Change in which the only
difference in the treatment is that the holders of the common stock would be
entitled to receive equity securities with full voting rights and the holders of
the nonvoting common stock would be entitled to receive equity securities which
have voting rights substantially identical to the voting rights of the nonvoting
common stock and are convertible in connection with any Voting Conversion Event,
as defined below, on a share for share basis, into the voting securities to
which the holders of the common stock are entitled. Nextel's certificate of
incorporation does not provide for cumulative voting in the election of
directors.
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<PAGE> 25
DIVIDENDS
Subject to the declaration and payment of dividends upon the preferred
stock of Nextel at the time outstanding, to the extent of any preference to
which that preferred stock is entitled, and after the provision for any sinking
or purchase fund or funds for any series of the preferred stock has been
complied with, the Nextel board of directors may declare and pay dividends on
the common stock and the nonvoting common stock, payable in cash or other
consideration, out of funds legally available. If dividends are declared on the
common stock that are payable in shares of common stock, then dividends payable
at the same rate in shares of nonvoting common stock must be declared on any
outstanding shares of nonvoting common stock.
Nextel has not paid any dividends on its common stock, and does not plan
to pay any dividends on its common stock for the foreseeable future. See "Price
Range of Common Stock and Dividend Policy."
LIQUIDATION, SUBDIVISION OR COMBINATION
In the event of any liquidation, dissolution or winding up of Nextel or
upon the distribution of the assets of Nextel, all assets and funds remaining
after payment in full of the debts and liabilities of Nextel, and after the
payment to the holders of the then outstanding preferred stock of the full
preferential amounts to which they were entitled, would be divided and
distributed among the holders of the common stock and nonvoting common stock
ratably. In no event will either common stock or nonvoting common stock be
split, divided or combined unless the other is proportionately split, divided or
combined.
CONVERTIBILITY OF NONVOTING COMMON STOCK INTO COMMON STOCK
Upon the actual or expected occurrence of any Voting Conversion Event,
as defined below, each share of nonvoting common stock which is being or has
been distributed, disposed of or sold, or is expected to be distributed,
disposed of or sold, in connection with that Voting Conversion Event will be
convertible at the option of the holder into one fully paid and nonassessable
share of common stock. If any shares of nonvoting common stock are converted
into shares of common stock in connection with a Voting Conversion Event,
however, and any of those shares of common stock are not actually distributed,
disposed of or sold according to the Voting Conversion Event, those shares of
common stock that are not distributed, disposed of or sold will be promptly
converted back into the same number of shares of nonvoting common stock.
A "Voting Conversion Event" means:
- any public offering or public sale of securities of Nextel
including a public offering registered under the Securities Act of
1933 and a public sale pursuant to Rule 144 of the Securities and
Exchange Commission or any similar rule then in force;
- any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that
sale, that person or group of persons would in the aggregate own
or control securities that possess in the aggregate the ordinary
voting power to elect a majority of Nextel's board of directors,
provided that the sale has been approved by Nextel's board of
directors or any authorized committee;
- any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that
sale, that person or group of persons in the aggregate would own
or control securities of Nextel, excluding any nonvoting common
stock being converted and disposed of in connection with the
Voting Conversion Event, that possess in the aggregate the
ordinary voting power to elect a majority of Nextel's board of
directors;
- any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that
sale, that person or group of persons would not, in the aggregate,
own, control or have the right to acquire more than two percent of
the outstanding securities of any class of voting securities of
Nextel; and
- any distribution, disposition or sale of any securities of Nextel
to a person or group of persons, within the meaning of the
Securities Exchange Act of 1934, in connection with a
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<PAGE> 26
merger, consolidation or similar transaction if, after that
transaction, that person or group of persons will own or control
securities that constitute in the aggregate the ordinary voting
power to elect a majority of the surviving corporation's
directors, provided that the transaction has been approved by
Nextel's board of directors or any authorized committee.
PREFERRED STOCK
Under the terms of the Securities Purchase Agreement dated as of April
4, 1995, as amended, among Nextel, Digital Radio L.L.C. and Craig O. McCaw (the
"McCaw Securities Purchase Agreement"), Nextel issued to Digital Radio L.L.C.
about 8.2 million shares of class A preferred stock (of which about 7.9 million
were outstanding on September 30, 1999), each with a stated value of $36.75 per
share, and 82 shares of class B preferred stock. These shares of class A
preferred stock are convertible, in specified circumstances, into an equal
number of shares of class C preferred stock. The currently outstanding shares of
class A preferred stock and any shares of class C preferred stock issued upon
conversion are convertible into about 23.7 million shares of common stock in the
aggregate, and the class B preferred stock is convertible into 82 shares of
common stock. In addition, Nextel has issued shares of the series D preferred
stock, the series E preferred stock and the zero coupon convertible preferred
stock. Some of the significant terms of each class and series of preferred stock
are summarized below.
CLASS A PREFERRED STOCK
The class A preferred stock is the primary mechanism for providing
Digital Radio L.L.C. with the economic benefits and corporate governance rights
contemplated by the McCaw Securities Purchase Agreement. Holders of class A
preferred stock, voting separately as a class, are entitled to elect three
members of the board of directors or, if greater than three, the number of
directors, rounded up to the nearest whole number, equal to 25% of the entire
board of directors (the "Class A Directors"), subject to the termination of
these rights if Digital Radio L.L.C.'s equity interest in Nextel falls below
specified levels. For so long as the operations committee of Nextel's board of
directors is in existence, Digital Radio L.L.C. is entitled to have a majority
of the members of the operations committee represented by Class A Directors or
directors designated by Digital Radio L.L.C. under the terms of the class B
preferred stock or the McCaw Securities Purchase Agreement. With respect to
matters other than the election of directors, shares of class A preferred stock
vote together as a class with shares of common stock and each share of class A
preferred stock is entitled to a number of votes equal to the number of shares
of common stock into which that share is convertible.
The operations committee consists of five members, three of whom are
entitled to be selected from among Digital Radio L.L.C.'s representatives on the
board of directors, as described above. 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 board of directors; and
nomination and oversight of specified executive officers. The board of
directors, by a majority vote, may override actions taken or proposed by the
operations committee, although doing so would give rise to a $25 million
liquidated damages payment to Digital Radio L.L.C.; the commencement of accrual
of a 12% dividend payable on the stated value of all outstanding shares of class
A preferred stock, with an aggregate stated value of about $291 million; and the
immediate vesting of the options to purchase 1,000,000 shares granted to an
affiliate of Digital Radio L.L.C. However, the board of directors, by a defined
super-majority vote, retains the power to override actions taken or proposed by
the operations committee without triggering these consequences. In addition, the
board of directors also may act to terminate the operations committee, although
this action by the board of directors would, in specified circumstances, result
in the obligation to make the $25 million liquidated damages payment and result
in the commencement of the 12% dividend accrual and the accelerated vesting of
the related options. The McCaw Securities Purchase Agreement, the certificate of
incorporation, and the Nextel by-laws also delineate a number of circumstances,
chiefly involving or resulting from specified events with respect to Digital
Radio L.L.C. or Mr. McCaw, in which
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<PAGE> 27
the operations committee could be terminated but the liquidated damages payment,
dividend accrual and vesting of options would not be required. Except for the
accrual of the 12% dividend in the circumstances described above, shares of
class A preferred stock are entitled to dividends only to the extent declared or
paid with respect to common stock, in amounts equal to the amounts that would be
received had the class A preferred stock been converted into common stock. Upon
liquidation, dissolution or winding up of Nextel, the holders of class A
preferred stock are entitled to receive a liquidation preference equal to the
stated value of the class A preferred stock plus any accrued but unpaid
dividends.
Each share of class A preferred stock is convertible at the election of
the holder into three shares of common stock, subject to specified adjustments.
Upon the occurrence of specified events, the shares of class A preferred stock
are automatically converted into shares of common stock. In addition, shares of
class A preferred stock are automatically converted into shares of class C
preferred stock on a one-for-one basis upon the occurrence of specified events,
including the reduction of Digital Radio L.L.C.'s ownership interest below
specified levels and foreclosure by a secured party upon shares of class A
preferred stock pledged to that secured party. Shares of class A preferred stock
are also redeemable at Nextel's option upon the occurrence of specified events
constituting a change in control, as defined in the terms of the certificate of
incorporation, at a redemption price equal to the stated value of the class A
preferred stock plus the amount of any accrued or declared but unpaid dividends
on the class A preferred stock.
CLASS B PREFERRED STOCK
The purpose of the class B preferred stock is to provide a protection
for Digital Radio L.L.C.'s right to proportionate representation on the board of
directors, to the extent not provided by Digital Radio L.L.C.'s ownership of
class A preferred stock, and to establish a mechanism for the payment of the $25
million liquidated damages payment contemplated by the McCaw Securities Purchase
Agreement if the board of directors takes specified actions with respect to the
operations committee that give rise to this payment. Shares of class B preferred
stock are automatically converted on a one-for-one basis into shares of common
stock if Digital Radio L.L.C.'s equity interest in Nextel falls below specified
levels or if specified transfers of class B preferred stock occur.
CLASS C PREFERRED STOCK
The purpose of the class C preferred stock is to protect the economic
attributes of the class A preferred stock if specified events resulting in the
termination of the corporate governance rights associated with the class A
preferred stock occur. The terms of the class C preferred stock are
substantially the same as the terms of the class A preferred stock except that
holders of class C preferred stock have no special voting rights in the election
of directors, including the appointment of directors to the operations
committee, and are not entitled to the 12% dividend in the circumstances in
which shares of class A preferred stock would be entitled to that dividend.
SERIES D PREFERRED STOCK
The series D preferred stock ranks equally with the series E preferred
stock and the zero coupon convertible preferred stock in all respects, and ranks
equally with the class A preferred stock, the class B preferred stock and the
class C preferred stock in all respects except two. First, the series D
preferred stock is junior with respect to accruals and payments of the special
12% dividends on the class A preferred stock discussed above. Second, the series
D preferred stock is junior with respect to the $25 million cash payment on the
class B preferred stock discussed above. The circumstances under which these
payments must be made are described above. Dividends on the series D preferred
stock are cumulative at 13% per year and are payable quarterly in cash or, on or
before July 15, 2002, at the sole option of Nextel, in additional shares of
series D preferred stock. The series D preferred stock is mandatorily redeemable
on July 15, 2009. It may be redeemed at specified prices in whole or in part at
Nextel's option after December 15, 2005 and, in specified circumstances, after
July 15, 2002. The series D preferred stock is also exchangeable, in whole but
not in part, at Nextel's option at any time after December 15, 2005, and sooner
in some circumstances, into subordinated exchange debentures.
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<PAGE> 28
SERIES E PREFERRED STOCK
The series E preferred stock ranks equally with the series D preferred
stock and the zero coupon convertible preferred stock in all respects, and ranks
equally with the class A preferred stock, the class B preferred stock and the
class C preferred stock in all respects except two. First, the series E
preferred stock is junior with respect to accruals and payments of the special
12% dividends on the class A preferred stock discussed above. Second, the series
E preferred stock is junior with respect to the $25 million cash payment on the
class B preferred stock discussed above. The circumstances under which these
payments must be made are described above. Dividends on the series E preferred
stock are cumulative at 11.125% per year and are payable quarterly in cash or,
on or before February 15, 2003, at the sole option of Nextel, in additional
shares of series E preferred stock. The series E preferred stock is mandatorily
redeemable on February 15, 2010. It may be redeemed at specified prices in whole
or in part at Nextel's option after December 15, 2005 and, in specified
circumstances, after February 15, 2003. The series E preferred stock is also
exchangeable, in whole but not in part, at Nextel's option at any time after
December 15, 2005, and sooner in some circumstances, into subordinated exchange
debentures.
ZERO COUPON CONVERTIBLE PREFERRED STOCK DUE 2013
The zero coupon convertible preferred stock ranks equally with the
series D preferred stock and the series E preferred stock in all respects, and
ranks equally with the class A preferred stock, the class B preferred stock, and
the class C preferred stock in all respects except two. First, the zero coupon
convertible preferred stock is junior with respect to accruals and payments of
the special 12% dividends on the class A preferred stock discussed above.
Second, the zero coupon convertible preferred stock is junior with respect to
the $25 million cash payment on the class B preferred stock discussed above. The
circumstances under which these payments must be made are described above. The
zero coupon convertible preferred stock had an initial liquidation preference of
$253.675 per share. No dividends are payable with respect to the zero coupon
convertible preferred stock; however, the liquidation preference accretes from
the issuance date at an annual rate of 9.25% compounded quarterly. The zero
coupon convertible preferred stock is convertible at the option of the holders
before redemption or maturity into common stock at a conversion rate of 9.7441
shares of common stock per share of zero coupon convertible preferred stock,
subject to adjustment upon the occurrence of specific events. The zero coupon
convertible preferred stock is redeemable at Nextel's option beginning December
23, 2005 and may be tendered by the holders for acquisition by Nextel on
December 23, 2005 and 2008. The zero coupon convertible preferred stock is
mandatorily redeemable on December 23, 2013 at the fully accreted liquidation
preference of $1,000 per share. Nextel may elect, subject to the satisfaction of
specific requirements, to pay any redemption or tender price with common stock.
RELEVANT PROVISIONS OF THE CERTIFICATE OF INCORPORATION, THE BY-LAWS AND
DELAWARE LAW
The certificate of incorporation and the by-laws contain provisions that
could make more difficult the acquisition of Nextel by means of a tender offer,
a proxy contest or otherwise. These provisions are expected to discourage
specific types of coercive takeover practices and inadequate takeover bids and
to encourage persons seeking to acquire control of Nextel to first negotiate
with Nextel. Although these provisions may have the effect of delaying,
deferring or preventing a change in control of Nextel, Nextel believes that the
benefits of increased protection of Nextel's potential ability to negotiate with
the proponent of an unfriendly or unsolicited proposal to acquire or restructure
Nextel outweigh the disadvantages of discouraging these proposals because, among
other things, negotiation of such proposals could result in an improvement of
their terms. The description below is intended as a summary only and is
qualified in its entirety by reference to the certificate of incorporation and
the by-laws.
BOARD OF DIRECTORS
The certificate of incorporation provides that the Nextel board of
directors is divided into three classes of directors, with each class having a
number of directors as nearly equal as possible and with the term of each class
expiring in a different year. The by-laws of Nextel provide that the Nextel
board of directors will consist of one or more members, and that the number of
directors will be determined by resolution of the Nextel board of directors or
by the stockholders at their annual meeting or a special
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<PAGE> 29
meeting. Nextel is a party to agreements with some of its stockholders that
entitle specified stockholders to name specified nominees to be elected to the
Nextel board of directors; the agreements might require Nextel to increase the
size of the Nextel board of directors. Additionally, the holders of class A
preferred stock, voting separately as a class, are entitled to elect a specified
number of members of the Nextel board of directors. Under the terms of the McCaw
Securities Purchase Agreement, Nextel cannot increase the size of the Nextel
board of directors to be greater than sixteen (16) members without the consent
of Digital Radio L.L.C. The Nextel board of directors currently consists of nine
directors. Subject to any rights of holders of preferred stock, a majority of
the Nextel board of directors then in office has the sole authority to fill any
vacancies on the Nextel board of directors. Under Delaware law, stockholders may
remove members of a classified board only for cause.
STOCKHOLDER ACTIONS AND SPECIAL MEETINGS
The certificate of incorporation provides that stockholder action can be
taken only at an annual or special meeting of stockholders and prohibits
stockholder action by written consent instead of a meeting. The by-laws provide
that, subject to the rights of holders of any series of preferred stock, special
meetings of stockholders may be called only by the president of Nextel, at the
request of a majority of the Nextel board of directors or at the request of
stockholders owning a majority of the entire capital stock of Nextel issued and
outstanding and entitled to vote.
ANTI-TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law ("DGCL") is
applicable to corporate takeovers in Delaware. Subject to specified exceptions
listed in this statute, Section 203 of the DGCL provides that a corporation may
not engage in any business combination with any "interested stockholder" for a
three-year period following the date that the stockholder becomes an interested
stockholder unless:
- prior to that date, the board of directors of the corporation
approved either the business combination or the transaction
which resulted in the stockholder becoming an interested
stockholder;
- upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction
commenced, excluding specified shares; or
- on or subsequent to that date, the business combination is
approved by the board of directors of the corporation and by
the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
Except as specified in Section 203 of the DGCL, an interested
stockholder is defined to include any person that is:
- the owner of 15% or more of the outstanding voting stock of
the corporation,
- an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the
corporation at any time within three years immediately prior
to the relevant date, and
- the affiliates and associates of the above.
Under specific circumstances, Section 203 of the DGCL makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may, by adopting an amendment to the corporation's certificate of
incorporation or bylaws, elect not to be governed by this section, effective
twelve months after adoption. Nextel's certificate of incorporation and by-laws
do not exclude Nextel from the restrictions imposed under Section 203 of the
DGCL. It is anticipated that the provisions of Section 203 of the DGCL may
encourage companies interested in acquiring Nextel to negotiate in advance with
the Nextel board of directors since the stockholder approval requirement would
be avoided if a majority of the directors then in office approve either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder.
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<PAGE> 30
PRINCIPAL UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. HOLDERS
GENERAL
The following is a general discussion of the principal United States
federal income and estate tax consequences of the ownership and disposition of
Nextel common stock that may be relevant to you if you are a non-U.S. holder.
For purposes of this summary, a non-U.S. holder is a beneficial owner of Nextel
common stock that is not, for United States federal income tax purposes:
- a citizen or individual resident of the United States;
- a corporation, or other entity treated as a corporation, created in or
under the laws of the United States or of any state;
- an estate, the income of which, is subject to United States federal
income taxation regardless of its source;
- a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust, including certain trusts in
existence on August 20, 1996 and treated as United States persons
prior to this date that timely elected to continue to be treated as
United States persons; or
- a partnership that is created or organized in or under the laws of the
United States or of any state.
This discussion does not address all aspects of United States federal
income and estate taxation that may be relevant to you in light of your
particular circumstances, and does not address any foreign, state or local tax
consequences. Furthermore, this discussion is based on provisions of the
Internal Revenue Code, Treasury regulations and administrative and judicial
interpretations as of the date hereof. All of these are subject to change,
possibly with retroactive effect, or different interpretations. If you are
considering buying Nextel common stock you should consult your own tax advisor
about current and possible future tax consequences of holding and disposing of
Nextel common stock in your particular situation.
DISTRIBUTIONS
Nextel has not paid any dividends on its common stock, and does not plan
to pay any dividends on its common stock for the foreseeable future. However, if
Nextel does pay dividends on its common stock, those dividends generally will
constitute dividends for United States federal income tax purposes to the extent
paid from Nextel's current or accumulated earnings and profits, as determined
under United States federal income tax principles. To the extent such dividends
exceed Nextel's current or accumulated earnings and profits, the dividends will
constitute a return of capital that will be applied against and will reduce your
basis in Nextel common stock, but not below zero, and then will be treated as
gain from the sale of the stock. Dividends paid to a non-U.S. holder that are
not effectively connected with a United States trade or business of the non-U.S.
holder will, to the extent paid out of earnings and profits, be subject to
United States withholding tax at a 30 percent rate or, if a tax treaty applies,
a lower rate specified by the treaty. To receive a reduced treaty rate, a
non-U.S. holder must furnish to Nextel or its paying agent a duly completed Form
1001 or Form W-8BEN, or substitute form, certifying to its qualification for
such rate.
Currently, withholding generally is imposed on the gross amount of a
distribution, regardless of whether Nextel has sufficient earnings and profits
to cause the distribution to be a dividend for United States federal income tax
purposes. However, withholding on distributions made after December 31, 2000 may
be on less than the gross amount of the distribution if the distribution exceeds
a reasonable estimate made by Nextel of its accumulated and current earnings and
profits.
Dividends that are effectively connected with the conduct of a trade or
business within the United States of a non-U.S. holder and, if a tax treaty
applies, are attributable to a United States permanent establishment of the
non-U.S. holder, are exempt from United States federal withholding tax, provided
that the non-U.S. holder furnishes to Nextel or its paying agent a duly
completed Form 4224 or Form W-8ECI, or substitute form, certifying the
exemption. However, dividends exempt from United States withholding because they
are effectively connected or they are attributable to a United States permanent
establishment
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are subject to United States federal income tax on a net income basis at the
regular graduated United States federal income tax rates. Any such effectively
connected dividends received by a foreign corporation may, under certain
circumstances, be subject to an additional "branch profits tax" at a 30 percent
rate or a lower rate specified by an applicable income tax treaty.
Under current United States Treasury regulations, dividends paid before
January 1, 2001 to an address outside the United States are presumed to be paid
to a resident of the country of address for purposes of the withholding
discussed above and for purposes of determining the applicability of a tax
treaty rate. However, United States Treasury regulations applicable to dividends
paid after December 31, 2000 eliminate this presumption, subject to certain
transition rules.
For dividends paid after December 31, 2000, a non-U.S. holder generally
will be subject to United States backup withholding tax at a 31 percent rate
under the backup withholding rules described below, rather than at a 30 percent
rate or a reduced rate under an income tax treaty, as described above, unless
the non-U.S. holder complies with certain Internal Revenue Service ("IRS")
certification procedures or, in the case of payments made outside the United
States with respect to an offshore account, certain IRS documentary evidence
procedures. Further, to claim the benefit of a reduced rate of withholding under
a tax treaty for dividends paid after December 31, 2000, a non-U.S. holder must
comply with certain modified IRS certification requirements. Special rules also
apply to dividend payments made after December 31, 2000 to foreign
intermediaries, United States or foreign wholly owned entities that are
disregarded for United States federal income tax purposes and entities that are
treated as fiscally transparent in the United States, the applicable income tax
treaty jurisdiction, or both. You should consult your own tax advisor concerning
the effect, if any, of the rules affecting post-December 31, 2000 dividends on
your possible investment in Nextel common stock.
A non-U.S. holder may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund along with the required information with
the IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of
Nextel common stock unless one of the following applies:
- The gain is effectively connected with a trade or business of the
non-U.S. holder in the United States and, if a tax treaty applies,
the gain is attributable to a United States permanent establishment
maintained by the non-U.S. holder. In this case, the non-U.S. holder
will, unless an applicable treaty provides otherwise, be taxed on
its net gain derived from the sale under regular graduated United
States federal income tax rates. If the non-U.S. holder is a foreign
corporation, it may be subject to an additional branch profits tax
equal to 30 percent of its effectively connected earnings and
profits within the meaning of the Internal Revenue Code for the
taxable year, as adjusted for certain items, unless it qualifies for
a lower rate under an applicable income tax treaty and duly
demonstrates such qualification.
- The non-U.S. holder is an individual, holds Nextel common stock as a
capital asset, is present in the United States for 183 or more days
in the taxable year of the disposition, and certain other conditions
are met. In this case, the non-United States holder will be subject
to a flat 30 percent tax on the gain derived from the sale, which
may be offset by certain United States capital losses.
- Nextel is or has been a "United States real property holding
corporation" for United States federal income tax purposes at any
time during the shorter of the five-year period ending on the date
of the disposition or the period during which the non-United States
holder held Nextel common stock. Even if Nextel is or was to become
a United States real property holding corporation, any gain
recognized by a non-U.S. holder still would not be subject to United
States federal income tax if Nextel common stock continues to be
"regularly traded on an established securities market" and the
non-U.S. holder did not own, actually or constructively,
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at any time during the shorter of the periods described above, more
than five percent of this class of Nextel common stock.
FEDERAL ESTATE TAX
Common stock owned or treated as owned by an individual non-U.S. holder
at the time of death, or common stock as to which the non-U.S. holder made
certain lifetime transfers, will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Under United States Treasury regulations, Nextel must report annually to
the IRS and to each non-U.S. holder the amount of dividends paid to such holder
and the tax withheld with respect to such dividends. These information reporting
requirements apply even if withholding was not required because the dividends
were effectively connected dividends or withholding was reduced by an applicable
income tax treaty. Pursuant to an applicable tax treaty, information may also be
made available to the tax authorities in the country in which the non-United
States holder resides.
United States federal backup withholding generally is a withholding tax
imposed at the rate of 31 percent on certain payments to persons that fail to
furnish certain required information. Backup withholding generally will not
apply to dividends paid before January 1, 2001 to non-United States holders. See
the discussion under "Distribution" above for rules regarding reporting
requirements to avoid backup withholding on dividends paid after December 31,
2000.
As a general matter, information reporting and backup withholding will
not apply to a payment by or through a foreign office of a foreign broker of the
proceeds of a sale of Nextel common stock effected outside the United States.
However, information reporting requirements, but not backup withholding, will
apply to a payment by or through a foreign office of a broker of the proceeds of
a sale of Nextel common stock effected outside the United States if that broker:
- is a United States person for United States federal income tax
purposes;
- is a foreign person that derives 50 percent or more of its gross
income for certain periods from the conduct of a trade or business
in the United States;
- is a "controlled foreign corporation" as defined in the Internal
Revenue Code; or
- is a foreign partnership with certain United States connections, for
payments made after December 31, 2000.
Information reporting requirements will not apply in the above cases if
the broker has documentary evidence in its records that the holder is a non-U.S.
holder and certain conditions are met or the holder otherwise establishes an
exemption.
Payment by or through a United States office of a broker of the proceeds
of a sale of Nextel common stock is subject to both backup withholding and
information reporting unless the holder certifies to the payor in the manner
required as to its status as a non-U.S. holder under penalties of perjury or
otherwise establishes an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate United States federal income tax. Rather, any amounts withheld under
the backup withholding rules will be refunded or allowed as a credit against the
holder's United States federal income tax liability, if any, provided the
required information or appropriate claim for refund is filed with the IRS.
THE FOREGOING DISCUSSION IS A SUMMARY OF CERTAIN UNITED STATES FEDERAL
INCOME AND ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER DISPOSITION
OF NEXTEL COMMON STOCK BY NON-U.S. HOLDERS. YOU ARE URGED TO CONSULT YOUR OWN
TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF OWNERSHIP
AND DISPOSITION OF NEXTEL COMMON STOCK, INCLUDING THE EFFECT OF ANY STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS.
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UNDERWRITERS
Under the terms and subject to the conditions contained in an
underwriting agreement dated the date of this prospectus the U.S. underwriters
named below, for whom Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation, Deutsche Bank Securities Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated are
acting as U.S. representatives, and the international underwriters named below
for whom Morgan Stanley & Co. International Limited, Goldman Sachs
International, Credit Suisse First Boston (Europe) Limited, Deutsche Bank AG
London, Merrill Lynch International and PaineWebber International (U.K.) Ltd.
are acting as international representatives, have severally agreed to purchase,
and Nextel has agreed to sell to them, severally, the number of shares indicated
below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated......................... 5,750,000
Goldman, Sachs & Co....................................... 5,750,000
Credit Suisse First Boston Corporation.................... 2,875,000
Deutsche Bank Securities Inc. ............................ 2,875,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........ 2,875,000
PaineWebber Incorporated ................................. 2,875,000
Banc of America Securities LLC............................ 400,000
Gerard Klauer Mattison & Co., Inc. ....................... 400,000
Hambrecht & Quist LLC..................................... 400,000
Prudential Securities Incorporated........................ 400,000
Soundview Technology Group, Inc. ......................... 400,000
----------
Subtotal............................................... 25,000,000
----------
International Underwriters:
Morgan Stanley & Co. International Limited................ 1,250,000
Goldman Sachs International............................... 1,250,000
Credit Suisse First Boston (Europe) Limited............... 625,000
Deutsche Bank AG London................................... 625,000
Merrill Lynch International............................... 625,000
PaineWebber International (U.K.) Ltd. .................... 625,000
----------
Subtotal............................................... 5,000,000
----------
Total............................................. 30,000,000
==========
</TABLE>
The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively referred
to as the "underwriters" and the "representatives", respectively. The
underwriters are offering the shares of common stock subject to their acceptance
of the shares from Nextel and subject to prior sale. The underwriting agreement
provides that the obligations of the several underwriters to pay for and accept
delivery of the shares of common stock offered by this prospectus are subject to
the approval of certain legal matters by their counsel and to certain other
conditions. The underwriters are obligated to take and pay for all of the shares
of common stock offered by this prospectus if any such shares are taken.
However, the underwriters are not required to take or pay for the shares covered
by the underwriters over-allotment option described below.
In the agreement between U.S. and international underwriters, sales may
be made between U.S. underwriters and international underwriters of any number
of shares as may be mutually agreed. The per share price of any shares sold by
the underwriters shall be the public offering price listed on the cover page of
this prospectus, in United States dollars, less an amount not greater than the
per share amount of the concession to dealers described below.
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<PAGE> 34
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price listed on the cover
page of this prospectus and part to certain dealers at a price that represents a
concession not in excess of $1.385 a share under the public offering price. Any
underwriter may allow, and such dealers may reallow, a concession not in excess
of $.10 a share to other underwriters or to certain dealers. After the initial
offering of the shares of common stock, the offering price and other selling
terms may from time to time be varied by the representatives.
Nextel has granted to the U.S. underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to an aggregate of
3,781,785 additional shares of common stock at the public offering price listed
on the cover page of this prospectus, less underwriting discounts and
commissions. The U.S. underwriters may exercise this option solely for the
purpose of covering overallotments, if any, made in connection with the offering
of the shares of common stock offered by this prospectus. To the extent the
option is exercised, each U.S. underwriter will become obligated, subject to
certain conditions, to purchase about the same percentage of the additional
shares of common stock as the number listed next to the U.S. underwriter's name
in the preceding table bears to the total number of shares of common stock
listed next to the names of all U.S. underwriters in the preceding table. If the
U.S. underwriters' option is exercised in full, the total price to the public
would be $2,831,335,855, the total underwriters' discounts and commissions would
be $77,867,014 and total proceeds to Nextel would be $2,753,468,841.
Nextel and its executive officers and directors, in those capacities,
have agreed that, without the prior written consent of Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (and subject to certain specified
exceptions described below), they will not during the period of 90 days after
the date of this prospectus:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common
stock, or
- enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the common
stock,
whether any transaction described above is to be settled by delivery of common
stock or other securities, in cash or otherwise.
The restrictions described in the previous paragraph do not apply to:
- the issuance by Nextel of any common stock offered by this prospectus;
- the issuance by Nextel of shares of common stock upon exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing and the contemporaneous or subsequent sale or other
disposition of any or all of the shares of common stock so acquired;
provided, that the aggregate number of shares of common stock sold or
disposed of during such 90 day period does not exceed 2,000,000 shares
in the aggregate for all directors and executive officers of Nextel;
- the granting by Nextel of any options, deferred shares or other equity
awards under the Nextel equity incentive plan, so long as such options
do not vest and become exercisable or such deferred share or other
awards do not vest, in each case, in the absence of extraordinary
events or occurrences beyond the control of the grantee or recipient,
until after the expiration of such 90 day period;
- the issuance by Nextel of shares of common stock in connection with
acquisitions of businesses or portions thereof, or in connection with
any strategic investment in Nextel by any third party on terms
approved by Nextel's board of directors provided the parties in any
such acquisition (other than the pending acquisition of 900 MHz
frequencies from Geotek) or
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investment transaction agree to be bound by the foregoing restrictions
or will not receive any of such shares of common stock until after the
expiration of such 90 day period;
- transactions relating to shares of common stock or other securities
acquired in open market transactions after the completion of the
offering by persons other than Nextel; and
- any transaction in or involving, directly or indirectly, the common
stock by any existing director or executive officer of Nextel that
subsequent to the date of this prospectus ceases to occupy any
director or executive officer position with Nextel.
In order to facilitate the offering of the common stock, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the common stock. Specifically, the underwriters may
over-allot in connection with the offering, creating a short position in the
common stock for their own account. In addition, to cover over-allotments or to
stabilize the price of the common stock, the underwriters may bid for, and
purchase, shares of common stock in the open market. Finally, the underwriting
syndicate may reclaim selling concessions allowed to an underwriter or a dealer
for distributing the common stock in the offering, if the syndicate repurchases
previously distributed common stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the common stock above independent
market levels. The underwriters are not required to engage in these activities,
and may end any of these activities at any time.
From time to time, certain of the underwriters have provided, and may
continue to provide, investment banking services to Nextel. Also, certain of the
underwriters may act as lenders under Nextel's increased bank facility.
Nextel and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
Jones, Day, Reavis & Pogue, Atlanta, Georgia, will pass upon the
validity of the common stock offered by this prospectus. Specified legal matters
will be passed upon for the underwriters by Shearman & Sterling, New York, New
York.
EXPERTS
The consolidated financial statements and related financial statement
schedules of Nextel that are incorporated in this prospectus by reference from
Nextel's Annual Report on Form 10-K for the year ended December 31, 1998 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated by reference in this prospectus, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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WHERE YOU CAN GET MORE INFORMATION
AVAILABLE INFORMATION
Nextel files reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy this information at
the public reference facilities maintained by the Commission at:
- The Commission's Public Reference Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
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.
You may obtain information on the operation of the public reference room
by calling the Commission at 1-800-SEC-0330. Nextel's filings are also available
on the Commission's web site on the Internet at http://www.sec.gov.
Statements in this prospectus concerning the contents of any contract,
agreement or other document are not necessarily complete. If Nextel filed as an
exhibit to any of its public filings any of the contracts, agreements or other
documents referred to in this prospectus, you should read the exhibit for a more
complete understanding of the document or matter involved.
INCORPORATION OF DOCUMENTS BY REFERENCE
Nextel has incorporated information into this prospectus by reference.
This means Nextel has disclosed information to you by referring you to another
document filed by Nextel with the Commission. Nextel will make those documents
available to you without charge upon your oral or written request. Requests for
these documents should be directed to Nextel Communications, Inc., 2001 Edmund
Halley Drive, Reston, Virginia 20191, Attention: Investor Relations, telephone:
(703) 433-4000.
The information in the following documents filed by Nextel with the
Commission (File No. 0-19656) is incorporated by reference in this prospectus:
- Annual Report on Form 10-K for the year ended December 31,
1998, dated and filed with the Commission on March 30, 1999;
- Current Reports on Form 8-K:
- dated and filed with the Commission on February 24, 1999;
- dated and filed with the Commission on April 1, 1999;
- dated May 12, 1999 and filed with the Commission on May
13, 1999;
- dated and filed with the Commission on June 15, 1999;
- dated and filed with the Commission on June 23, 1999;
- dated and filed with the Commission on August 12, 1999;
- dated and filed with the Commission on August 18, 1999;
- dated October 20, 1999 and filed with the Commission on
October 21, 1999;
- Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, dated and filed with the Commission on May 17, 1999;
- Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, dated and filed with the Commission on August 16, 1999;
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<PAGE> 37
- Proxy Statement, dated as of April 7, 1999, filed with the
Commission in definitive form on April 8, 1999 with respect
to the information required by Items 401 (management), 402
(executive compensation), 403 (securities ownership) and 404
(certain relationships and related transactions) of
Regulation S-K promulgated under the Securities Act of 1933
and the Securities Exchange Act of 1934; and
- The description of the common stock contained in the
registration statement on Form 8-A dated January 16, 1992
including the information incorporated by reference into that
registration statement from the registration statement on
Form S-1, as amended, dated as of January 27, 1992.
Nextel is also incorporating by reference additional documents it may
file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 after the date of this prospectus and before the termination of the
offering. This additional information is a part of this prospectus from the date
of filing of those documents.
Any statements made in this prospectus or in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference in
this prospectus modifies or supersedes the statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
This information relating to Nextel contained in this prospectus should
be read together with the information in the documents incorporated by
reference. In addition, some of the information, including financial
information, contained in this prospectus or incorporated in this prospectus by
reference should be read in conjunction with documents filed with the Commission
by Nextel International, Inc.
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