##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION



FORM 10-Q

(Mark One)

|                                                  |  |                                                                                          
|------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|                                                 
|                                                 
|                                                 
|                                                 
|[X]                                               |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended September 30, 2000
|OR                                               
|[   ]                                             |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934
|                                                  |  | For the transition period from    to                                                     
|Commission file number 0-19656                   

NEXTEL COMMUNICATIONS, INC.



|                                                                                   |  |                                               
|---------------------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Delaware(State or other jurisdiction of
	incorporation or organization)            |  | 36-3939651(I.R.S. Employer Identification No.)
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|2001 Edmund Halley Drive, Reston, Virginia(Address of principal executive offices) |  | 20191(Zip Code)                               
|Registrants telephone number, including area code:
	(703) 433-4000               

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
Yes [X]     No [  ]

Indicate the number of shares outstanding of each of
issuers classes of common stock as of the latest
practicable date:

|                                                  |  |                              |             | 
|------------------------------------------------- |  | ---------------------------- | ----------- | 
|                                                  |  | Number of Shares Outstanding
|Title of Class                                    |  | on October 31, 2000         
|                                                  |  |                             
|Class A Common Stock, $0.001 par value            |  |                              | 726,179,720 | 
|Class B Non-voting Common Stock, $0.001 par value |  |                              | 35,660,000  | 



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TABLE OF CONTENTS



|                                |                                                                                                |  |  |  |  |  |  | 
|------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION.
|                                | Item 1. Financial Statements -- Unaudited.                                                    
|                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|PART II -- OTHER INFORMATION.  
|                                | Item 1. Legal Proceedings.                                                                    
|                                | Item 6. Exhibits and Reports on Form 8-K.                                                     
|                                | SIGNATURE                                                                                     
|                                | EXHIBIT INDEX                                                                                 
|Financial Data Schedule        



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NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

INDEX

| |          |  |  |                        |  |                                                                                                                                                         |  |  |    | 
| | -------- |  |  | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
| |          |  |  |                        |  | Page No.                                                                                                                                               
| |          |  |  |                        |  |                                                                                                                                                        
| | Part I   |  |  | Financial Information.
| |          |  |  | Item 1.                |  | Financial Statements  Unaudited.                                                                                                                       |  |  |    | 
| |          |  |  |                        |  | Condensed Consolidated Balance Sheets                                                                                                                   |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | As of September 30, 2000 and December 31,
	1999                                                                                                         |  |  | 3  | 
|
|
|
|
| |          |  |  |                        |  | Condensed Consolidated Statements of Operations and
	Comprehensive
	  (Loss) Income For the Nine and Three Months Ended
	September 30,
	  2000 and 1999 |  |  | 4  | 
| |          |  |  |                        |  | Condensed Consolidated Statement of Changes in
	Stockholders Equity                                                                                    |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | For the Nine Months Ended September 30, 2000                                                                                                            |  |  | 5  | 
| |          |  |  |                        |  | Condensed Consolidated Statements of Cash Flows                                                                                                         |  |  |    | 
|
|
|
|
| |          |  |  |                        |  | For the Nine Months Ended September 30, 2000
	and 1999                                                                                                  |  |  | 6  | 
|
|
|
|
| |          |  |  |                        |  | Notes to Condensed Consolidated Financial Statements                                                                                                    |  |  | 7  | 
|
|
|
|
| |          |  |  | Item 2.                |  | Managements Discussion and Analysis of Financial Condition
	and Results of
	  Operations                                                               |  |  | 16 | 
|
|
|
|
| |          |  |  | Item 3.                |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                              |  |  | 26 | 
|
|
|
|
| | Part  II |  |  | Other Information.    
|
|
|
|
| |          |  |  | Item 1.                |  | Legal Proceedings                                                                                                                                       |  |  | 28 | 
|
|
|
|
| |          |  |  | Item 6.                |  | Exhibits and Reports on Form 8-K                                                                                                                        |  |  | 28 | 



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##### Table of Contents






PART I  FINANCIAL INFORMATION.




Item 1.  Financial Statements 
Unaudited.

NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2000 and December 31, 1999


(in millions)


Unaudited


|                                                                                    |                                                                                     |                            |        |        |        |   |        |        |        | 
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                                    |                                                                                     | 2000                       |        | 1999  
|                                                                                    |                                                                                     |                            |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|ASSETS                                                                             
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Current assets                                                                      |                                                                                     |                            |        |        |        |   |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Cash and cash equivalents, of which $479 and $1,365 is restricted                   |                            | $      | 3,657  |        |   | $      | 4,701  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Short-term investments, of which $123 and $0 is restricted                          |                            |        | 2,707  |        |   |        | 1,107  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accounts and notes receivable, less allowance for doubtful
	accounts of $82 and $75 |                            |        | 780    |        |   |        | 619    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Subscriber unit and accessory inventory                                             |                            |        | 183    |        |   |        | 113    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Prepaid expenses and other                                                          |                            |        | 118    |        |   |        | 80     |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | Total current assets       |        |        | 7,445  |   |        |        | 6,620  | 
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Property, plant and equipment,net of accumulated
	depreciation of $2,365 and $1,687 |                                                                                     |                            | 7,925  |        |        |   | 6,152  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Intangible assets,net of accumulated amortization of
	$1,040 and $1,007             |                                                                                     |                            | 4,851  |        |        |   | 4,551  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Investments and other assets                                                        |                                                                                     |                            | 1,625  |        |        |   | 1,087  |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | $                          | 21,846 |        |        | $ | 18,410 |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                               
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Current liabilities                                                                 |                                                                                     |                            |        |        |        |   |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accounts payable                                                                    |                            | $      | 689    |        |   | $      | 559    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accrued expenses and other                                                          |                            |        | 889    |        |   |        | 643    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Due to related parties                                                              |                            |        | 452    |        |   |        | 438    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Current portion of long-term debt and finance obligation                            |                            |        | 142    |        |   |        | 1,191  |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | Total current liabilities  |        |        | 2,172  |   |        |        | 2,831  | 
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Long-term debt                                                                      |                                                                                     |                            | 13,813 |        |        |   | 9,760  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Finance obligation                                                                  |                                                                                     |                            | 621    |        |        |   | 552    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Deferred income taxes                                                               |                                                                                     |                            | 867    |        |        |   | 799    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Other                                                                               |                                                                                     |                            | 87     |        |        |   | 80     |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | Total liabilities          |        |        | 17,560 |   |        |        | 14,022 | 
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|Commitments and contingencies (note 4)                                              |                                                                                     |                            |        |        |        |   |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Minority interest                                                                   |                                                                                     |                            | 20     |        |        |   | 44     |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Mandatorily redeemable preferred stock                                              |                                                                                     |                            | 1,827  |        |        |   | 1,770  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Stockholders equity                                                                |                                                                                     |                            |        |        |        |   |        |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Convertible preferred stock, 8 shares issued and outstanding                        |                            |        | 291    |        |   |        | 291    |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Common stock, class A, 726 and 702 shares issued and outstanding                    |                            |        | 1      |        |   |        | 1      |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Common stock, class B, non-voting convertible, 36 shares issued
	and outstanding    |                            |        |       |        |   |        |       |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Paid-in capital                                                                     |                            |        | 8,405  |        |   |        | 8,046  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accumulated deficit                                                                 |                            |        | (6,547 | )      |   |        | (5,739 | )     
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Treasury stock, at cost                                                             |                            |        | (3     | )      |   |        | (6     | )     
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Deferred compensation, net                                                          |                            |        | (29    | )      |   |        | (23    | )     
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accumulated other comprehensive income                                              |                            |        | 321    |        |   |        | 4      |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | Total stockholders equity |        |        | 2,439  |   |        |        | 2,574  | 
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       
|                                                                                    |                                                                                     | $                          | 21,846 |        |        | $ | 18,410 |       
|                                                                                    |                                                                                     |                            |        |        |        |   |        |       

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

3



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and
Comprehensive (Loss) Income

For the Nine and Three Months Ended September 30, 2000
and 1999


(in millions, except per share amounts)


Unaudited


|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |       |  
|------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ----------------- | ----- | ------------------ | - | ---- | ------ | ------ | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                                |                                                                     |                   |       |                   
|                                                                                |                                                                     | Nine Months Ended |       | Three Months Ended
|                                                                                |                                                                     | September 30,     |       | September 30,     
|                                                                                |                                                                     |                   |       |                   
|                                                                                |                                                                     | 2000              |       | 1999               |   | 2000 |        | 1999  
|                                                                                |                                                                     |                   |       |                    |   |      |        |       
|Operating revenues                                                              |                                                                     | $                 | 3,755 |                    |   | $    | 2,346  |        |   | $ | 1,416 |       |   | $ | 889   |      
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Operating expenses                                                              |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cost of revenues                                                    |                   |       | 760                |   |      |        | 504    |   |   |       | 286   |   |   |       | 175   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Selling, general and administrative                                 |                   |       | 2,118              |   |      |        | 1,523  |   |   |       | 771   |   |   |       | 539   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                                       |                   |       | 898                |   |      |        | 732    |   |   |       | 315   |   |   |       | 261   |  
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                                |                                                                     |                   | 3,776 |                    |   |      | 2,759  |        |   |   | 1,372 |       |   |   | 975   |      
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Operating (loss) income                                                         |                                                                     |                   | (21   | )                  |   |      | (413   | )      |   |   | 44    |       |   |   | (86   | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Other income (expense)                                                          |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest expense                                                    |                   |       | (912               | ) |      |        | (627   | ) |   |       | (333  | ) |   |       | (220  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest income                                                     |                   |       | 298                |   |      |        | 28     |   |   |       | 111   |   |   |       | 16    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Debt conversion expense                                             |                   |       | (23                | ) |      |        |       |   |   |       |      |   |   |       |      |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Equity in losses of unconsolidated affiliates                       |                   |       | (106               | ) |      |        | (49    | ) |   |       | (35   | ) |   |       | (18   | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency transaction gains (losses), net                    |                   |       | 9                  |   |      |        | (61    | ) |   |       | 3     |   |   |       | (15   | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other, net                                                          |                   |       | 27                 |   |      |        | 78     |   |   |       | 18    |   |   |       | 3     |  
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                                |                                                                     |                   | (707  | )                  |   |      | (631   | )      |   |   | (236  | )     |   |   | (234  | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Loss before income tax benefit and extraordinary item                           |                                                                     |                   | (728  | )                  |   |      | (1,044 | )      |   |   | (192  | )     |   |   | (320  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit                                                              |                                                                     |                   | 24    |                    |   |      | 25     |        |   |   | 8     |       |   |   | 8     |      
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Loss before extraordinary item                                                  |                                                                     |                   | (704  | )                  |   |      | (1,019 | )      |   |   | (184  | )     |   |   | (312  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Extraordinary item  loss on early retirement of
	debt, net of income tax of $0 |                                                                     |                   | (104  | )                  |   |      |       |        |   |   |      |       |   |   |      |      
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Net loss                                                                        |                                                                     |                   | (808  | )                  |   |      | (1,019 | )      |   |   | (184  | )     |   |   | (312  | )    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Mandatorily redeemable preferred stock dividends                                |                                                                     |                   | (155  | )                  |   |      | (142   | )      |   |   | (52   | )     |   |   | (49   | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Loss attributable to common stockholders                                        |                                                                     | $                 | (963  | )                  |   | $    | (1,161 | )      |   | $ | (236  | )     |   | $ | (361  | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Loss per share attributable to common stockholders, basic and
	diluted          |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loss before extraordinary item attributable to common
	stockholders |                   | $     | (1.14              | ) |      | $      | (1.89  | ) |   | $     | (0.31 | ) |   | $     | (0.55 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Extraordinary item                                                  |                   |       | (0.14              | ) |      |        |       |   |   |       |      |   |   |       |      |  
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                                |                                                                     | $                 | (1.28 | )                  |   | $    | (1.89  | )      |   | $ | (0.31 | )     |   | $ | (0.55 | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Weighted average number of common shares outstanding                            |                                                                     |                   | 754   |                    |   |      | 615    |        |   |   | 761   |       |   |   | 655   |      
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|Comprehensive (loss) income, net of income tax                                  |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net loss                                                            |                   | $     | (808               | ) |      | $      | (1,019 | ) |   | $     | (184  | ) |   | $     | (312  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Unrealized gain on available-for-sale securities                    |                   |       | 291                |   |      |        | 54     |   |   |       | 326   |   |   |       | 25    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency translation adjustment                             |                   |       | 26                 |   |      |        | (121   | ) |   |       | 18    |   |   |       | (11   | )
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      
|                                                                                |                                                                     | $                 | (491  | )                  |   | $    | (1,086 | )      |   | $ | 160   |       |   | $ | (298  | )    
|                                                                                |                                                                     |                   |       |                    |   |      |        |        |   |   |       |       |   |   |       |      

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

4



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in
Stockholders Equity

For the Nine Months Ended September 30, 2000


(in millions)


Unaudited


|                             |                                                                      |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      |     | 
|---------------------------- | -------------------------------------------------------------------- | ------------------------------------------------- | - | ------------ |  | ------------ | --- | ------- |  | ------ | --- | ------ | -- | ------- | - |  | - |  | -- |  |  | - | - |  |  | - | ----- | ---- | --- | 
|                             |                                                                      |                                                   |   |              |  |              |     |        
|                             |                                                                      | Convertible                                       |   | Class A      |  | Class B      |     |        
|                             |                                                                      | Preferred Stock                                   |   | Common Stock |  | Common Stock |     |        
|                             |                                                                      |                                                   |   |              |  |              |     | Paid-in
|                             |                                                                      | Shares                                            |   | Amount       |  | Shares       |     | Amount  |  | Shares |     | Amount |    | Capital
|                             |                                                                      |                                                   |   |              |  |              |     |         |  |        |     |        |    |        
|Balance, January  1, 2000    |                                                                      |                                                   | 8 |              |  | $            | 291 |         |  |        | 702 |        |    | $       | 1 |  |   |  | 36 |  |  | $ |  |  |  | $ | 8,046 |     
|                            
|                            
|                            
|                            
|                             | Net loss                                                             |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      |    
|                            
|                            
|                            
|                            
|                             | Unrealized gain on available-for-sale securities, net of income
	tax |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      |    
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                              |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      |    
|                            
|                            
|                            
|                            
|                             | Issuance of common stock:                                            |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      |    
|                            
|                            
|                            
|                            
|                             |                                                                      | Exercise of options and warrants                  |   |              |  |              |     |         |  |        |     |        | 7  |         |   |  |  |  |    |  |  |   |   |  |  |   |       |      | 70  | 
|                            
|                            
|                            
|                            
|                             |                                                                      | Employee stock purchase plan                      |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |      | 11  | 
|                            
|                            
|                            
|                            
|                             |                                                                      | Conversion of debt securities and preferred stock |   |              |  |              |     |         |  |        |     |        | 17 |         |   |  |  |  |    |  |  |   |   |  |  |   |       |      | 337 | 
|                            
|                            
|                            
|                            
|                             | Deferred compensation, net                                           |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       | 15   |    
|                            
|                            
|                            
|                            
|                             | Gain on issuance of common stock by affiliate                        |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       | 81   |    
|                            
|                            
|                            
|                            
|                             | Mandatorily redeemable preferred stock dividends                     |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       | (155 | )  
|                             |                                                                      |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |     
|Balance, September  30, 2000 |                                                                      |                                                   | 8 |              |  | $            | 291 |         |  |        | 726 |        |    | $       | 1 |  |   |  | 36 |  |  | $ |  |  |  | $ | 8,405 |     
|                             |                                                                      |                                                   |   |              |  |              |     |         |  |        |     |        |    |         |   |  |   |  |    |  |  |   |   |  |  |   |       |     

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                                      |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |      |     | 
|---------------------------- | -------------------------------------------------------------------- | ------------------------------------------------- | ------ | -------------- | - | -------- | - | ------------ | - | ------------- | -- | ---------- | - | ----- | --- | -- | - | - | --- | --- |  | - | ---- | -- |  | - | ----- | ---- | --- | 
|                             |                                                                      |                                                   |        |                |   |          |   |              |   |               |    |           
|                             |                                                                      |                                                   |        |                |   |          |   |              |   | Accumulated   |    |           
|                             |                                                                      |                                                   |        |                |   |          |   |              |   | Other         |    |           
|                             |                                                                      |                                                   |        |                |   |          |   |              |   | Comprehensive |    |           
|                             |                                                                      |                                                   |        |                |   |          |   |              |   | Income (Loss) |    |           
|                             |                                                                      |                                                   |        |                |   |          |   |              |   |              
|                             |                                                                      |                                                   |        | Treasury Stock |   |          |   | Unrealized   |   | Cumulative    |    |           
|                             |                                                                      | Accumulated                                       |        |                |   | Deferred |   | Gain on      |   | Translation   |    |           
|                             |                                                                      | Deficit                                           |        | Shares         |   | Amount   |   | Compensation |   | Investments   |    | Adjustment |   | Total
|                             |                                                                      |                                                   |        |                |   |          |   |              |   |               |    |            |   |      
|Balance, January  1, 2000    |                                                                      | $                                                 | (5,739 | )              |   |          |  |              |   | $             | (6 | )          |   | $     | (23 | )  |   | $ | 142 |     |  | $ | (138 | )  |  | $ | 2,574 |     
|                            
|                            
|                            
|                            
|                             | Net loss                                                             |                                                   |        | (808           | ) |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       | (808 | )  
|                            
|                            
|                            
|                            
|                             | Unrealized gain on available-for-sale securities, net of
	income tax |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     | 291 |  |   |      |    |  |   |       | 291  |    
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                              |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      | 26 |  |   |       | 26   |    
|                            
|                            
|                            
|                            
|                             | Issuance of common stock:                                            |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |      |    
|                            
|                            
|                            
|                            
|                             |                                                                      | Exercise of options and warrants                  |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |      | 70  | 
|                            
|                            
|                            
|                            
|                             |                                                                      | Employee stock purchase plan                      |        |                |   |          |   |              |  |               |    |            | 3 |       |     |    |   |   |     |     |  |   |      |    |  |   |       |      | 14  | 
|                            
|                            
|                            
|                            
|                             |                                                                      | Conversion of debt securities and preferred stock |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |      | 337 | 
|                            
|                            
|                            
|                            
|                             | Deferred compensation, net                                           |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     | (6 | ) |   |     |     |  |   |      |    |  |   |       | 9    |    
|                            
|                            
|                            
|                            
|                             | Gain on issuance of common stock by affiliate                        |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       | 81   |    
|                            
|                            
|                            
|                            
|                             | Mandatorily redeemable preferred stock dividends                     |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       | (155 | )  
|                             |                                                                      |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |     
|Balance, September  30, 2000 |                                                                      | $                                                 | (6,547 | )              |   |          |  |              |   | $             | (3 | )          |   | $     | (29 | )  |   | $ | 433 |     |  | $ | (112 | )  |  | $ | 2,439 |     
|                             |                                                                      |                                                   |        |                |   |          |   |              |   |               |    |            |   |       |     |    |   |   |     |     |  |   |      |    |  |   |       |     

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

5



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2000 and 1999


(in millions)


Unaudited


|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |        |     |      |       |  
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------------- | --- | ---- | ------ | ------ | --- | ---- | ----- | -
|                                                              |                                                                                            | 2000                                                                               |                                              | 1999                                               
|                                                              |                                                                                            |                                                                                    |                                              |                                                    
|Cash flows from operating activities                          |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Net loss                                                                                   |                                                                                    | $                                            | (808                                                | )   |      | $      | (1,019 | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Adjustments to reconcile net loss to net cash provided by (used
	in) operating activities: |                                                                                    |                                              |                                                     |     |      |        |        |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Amortization of deferred financing costs and accretion of senior
	redeemable notes |                                              |                                                     | 301 |      |        |        | 311 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Depreciation and amortization                                                      |                                              |                                                     | 898 |      |        |        | 732 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Provision for losses on accounts receivable                                        |                                              |                                                     | 111 |      |        |        | 110 |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Income tax benefit                                                                 |                                              |                                                     | (24 | )    |        |        | (25 | )   
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Extraordinary loss on early retirement of debt                                     |                                              |                                                     | 104 |      |        |        |    |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Net foreign currency transaction (gains) losses                                    |                                              |                                                     | (9  | )    |        |        | 61  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Equity in losses of unconsolidated affiliates                                      |                                              |                                                     | 106 |      |        |        | 49  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Gain on sale of assets, net                                                        |                                              |                                                     | (21 | )    |        |        | (59 | )   
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Other, net                                                                         |                                              |                                                     | 19  |      |        |        | 12  |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            | Change in assets and liabilities, net of effects from
	acquisitions:               |                                              |                                                     |     |      |        |        |     |     
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                    | Accounts and notes receivable                |                                                     |     | (284 | )      |        |     | (230 | )    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                    | Subscriber unit and accessory inventory      |                                                     |     | (75  | )      |        |     | (21  | )    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                    | Other assets                                 |                                                     |     | (54  | )      |        |     | 12   |      
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                                                            |                                                                                    | Accounts payable, accrued expenses and other |                                                     |     | 325  |        |        |     | 31   |      
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                              |                                                                                            |                                                                                    |                                              | Net cash provided by (used in) operating activities |     |      | 589    |        |     |      | (36   | )
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|Cash flows from investing activities                          |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Capital expenditures                                                                       |                                                                                    |                                              | (2,281                                              | )   |      |        | (1,075 | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Purchases of short-term investments                                                        |                                                                                    |                                              | (4,644                                              | )   |      |        | (1     | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from maturities and sales of short-term investments                               |                                                                                    |                                              | 3,068                                               |     |      |        |       |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Payments for investments, purchase of licenses and acquisitions,
	net of cash acquired     |                                                                                    |                                              | (624                                                | )   |      |        | (95    | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from sale of assets                                                               |                                                                                    |                                              | 297                                                 |     |      |        | 290    |    
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                              |                                                                                            |                                                                                    |                                              | Net cash used in investing activities               |     |      | (4,184 | )      |     |      | (881  | )
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|Cash flows from financing activities                          |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Borrowings under long-term credit facilities                                               |                                                                                    |                                              | 1,925                                               |     |      |        | 233    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Issuance of debt securities                                                                |                                                                                    |                                              | 1,791                                               |     |      |        | 600    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Retirement of debt securities                                                              |                                                                                    |                                              | (1,208                                              | )   |      |        |       |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Sale of stock and exercise of stock options, warrants and other                            |                                                                                    |                                              | 70                                                  |     |      |        | 1,033  |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Proceeds from financing obligation                                                         |                                                                                    |                                              | 74                                                  |     |      |        | 575    |    
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Revolving line of credit repayments, net                                                   |                                                                                    |                                              |                                                    |     |      |        | (423   | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Deferred financing costs                                                                   |                                                                                    |                                              | (45                                                 | )   |      |        | (33    | )  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Other, net                                                                                 |                                                                                    |                                              | (56                                                 | )   |      |        | (10    | )  
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|                                                              |                                                                                            |                                                                                    |                                              | Net cash provided by financing activities           |     |      | 2,551  |        |     |      | 1,975 |  
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|Effect of exchange rate changes on cash and cash
	equivalents |                                                                                            |                                                                                    |                                             |                                                     |     |      | (17    | )     
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|Net (decrease) increase in cash and cash equivalents          |                                                                                            |                                                                                    | (1,044                                       | )                                                   |     |      | 1,058  |       
|                                                             
|                                                             
|                                                             
|                                                             
|Cash and cash equivalents, beginning of period                |                                                                                            |                                                                                    | 4,701                                        |                                                     |     |      | 321    |       
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       
|Cash and cash equivalents, end of period                      |                                                                                            | $                                                                                  | 3,657                                        |                                                     |     | $    | 1,379  |       
|                                                              |                                                                                            |                                                                                    |                                              |                                                     |     |      |        |       

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

6



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited


Note 1.  Basis of Presentation.

Our unaudited condensed consolidated financial statements have
been prepared under the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments that are
necessary for a fair presentation of the results for interim
periods. All adjustments made were normal recurring accruals.

You should read the condensed consolidated financial statements
in conjunction with the consolidated financial statements and
notes contained in our Annual Report on Form 10-K for the
year ended December 31, 1999. You should also read Nextel
International, Inc.s Annual Report on Form 10-K for
the year ended December 31, 1999 and its subsequent
Quarterly Reports on Form 10-Q for matters related to the
operations of Nextel International, our indirect, substantially
wholly owned subsidiary. You should not expect the results of
operations of interim periods to be an indication of the results
for a full year.

Restricted Cash, Cash Equivalents and Short-term
Investments.Nextel International and its subsidiaries
held cash, cash equivalents and short-term investments of
$602 million at September 30, 2000 and
$100 million at December 31, 1999 that were not available
to fund any of the cash needs of our domestic operations due to
restrictions contained in their financing agreements. At
December 31, 1999, restricted cash also included
$1,265 million held in an irrevocable trust to effect the
redemption of our 10.125% senior redeemable discount notes due
2004 in January 2000 and the redemption of our 9.75% senior
redeemable discount notes due 2004 in February 2000 (See
note 3).

Supplemental Cash Flow Information.

|                       |                                                               |               |       |       |  |   |       |       | 
|---------------------- | ------------------------------------------------------------- | ------------- | ----- | ----- |  | - | ----- | ----- | 
|                       |                                                               |              
|                       |                                                               | Nine Months  
|                       |                                                               | Ended        
|                       |                                                               | September 30,
|                       |                                                               |              
|                       |                                                               | 2000          |       | 1999 
|                       |                                                               |               |       |      
|                       |                                                               |              
|                       |                                                               | (in millions)
|                      
|                      
|                      
|                      
|Capital expenditures   |                                                               |               |       |       |  |   |       |      
|                      
|                      
|                      
|                      
|                       | Cash paid for capital expenditures                            |               | $     | 2,281 |  |   | $     | 1,075 | 
|                      
|                      
|                      
|                      
|                       | Change in capital expenditures accrued and unpaid or financed |               |       | 125   |  |   |       | 272   | 
|                       |                                                               |               |       |       |  |   |       |      
|                       |                                                               | $             | 2,406 |       |  | $ | 1,347 |      
|                       |                                                               |               |       |       |  |   |       |      
|Interest costs         |                                                               |               |       |       |  |   |       |      
|                      
|                      
|                      
|                      
|                       | Interest expense                                              |               | $     | 912   |  |   | $     | 627   | 
|                      
|                      
|                      
|                      
|                       | Interest capitalized                                          |               |       | 52    |  |   |       | 29    | 
|                       |                                                               |               |       |       |  |   |       |      
|                       |                                                               | $             | 964   |       |  | $ | 656   |      
|                       |                                                               |               |       |       |  |   |       |      
|Cash paid for interest |                                                               | $             | 553   |       |  | $ | 255   |      
|                       |                                                               |               |       |       |  |   |       |      

Revenue Recognition.We recognize revenue for
airtime and other services over the service period, net of
credits and adjustments for service discounts. We establish an
allowance for doubtful accounts sufficient to cover probable
losses.

Digital Subscriber Unit and Accessory Sales and Related
Costs.We deliver our wireless services through handset
devices, which we refer to as digital subscriber units. The loss
generated from the sale of the subscriber units used on our
digital mobile network primarily results from our subsidy of
digital subscriber units and accessories and represents
marketing costs. Consolidated digital subscriber unit and
accessory sales and the related cost of sales, including current
period order fulfillment and installation related expenses and

7



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

write downs of digital subscriber unit inventory and related
accessories for shrinkage and obsolescence, are classified
within selling, general and administrative expenses as follows:

|                                            |  |               |      |               |  |      |      |      |  |   |      |   |  |   |      |  
|------------------------------------------- |  | ------------- | ---- | ------------- |  | ---- | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                            |  |               |      |              
|                                            |  | Nine Months   |      | Three Months 
|                                            |  | Ended         |      | Ended        
|                                            |  | September 30, |      | September 30,
|                                            |  |               |      |              
|                                            |  | 2000          |      | 1999          |  | 2000 |      | 1999
|                                            |  |               |      |               |  |      |      |     
|                                            |  |               |      |               |  |     
|                                            |  |               |      | (in millions) |  |     
|                                           
|                                           
|                                           
|                                           
|Subscriber unit and accessory sales         |  | $             | 365  |               |  | $    | 349  |      |  | $ | 121  |   |  | $ | 121  |  
|                                           
|                                           
|                                           
|                                           
|Cost of subscriber unit and accessory sales |  |               | 756  |               |  |      | 659  |      |  |   | 280  |   |  |   | 236  |  
|                                            |  |               |      |               |  |      |      |      |  |   |      |   |  |   |      |  
|                                            |  | $             | (391 | )             |  | $    | (310 | )    |  | $ | (159 | ) |  | $ | (115 | )
|                                            |  |               |      |               |  |      |      |      |  |   |      |   |  |   |      |  

New Accounting Pronouncements.In June 1998,
the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
Activities, which, as amended by FASB Statement
No. 138, establishes accounting and reporting standards for
derivative instruments, including some derivative instruments
embedded in other contracts, and for hedging activities. FASB
Statement No. 133 requires that all derivatives be recognized on
our balance sheet as either assets or liabilities and measured
at fair value. Additionally, it requires that changes in the
derivative instruments fair value be recognized in our
statement of operations unless specific hedge accounting
criteria are met. Effective January 1, 2001, with respect
to derivative instruments embedded in other contracts, we will
apply FASB Statement No. 133 to all contracts issued,
acquired or substantively modified after December 31, 1998.

Currently, we hedge the cash flows on some of our long-term debt
using interest rate swaps and collars. These instruments are
used to achieve a desired proportion of fixed rate versus
floating rate debt. In an interest rate swap, we agree to
exchange, at specified intervals, the difference between a
variable interest rate and either a fixed or another variable
interest rate, multiplied by a notional principal amount.
Interest rate collar agreements consist of both an interest rate
cap and floor and enable us to lock into a predetermined
interest rate range when interest rates are above or below
specified levels. Our collar agreements contain provisions that
reduce or eliminate the effectiveness of these agreements if
interest rates rise above specified levels.

Under current accounting principles generally accepted in the
United States, our interest rate swaps and collars are not
recognized on the balance sheet and the net quarterly cash
settlements are recognized as either an increase in or reduction
to interest expense in our statement of operations. Some of our
interest rate swaps and collars will not qualify for hedge
accounting under FASB Statement No. 133. Upon adoption of
FASB Statement No. 133 on January 1, 2001, we will record
our interest rate swaps and collars as assets or liabilities on
our balance sheet at their fair value. We will record as a
transition adjustment the difference between the previous
carrying amounts and the fair values of our interest rate swaps
and collars. This transition adjustment will be reflected as the
cumulative effect of a change in accounting principle, and
recorded as a component of accumulated other comprehensive
income in stockholders equity. After adoption, FASB
Statement No. 133 requires the changes in the fair values
of those interest rate swaps and collars that do not qualify for
hedge accounting to be recognized in our statement of operations
in the period of the change. For our interest rate swaps that
qualify for cash flow hedge accounting, the effective portion of
the changes in their fair values will be reported as a component
of accumulated other comprehensive income in stockholders
equity and will be reclassified into earnings in the same period
during which the hedged forecasted transactions affect earnings.
The ineffective portion of the changes in the fair values of
these interest rate swaps will be recognized in our statement of
operations in the period of the change.

8



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

We are in the process of quantifying the effects of adopting
FASB Statement No. 133 on our financial position and
results of operations. As a result of our analysis to date:



| |   |                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we do not believe that we have any embedded derivatives in our
	contracts that would need to be separately accounted for under
	FASB Statement No.  133;               
|
| |  | we will record a transition adjustment for our interest rate
	swaps and collars described above; and                                                                   
|
| |  | based on current market conditions, we do not believe that this
	transition adjustment will have a material impact on our
	financial position or results of operations.

In December 1999, the Securities and Exchange Commission
issued Staff Accounting Bulletin, or SAB, No. 101,
Revenue Recognition in Financial Statements, which
provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. The guidelines in
SAB No. 101 must be adopted by the fourth quarter of 2000.
Based on our current assessment and guidance provided to date by
the Securities and Exchange Commission, we do not believe that
SAB No. 101 will have a material impact on our financial
position or results of operations. However, some items addressed
in SAB No. 101, such as multiple-element revenue
arrangements, are currently under discussion, and consensus on
the accounting guidance treatment or the effective date has not
been reached. Accordingly, we will continue to follow the
discussions and evaluate the potential impact of the accounting
guidance on our financial position and results of operations.

In March 2000, the FASB issued Interpretation No. 44,
Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of the Accounting Principles
Board Opinion No. 25, which clarifies the application
of APB Opinion No. 25 for some issues including:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | the definition of an employee for purposes of applying APB
	Opinion No. 25;                                        
|
| |  | the criteria for determining whether a plan qualifies as a
	noncompensatory plan;                                  
|
| |  | the accounting consequences of various modifications to the
	terms of a previously fixed stock option or award; and
|
| |  | the accounting for an exchange of stock compensation awards in a
	business combination.                            

Interpretation No. 44 became effective July 1, 2000,
but some of the conclusions cover specific events that occurred
before its effectiveness. The adoption of this guidance on
July 1, 2000 did not have a material impact on our
financial position or results of operations.

In May 2000, the Emerging Issues Task Force reached a
consensus on Issue No. 00-14, Accounting for Certain
Sales Incentives, which addresses the recognition,
measurement and statement of operations classification for sales
incentives offered voluntarily by vendors, without cost to
consumers, as a result of a single exchange transaction. We are
required to and will adopt EITF Issue No. 00-14 in the
fourth quarter of 2000. Based on our analysis to date, we do not
believe that implementation of this consensus will have a
material impact on our financial position or results of
operations.

In July 2000, the Emerging Issues Task Force reached a
consensus on Issue No. 99-19, Reporting Revenue Gross
as a Principal versus Net as an Agent, which addresses
whether a company should recognize revenue based on the gross
amount billed to the customer because it has earned revenue from
the sale of the goods or services or whether the company should
recognize revenue based on the net amount retained because, in
substance, it has earned a commission. We are required to and
will adopt EITF Issue No. 99-19 in the fourth quarter of
2000. Based on our analysis to date, we do not believe that
implementation of this consensus will have a material impact on
our financial position or results of operations.

9



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In September 2000, the Emerging Issues Task Force reached a
consensus on Issue No. 00-10, Accounting for Shipping
and Handling Fees and Costs, which addresses the statement
of operations classification of shipping and handling fees
billed to customers and shipping and handling costs incurred by
companies that sell goods. We are required to and will adopt
EITF Issue No. 00-10 in the fourth quarter of 2000. Based
on our analysis to date, we do not believe that implementation
of this consensus will have a material impact on our financial
position or results of operations.

Reclassifications and Other.We have reclassified
some prior period amounts to conform to our current year
presentation. During the first quarter of 2000, we changed the
estimated useful lives of some of our digital mobile network and
non-network assets. The effect of this change in estimate was
additional depreciation expense of about $39 million for
the nine months ended September 30, 2000, including
$13 million for the three months ended September 30, 2000.

Note 2.  Significant Transactions and
Developments.

Stock Split.On May 25, 2000, our
stockholders approved an increase in the number of authorized
shares of our class A common stock from 515,000,000 to
2,060,000,000 and our class B common stock from 35,000,000 to
100,000,000, enabling us to complete a 2-for-1 common stock
split effective June 6, 2000, distributed to stockholders
of record as of May 26, 2000. Information presented
throughout these financial statements and related footnotes has
been adjusted to reflect the 2-for-1 common stock split.

Peru, Brazil and Chile.As a result of the
acquisitions described below, Nextel International owns 100% of
its operating companies in Latin America. Each of these
acquisitions was accounted for under the purchase method. As the
purchase price has been allocated on a preliminary basis,
adjustments may be required.

In May 2000, Nextel International purchased another
stockholders interest in its Peruvian operating company
for about $3 million in cash and increased its ownership
from about 63% to about 69%.

In May 2000, Nextel International purchased all of the
equity interests of Motorola International Development
Corporation in its Peruvian operating company. This purchase
increased its ownership from about 69% to 100%. At the same
time, Nextel International purchased all of Motorola
Internationals equity interests in McCaw International
(Brazil), Ltd., the parent company of its Brazilian operating
company. This purchase increased Nextel Internationals
ownership of its Brazilian operations from about 88% to about
92%. In May 2000, Nextel International also purchased three
Chilean analog specialized mobile radio companies from Motorola
International. Nextel International paid Motorola International
an aggregate purchase price of about $78 million in cash
for the acquisitions in Peru, Brazil and Chile.

In July 2000, Nextel International entered into a purchase,
release and settlement agreement with the minority stockholders
in McCaw International (Brazil). Under that agreement, on
August 4, 2000, Nextel International made a cash payment to
the minority stockholders totaling $146 million, received
all of the equity interests held by the minority stockholders in
McCaw International (Brazil) and exchanged mutual releases with
the minority stockholders. In addition, all pending court
disputes between Nextel International and one of the minority
stockholders were permanently dismissed. For a description of
these disputes, see our 1999 Annual Report on Form 10-K. As
a result, Nextel International increased its ownership interest
in both its primary Brazilian operating company and its parent
to 100%. Additionally, all rights of the minority stockholders
in McCaw International (Brazil), including their rights to put
their equity interests to Nextel International beginning in
October 2001, were terminated.

Initial Public Offering.On August 17, 2000,
Nextel International announced that it had filed a registration
statement with the Securities and Exchange Commission for a
proposed initial public offering of its common stock.

10



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Nextel Partners, Inc.In September 2000,
pursuant to binding agreements, we and Nextel Partners completed
transactions in which Nextel Partners acquired from us specified
additional territories and assets including related Federal
Communications Commission licenses. As a result of this
transaction, we received additional equity with a fair value of
about $31 million for the licenses and about
$3 million in cash for the other assets. Accordingly, we
recorded a gain of about $15 million in the third quarter
of 2000, which is included in other, net in our statement of
operations. We continue to account for our investment in Nextel
Partners using the equity method. Changes in our proportionate
share of the underlying equity of Nextel Partners have been
recognized as an increase in paid-in capital in our condensed
consolidated statement of changes in stockholders equity.

Note 3.  Long-term Debt.

|                                                                                                                                                                 |  |               |        |              |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | -
|                                                                                                                                                                 |  | September 30, |        | December 31,
|                                                                                                                                                                 |  | 2000          |        | 1999        
|                                                                                                                                                                 |  |               |        |             
|                                                                                                                                                                 |  |              
|                                                                                                                                                                 |  | (in millions)
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|9.75% senior redeemable discount notes due 2004, net of
	unamortized discount of $0                                                                              |  | $             |       |              |  | $ | 876    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|10.125% senior redeemable discount notes due 2004, net of
	unamortized discount of $40                                                                           |  |               |       |              |  |   | 254    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|13.0% senior redeemable discount notes due 2007, issued
	by Nextel International, net of unamortized discount of $181 and
	$252                                  |  |               | 770    |              |  |   | 699    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|10.65% senior redeemable discount notes due 2007, net of
	unamortized discount of $154 and $205                                                                  |  |               | 686    |              |  |   | 635    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|9.75% senior serial redeemable discount notes due 2007,net of unamortized discount of $203 and $267                                                              |  |               | 926    |              |  |   | 862    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|4.75% convertible senior notes due 2007                                                                                                                          |  |               | 354    |              |  |   | 600    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|9.95% senior serial redeemable discount notes due 2008,
	net of unamortized discount of $334 and $425                                                            |  |               | 1,293  |              |  |   | 1,202  |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|12.125% senior serial redeemable discount notes due 2008,
	issued by Nextel International, net of unamortized discount of
	$188 and $234                         |  |               | 542    |              |  |   | 496    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|12.0% senior serial redeemable notes due 2008, net of
	unamortized discount of $4 and $4                                                                         |  |               | 296    |              |  |   | 296    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|9.375% senior serial redeemable notes due 2009                                                                                                                   |  |               | 2,000  |              |  |   | 2,000  |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|5.25% convertible senior notes due 2010                                                                                                                          |  |               | 1,150  |              |  |   |       |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|12.75% senior serial redeemable notes due 2010, issued by
	Nextel International, net of unamortized discount of $9                                               |  |               | 641    |              |  |   |       |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Bank credit facility                                                                                                                                             |  |               | 4,500  |              |  |   | 2,650  |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Capital lease obligation                                                                                                                                         |  |               | 267    |              |  |   |       |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Nextel International vendor credit facilities                                                                                                                    |  |               | 366    |              |  |   | 243    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Nextel Argentina credit facilities                                                                                                                               |  |               | 127    |              |  |   | 108    |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Other                                                                                                                                                            |  |               | 2      |              |  |   | 4      |  
|                                                                                                                                                                 |  |               |        |              |  |   |        |  
|                                                                                                                                                                 |  |               | 13,920 |              |  |   | 10,925 |  
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Less current portion, including $1,130 in 1999 associated with
	the redemption in 2000 of our 9.75% senior notes due 2004 and
	our 10.125% senior notes due 2004 |  |               | (107   | )            |  |   | (1,165 | )
|                                                                                                                                                                 |  |               |        |              |  |   |        |  
|                                                                                                                                                                 |  | $             | 13,813 |              |  | $ | 9,760  |  
|                                                                                                                                                                 |  |               |        |              |  |   |        |  

5.25% Convertible Senior Notes due 2010.In the
first quarter of 2000, we completed the sale of
$1.15 billion aggregate principal amount of our 5.25%
convertible senior notes due 2010, generating about

11



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$1.13 billion in net cash proceeds. Cash interest is
payable semiannually beginning July 15, 2000 at a rate of
5.25% per year. We may choose to redeem some or all of these
notes starting January 18, 2003 at an initial redemption
price of 103.5% of the aggregate principal amount of these notes
plus accrued and unpaid interest. These notes are convertible at
the option of the holders into class A common stock at any time
prior to redemption, repurchase or maturity at a conversion
price of $74.40 per share, subject to adjustment. These notes
are senior unsecured indebtedness of ours and rank equal in
right of payment with all our other unsubordinated, unsecured
indebtedness.

Incremental Bank Financing.On March 15,
2000, we, along with some of our subsidiaries and some of our
lenders, established the $1.0 billion incremental senior
secured term loan under our existing domestic bank credit
facility. As a result, the total amount of borrowings available
under our bank credit facility increased from $5.0 billion
to $6.0 billion. We borrowed the entire amount of this
incremental $1.0 billion term loan on March 15, 2000.
The maturity date of this loan is June 30, 2009, although
the maturity date can accelerate if our credit ratings are below
specified levels and if the aggregate amount of specified debt
obligations that mature before June 30, 2009, including the
redemption price of redeemable stock that is mandatorily
redeemable before June 30, 2009, exceed specified amounts.
Loans under the bank credit facility bear interest, payable
quarterly, at variable rates calculated based either on the U.S.
prime rate or the London Interbank Offering Rate, or LIBOR.

Conversion of 4.75% Convertible Senior Notes.In
late March 2000, we issued about 10 million shares of
class A common stock upon the conversion of about
$246 million of our 4.75% convertible senior notes
representing a conversion price of $23.654 per share. In order
to induce conversion of these notes prior to redemption, we paid
the note holders about $26 million in cash, representing
$3 million of accrued interest and $23 million of debt
conversion expense that was recorded in the first quarter of
2000.

Debt Extinguishment.During the first quarter of
2000, we utilized a portion of the proceeds from our 9.375%
senior notes due 2009 to repurchase and redeem prior to final
maturity all of our outstanding 10.125% senior notes due 2004
and all of our outstanding 9.75% senior notes due 2004. As a
result of the early retirement of these senior notes repurchased
and redeemed during the first quarter of 2000, we recognized an
extraordinary loss of about $104 million, representing the
excess of the purchase price over the carrying values of the
repurchased and redeemed notes and the write-off of associated
unamortized deferred financing costs of about $26 million.

12.75% Senior Serial Redeemable Notes due 2010.In
August 2000, Nextel International completed the sale of
$650 million aggregate principal amount of its 12.75%
senior serial redeemable notes due 2010, generating about $624
million in net cash proceeds. Cash interest will be payable
semiannually beginning February 1, 2001 at a rate of 12.75%
per year. Nextel International may choose to redeem some or all
of these notes starting August 1, 2005 at an initial
redemption price of 112.75% of the aggregate principal amount of
these notes, plus accrued and unpaid interest. Before
August 1, 2003, Nextel International may choose to redeem
up to 35% of the aggregate principal amount of the notes using
the proceeds of one or more sales of qualified equity securities
at 112.75% of their principal amount, plus accrued interest.
Upon a change of control, as defined in the indenture for these
notes, Nextel International must make an offer to repurchase all
the outstanding notes at 101% of their principal amount, plus
accrued and unpaid interest to the date of repurchase. The notes
are senior unsecured indebtedness and rank equal in right of
payment with all Nextel Internationals other
unsubordinated, unsecured indebtedness. Because these notes were
issued in a private placement, they may not be offered or sold
in the United States absent an effective registration statement
or an applicable exemption from the registration requirements of
the Securities Act of 1933. In the event that these notes are
not registered with the Securities and Exchange Commission prior
to February 1, 2001, additional incremental interest on the
principal amount of these notes will accrue until they are
registered or other requirements are met.

12



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Sale Leaseback Transaction.On August 10,
2000, we completed a sale-leaseback transaction involving some
of our owned switch equipment that is being accounted for as a
capital lease. We received total net proceeds of about
$280 million, resulting in a gain of about
$19 million. The gain, which has been deferred, is being
amortized on a straight-line basis over the seven-year lease
term.

Note 4.  Commitments and Contingencies.

Beginning in the second quarter of 2000, allegations of
employment discrimination and harassment were leveled against us
in the press and some related complaints have been filed with
the Equal Employment Opportunity Commission. We and a law firm
claiming to represent the current and former employees of Nextel
and its subsidiaries that have asserted these allegations have
structured mutually acceptable arrangements for processing such
claims, which are being implemented. Based on the specific claim
details and our related investigative results to date, we do not
believe that the claims that have come to our attention are
likely to result in material liability to us.

See also Part II, Item 1. Legal Proceedings for
discussion of other legal matters.

On August 21, 2000, we entered into an asset purchase
agreement and plan of reorganization with Chadmoore Wireless
Group, Inc., an operator of specialized mobile radio services in
secondary and tertiary markets in the United States. Under the
agreement, we will purchase substantially all of the assets used
in Chadmoores specialized mobile radio business, together
with some liabilities, in exchange for shares of our common
stock valued, for the purposes of the transaction, at $160
million. The purchase price is subject to adjustments for, among
other things, the amount of advances we make to Chadmoore prior
to closing. The closing of this transaction, which is subject to
various conditions, including regulatory approval and the
approval of the Chadmoore stockholders, is expected to occur in
the first half of 2001.

In September 2000, the Federal Communications Commission
concluded its auctions of 700 MHz and 800 MHz frequencies. We
successfully bid about $232 million for licenses in the 800 MHz
auction and about $338 million for licenses in the 700 MHz
auction. Through October 2000, we have paid a total of
about $114 million for these licenses and expect to pay the
remaining $456 million in 2001.

Note 5.  Mandatorily Redeemable Preferred Stock.

|                                                                                                                                                                                                                                                                                                                           |  |               |       |              |  |   |       | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------ |  | - | ----- | 
|                                                                                                                                                                                                                                                                                                                           |  | September 30, |       | December 31,
|                                                                                                                                                                                                                                                                                                                           |  | 2000          |       | 1999        
|                                                                                                                                                                                                                                                                                                                           |  |               |       |             
|                                                                                                                                                                                                                                                                                                                           |  |              
|                                                                                                                                                                                                                                                                                                                           |  | (in millions)
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|Series D exchangeable preferred stock mandatorily
	redeemable 2009,13% cumulative annual dividend; 732,382 and
	665,376 shares issued; 732,371 and 665,365 shares outstanding;
	stated at liquidation value                                                                                                                |  | $             | 752   |              |  | $ | 683   | 
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|Series E exchangeable preferred stock mandatorily
	redeemable 2010,11.125% cumulative annual dividend; 987,920
	and 909,871 shares issued; 987,906 and 909,857 shares
	outstanding; stated at liquidation value                                                                                                            |  |               | 1,002 |              |  |   | 922   | 
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                          
|Zero coupon convertible preferred stock mandatorily
	redeemable 2013,no dividend; convertible into 4,779,386 and
	11,523,529 shares of class A common stock; 245,245 and 591,308
	shares issued and outstanding; stated at fair value when issued
	plus accretion of liquidation preference at 9.25% compounded
	quarterly |  |               | 73    |              |  |   | 165   | 
|                                                                                                                                                                                                                                                                                                                           |  |               |       |              |  |   |       | 
|                                                                                                                                                                                                                                                                                                                           |  | $             | 1,827 |              |  | $ | 1,770 | 
|                                                                                                                                                                                                                                                                                                                           |  |               |       |              |  |   |       | 

Conversion of Zero Coupon Convertible Preferred Stock
Mandatorily Redeemable 2013.During the first half of
2000, we issued about 6.7 million shares of class A common
stock upon the conversion of about

13



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$98 million in total accreted value of our zero coupon
convertible preferred stock mandatorily redeemable in 2013,
representing the original stated conversion rate, adjusted for
the effect of the stock split, of 19.4882 shares of class A
common stock for each share of zero coupon convertible preferred
stock.

Note 6.  Segment Reporting.

We operate in two business segments: domestic and international.
These reportable segments are strategic business units that are
in different phases of development and that we manage and have
financed separately based on the fundamental differences in
their operations. We evaluate performance of these segments and
allocate resources to them based on earnings
(losses) before interest, taxes, depreciation and
amortization and other nonoperating charges, referred to as
segment earnings (losses).

|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |              |  |   |       |   |  |   |      |   |  |   |        |  
|----------------------------------------------------- |  | ------------------------- | ----- | ------------------------- |  | ------------ | ---- | -------- |  | ------------- | ----- | ------------ |  | - | ----- | - |  | - | ---- | - |  | - | ------ | -
|                                                      |  |                           |       |                          
|                                                      |  | For the Nine Months Ended |       | For the Nine Months Ended
|                                                      |  | September 30, 2000        |       | September 30, 1999       
|                                                      |  |                           |       |                          
|                                                      |  | Domestic                  |       | International             |  | Consolidated |      | Domestic |  | International |       | Consolidated
|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |             
|                                                      |  |                          
|                                                      |  | (in millions)            
|                                                     
|                                                     
|                                                     
|                                                     
|Operating revenues                                    |  | $                         | 3,558 |                           |  | $            | 197  |          |  | $             | 3,755 |              |  | $ | 2,277 |   |  | $ | 69   |   |  | $ | 2,346  |  
|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |              |  |   |       |   |  |   |      |   |  |   |        |  
|Segment earnings (losses)                             |  | $                         | 977   |                           |  | $            | (100 | )        |  | $             | 877   |              |  | $ | 447   |   |  | $ | (128 | ) |  | $ | 319    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Depreciation and amortization                         |  |                           | (795  | )                         |  |              | (103 | )        |  |               | (898  | )            |  |   | (651  | ) |  |   | (81  | ) |  |   | (732   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |  |                           | (735  | )                         |  |              | (177 | )        |  |               | (912  | )            |  |   | (499  | ) |  |   | (128 | ) |  |   | (627   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest income                                       |  |                           | 283   |                           |  |              | 15   |          |  |               | 298   |              |  |   | 23    |   |  |   | 5    |   |  |   | 28     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Equity in losses of unconsolidated affiliates         |  |                           | (75   | )                         |  |              | (31  | )        |  |               | (106  | )            |  |   | (28   | ) |  |   | (21  | ) |  |   | (49    | )
|                                                     
|                                                     
|                                                     
|                                                     
|Foreign currency transaction gains (losses), net      |  |                           |      |                           |  |              | 9    |          |  |               | 9     |              |  |   |      |   |  |   | (61  | ) |  |   | (61    | )
|                                                     
|                                                     
|                                                     
|                                                     
|Other (expense) income, net                           |  |                           | (3    | )                         |  |              | 7    |          |  |               | 4     |              |  |   | 62    |   |  |   | 16   |   |  |   | 78     |  
|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |              |  |   |       |   |  |   |      |   |  |   |        |  
|Loss before income tax benefit and extraordinary item |  | $                         | (348  | )                         |  | $            | (380 | )        |  | $             | (728  | )            |  | $ | (646  | ) |  | $ | (398 | ) |  | $ | (1,044 | )
|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |              |  |   |       |   |  |   |      |   |  |   |        |  
|Capital expenditures                                  |  | $                         | 2,013 |                           |  | $            | 393  |          |  | $             | 2,406 |              |  | $ | 1,224 |   |  | $ | 123  |   |  | $ | 1,347  |  
|                                                      |  |                           |       |                           |  |              |      |          |  |               |       |              |  |   |       |   |  |   |      |   |  |   |        |  

|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |              |  |   |      |   |  |   |      |   |  |   |      |  
|----------------------------------------------------- |  | -------------------------- | ----- | -------------------------- |  | ------------ | ---- | -------- |  | ------------- | ----- | ------------ |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|                                                      |  |                            |       |                           
|                                                      |  | For the Three Months Ended |       | For the Three Months Ended
|                                                      |  | September 30, 2000         |       | September 30, 1999        
|                                                      |  |                            |       |                           
|                                                      |  | Domestic                   |       | International              |  | Consolidated |      | Domestic |  | International |       | Consolidated
|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |             
|                                                      |  |                           
|                                                      |  | (in millions)             
|                                                     
|                                                     
|                                                     
|                                                     
|Operating revenues                                    |  | $                          | 1,330 |                            |  | $            | 86   |          |  | $             | 1,416 |              |  | $ | 862  |   |  | $ | 27   |   |  | $ | 889  |  
|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |              |  |   |      |   |  |   |      |   |  |   |      |  
|Segment earnings (losses)                             |  | $                          | 392   |                            |  | $            | (33  | )        |  | $             | 359   |              |  | $ | 210  |   |  | $ | (35  | ) |  | $ | 175  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Depreciation and amortization                         |  |                            | (277  | )                          |  |              | (38  | )        |  |               | (315  | )            |  |   | (232 | ) |  |   | (29  | ) |  |   | (261 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |  |                            | (263  | )                          |  |              | (70  | )        |  |               | (333  | )            |  |   | (174 | ) |  |   | (46  | ) |  |   | (220 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest income                                       |  |                            | 101   |                            |  |              | 10   |          |  |               | 111   |              |  |   | 14   |   |  |   | 2    |   |  |   | 16   |  
|                                                     
|                                                     
|                                                     
|                                                     
|Equity in losses of unconsolidated affiliates         |  |                            | (21   | )                          |  |              | (14  | )        |  |               | (35   | )            |  |   | (8   | ) |  |   | (10  | ) |  |   | (18  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Foreign currency transaction gains (losses), net      |  |                            |      |                            |  |              | 3    |          |  |               | 3     |              |  |   |     |   |  |   | (15  | ) |  |   | (15  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Other income, net                                     |  |                            | 15    |                            |  |              | 3    |          |  |               | 18    |              |  |   |     |   |  |   | 3    |   |  |   | 3    |  
|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |              |  |   |      |   |  |   |      |   |  |   |      |  
|Loss before income tax benefit and extraordinary item |  | $                          | (53   | )                          |  | $            | (139 | )        |  | $             | (192  | )            |  | $ | (190 | ) |  | $ | (130 | ) |  | $ | (320 | )
|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |              |  |   |      |   |  |   |      |   |  |   |      |  
|Capital expenditures                                  |  | $                          | 666   |                            |  | $            | 140  |          |  | $             | 806   |              |  | $ | 453  |   |  | $ | 31   |   |  | $ | 484  |  
|                                                      |  |                            |       |                            |  |              |      |          |  |               |       |              |  |   |      |   |  |   |      |   |  |   |      |  

14



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##### Table of Contents



NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                   |  |                          |        |                         |  |              |       |          |  |               |        |              |  |   |        |  |  |   |       |  |  |   |        | 
|---------------------------------- |  | ------------------------ | ------ | ----------------------- |  | ------------ | ----- | -------- |  | ------------- | ------ | ------------ |  | - | ------ |  |  | - | ----- |  |  | - | ------ | 
|                                   |  |                          |        |                        
|                                   |  | As of September 30, 2000 |        | As of December 31, 1999
|                                   |  |                          |        |                        
|                                   |  | Domestic                 |        | International           |  | Consolidated |       | Domestic |  | International |        | Consolidated
|                                   |  |                          |        |                         |  |              |       |          |  |               |        |             
|                                   |  |                         
|                                   |  | (in millions)           
|                                  
|                                  
|                                  
|                                  
|Property, plant and equipment, net |  | $                        | 6,997  |                         |  | $            | 928   |          |  | $             | 7,925  |              |  | $ | 5,613  |  |  | $ | 539   |  |  | $ | 6,152  | 
|                                   |  |                          |        |                         |  |              |       |          |  |               |        |              |  |   |        |  |  |   |       |  |  |   |        | 
|Identifiable assets                |  | $                        | 18,871 |                         |  | $            | 2,975 |          |  | $             | 21,846 |              |  | $ | 16,728 |  |  | $ | 1,682 |  |  | $ | 18,410 | 
|                                   |  |                          |        |                         |  |              |       |          |  |               |        |              |  |   |        |  |  |   |       |  |  |   |        | 

Note 7.  Subsequent Events.

Acquisition of Clearnet Communications, Inc. by BCT.TELUS
Communications, Inc.In October 2000, BCT.TELUS
acquired Clearnet, a publicly traded Canadian company in which
Nextel International owned about a 14% equity interest, for cash
and stock. BCT.TELUS is a publicly traded telecommunications
company that, prior to its acquisition of Clearnet, provided
wireline, wireless data and internet communications services
primarily in Western Canada. Under agreements among Nextel
International, BCT.TELUS and Clearnet, Nextel International
exchanged all of its Clearnet stock for non-voting shares of
BCT.TELUS. Nextel International has entered into a lock-up
agreement with BCT.TELUS under which it has agreed not to
dispose of any of its BCT.TELUS shares until October 2001,
subject to specified exceptions. In exchange for its
8.4 million shares of Clearnet, Nextel International
received about 13.7 million shares of BCT.TELUS,
representing about 4.8% of the ownership interest in BCT.TELUS.
In accordance with EITF Issue No. 91-5, Nonmonetary
Exchange of Cost Method Investments, we will record a
pre-tax gain of about $275 million in the fourth quarter of
2000 related to this transaction. In accordance with FASB
Statement No. 115, the shares of BCT.TELUS will be recorded
at their then current market value in our financial statements.

15



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##### Table of Contents






Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations.

Overview.

The following is a discussion of our condensed consolidated
financial condition and results of operations for the nine- and
three-month periods ended September 30, 2000 and 1999. This
discussion also addresses significant factors that could affect
our prospective financial condition and results of operations
and should be read in conjunction with our 1999 Annual Report on
Form 10-K. Additional information regarding our
international operations is available in Nextel
Internationals 1999 Annual Report on Form 10-K and its
subsequent Quarterly Reports on Form 10-Q. Historical
results may not indicate future performance. See Forward
Looking Statements.

We provide a wide array of digital wireless communications
services throughout the United States. We offer a
differentiated, integrated package of digital wireless
communications services under the Nextel brand name, primarily
to business users. Our digital mobile network constitutes one of
the largest integrated wireless communications systems utilizing
a single transmission technology in the United States. This
digital technology, developed by Motorola, Inc., is referred to
as the integrated Digital Enhanced Network, or iDEN®,
technology.

A customer using our digital mobile network is able to access:



| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | digital mobile telephone service;                                                                                        
|
| |  | digital two-way radio dispatch service, which is marketed as
	Nextel Direct Connect® service;                          
|
| |  | the Internet and new digital two-way mobile data and two-way
	messaging services, marketed as Nextel
	OnlineSM service;
|
| |  | advanced calling features, such as three-way calling, voicemail
	and call forwarding;                                    
|
| |  | international roaming capabilities; and                                                                                  
|
| |  | paging.                                                                                                                  

As of September 30, 2000:



| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we provided service to about 6,157,000 digital subscriber units
	in the United States, adding about 540,400 net subscriber units
	during the quarter; and                                                                     
|
| |  | our digital mobile network or the compatible digital mobile
	network of our affiliate, Nextel Partners, Inc., was operational
	in areas in and around 177 of the top 200 metropolitan
	statistical areas in the United States.

In the second quarter of 2000, we commercially launched our
Nextel Online service offering, which is currently available in
all of our domestic markets, for Internet capable subscriber
units developed and manufactured by Motorola, the
i1000plus, the i500plus and
the i700plus, as well as the
i550plus, introduced in August 2000.
These digital subscriber units incorporate micro-browsers and
enable wireless Internet services, by supplying web-based
applications and content directly to our subscribers. On
June 20, 2000, we commercially launched our Nextel Online
Two-Way MessagingSM service that enables Internet
capable subscriber units to send, receive and respond to text
messages. In addition, in July 2000, Nextel Partners
announced the introduction of the Nextel Online service offering
in some of its markets and stated that it expects to introduce
the service in all of its remaining markets by the end of 2000.

We expect to further differentiate our unique package of
services by adding a new platform of Java
technology-enabled handsets. These new handsets, developed and
manufactured by Motorola, are expected to combine the qualities
of our Internet capable i1000plus handset with additional
features and functionality, such as the ability to download
Java-based applications, wireless synchronization capabilities,
and certain voice recognition and recorder features. We plan to
deploy and test market these new handsets in the first quarter
of 2001 in contemplation of a national launch beginning in the
second quarter of 2001.

16



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##### Table of Contents



In April 2000, we launched our Nextel
WorldwideSM service offering with the introduction of
the i2000 digital subscriber unit. The i2000,
being manufactured by Motorola, is a dual-mode subscriber unit
that operates on both the iDEN technology used by Nextel and the
Global System for Mobile Communications, or GSM, 900 MHz
digital wireless technology that has been established as the
current digital cellular communications standard in Europe and
elsewhere. As of September 30, 2000, a customer using the
i2000 could roam in more than 75 countries worldwide with the
convenience of one phone, one number and one bill.

In addition to our domestic operations, we have ownership
interests in international wireless companies through our
substantially wholly owned subsidiary, Nextel International.
Nextel International, through its subsidiaries and affiliates,
provides wireless communications services in and around various
major metropolitan market areas in Latin American, Asia and
Canada. As of September 30, 2000, along with Nextel
International, we provided services in nine of the worlds
25 largest cities.

As of September 30, 2000, an estimated 1,418,900
international digital subscriber units were in service on the
commercial networks then being operated by Nextel
Internationals subsidiaries and affiliates in Argentina,
Brazil, Canada, Japan, Mexico, Peru and the Philippines. As of
September 30, 2000, Nextel Internationals
proportionate share of international digital subscriber units in
service, based on its ownership interests in its subsidiaries
and affiliates, was estimated to be about 740,400.

Results of Operations.

Our consolidated financial statements include the accounts of
our wholly owned and majority owned operating companies. We use
the equity method to account for unconsolidated investments in
companies in which we exercise significant influence over
operating and financial policies but do not have control.

Nextel International owns 100% of its operating companies in
Brazil, Mexico, Argentina, Peru and Chile. As a result of its
recent additional investment in its Philippine operating
company, Nextel International began consolidating the results of
this company beginning in the third quarter of 2000. Because
Nextel International has significant influence, but not control,
over the business and financial affairs of its Japanese
operating company, Nextel International accounts for its
operations under the equity method. Due to lower equity
ownership interest in its Canadian operating company, Nextel
International does not exercise significant influence over this
companys operations and business strategy. Accordingly,
Nextel International accounts for this investment as a
marketable security.

The accounts of our consolidated non-U.S. subsidiaries and our
non-U.S. subsidiary accounted for under the equity method are
presented utilizing accounts as of a date one month earlier than
the accounts of our U.S. subsidiaries to ensure timely reporting
of consolidated results.

We deliver our wireless services through handset devices, which
we refer to as digital subscriber units. Our operating revenues
and the variable component of our selling expenses are primarily
driven by the number of digital subscriber units in service and
not necessarily by the number of customers, as one customer may
purchase one or many digital subscriber units.

Operating revenues primarily include monthly access charges for
digital interconnect services and digital two-way radio service,
charges for airtime and digital two-way radio usage in excess of
plan minutes and long distance charges derived from calls placed
by our customers.

Cost of revenues consists primarily of costs of interconnection
with local exchange carrier facilities and direct switch and
transmitter and receiver site costs, such as property taxes,
insurance costs, rent for the network switches and sites and
utility costs, including electricity, used to operate our
digital mobile networks. Interconnection costs have fixed and
variable components. The fixed component of interconnection
costs consists of monthly flat-rate fees for facilities leased
from local exchange carriers. The variable component of
interconnection costs, which fluctuates in relation to the level
of wireless calls, generally consists of per-minute use fees
charged by wireline and wireless providers for wireless calls
terminating on their networks.

17



---



##### Table of Contents



Operating Revenues.

|                   |               |                       |       |              |  |               |      |              |  |               |       |         |  |  |      |     |  |   |       |       |  |  |     |      | 
|------------------ | ------------- | --------------------- | ----- | ------------ |  | ------------- | ---- | ------------ |  | ------------- | ----- | ------- |  |  | ---- | --- |  | - | ----- | ----- |  |  | --- | ---- | 
|                   |               |                       |       |              |  |               |      |              |  |              
|                   |               |                       |       | % of         |  |               |      | % of         |  | Increase from
|                   |               |                       |       | Consolidated |  |               |      | Consolidated |  | Previous Year
|                   |               | September 30,         |       | Operating    |  | September 30, |      | Operating    |  |              
|                   |               | 2000                  |       | Revenues     |  | 1999          |      | Revenues     |  | Dollars       |       | Percent
|                   |               |                       |       |              |  |               |      |              |  |               |       |        
|                   |               |                      
|                   |               | (dollars in millions)
|Nine Months Ended  |               |                       |       |              |  |               |      |              |  |               |       |         |  |  |      |     |  |   |       |       |  |  |     |     
|                  
|                  
|                  
|                  
|Operating revenues |               | $                     | 3,755 |              |  |               | 100% |              |  | $             | 2,346 |         |  |  | 100% |     |  | $ | 1,409 |       |  |  | 60% |     
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |       | 3,558        |  |               |      | 95%          |  |               |       | 2,277   |  |  |      | 97% |  |   |       | 1,281 |  |  |     | 56%  | 
|                  
|                  
|                  
|                  
|                   | International |                       |       | 197          |  |               |      | 5%           |  |               |       | 69      |  |  |      | 3%  |  |   |       | 128   |  |  |     | 186% | 
|Three Months Ended |               |                       |       |              |  |               |      |              |  |               |       |         |  |  |      |     |  |   |       |       |  |  |     |     
|                  
|                  
|                  
|                  
|Operating revenues |               | $                     | 1,416 |              |  |               | 100% |              |  | $             | 889   |         |  |  | 100% |     |  | $ | 527   |       |  |  | 59% |     
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |       | 1,330        |  |               |      | 94%          |  |               |       | 862     |  |  |      | 97% |  |   |       | 468   |  |  |     | 54%  | 
|                  
|                  
|                  
|                  
|                   | International |                       |       | 86           |  |               |      | 6%           |  |               |       | 27      |  |  |      | 3%  |  |   |       | 59    |  |  |     | 219% | 

Domestic operating revenues increased principally as a result of
a 52% increase in end-of-period domestic digital subscriber
units in service from about 4,050,900 at September 30, 1999
to about 6,157,000 at September 30, 2000, as well as a 73%
increase in total system minutes of use. The growth in digital
subscriber units in service is the result of a number of
factors, principally:



| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | expanded network coverage and capacity;                                           
|
| |  | differentiated products and services including instant
	conferencing capabilities;
|
| |  | an increased number of indirect distributors;                                     
|
| |  | increased consumer awareness and acceptance of wireless
	communications;          
|
| |  | pricing plans targeted at particular market segments; and                         
|
| |  | increased sales force and marketing staff.                                        

Operating revenues for our international operations increased
primarily as a result of a 182% increase in end-of-period
digital subscriber units in service for our consolidated
international subsidiaries in Latin America from about 212,400
at September 30, 1999 to about 600,000 at
September 30, 2000.

Cost of Revenues.

|                   |               |                       |     |              |  |               |     |              |  |               |     |         |  |  |     |     |  |   |     |     |  |  |     |     | 
|------------------ | ------------- | --------------------- | --- | ------------ |  | ------------- | --- | ------------ |  | ------------- | --- | ------- |  |  | --- | --- |  | - | --- | --- |  |  | --- | --- | 
|                   |               |                       |     |              |  |               |     |              |  |              
|                   |               |                       |     | % of         |  |               |     | % of         |  | Increase from
|                   |               |                       |     | Consolidated |  |               |     | Consolidated |  | Previous Year
|                   |               | September 30,         |     | Operating    |  | September 30, |     | Operating    |  |              
|                   |               | 2000                  |     | Revenues     |  | 1999          |     | Revenues     |  | Dollars       |     | Percent
|                   |               |                       |     |              |  |               |     |              |  |               |     |        
|                   |               |                      
|                   |               | (dollars in millions)
|Nine Months Ended  |               |                       |     |              |  |               |     |              |  |               |     |         |  |  |     |     |  |   |     |     |  |  |     |    
|                  
|                  
|                  
|                  
|Cost of revenues   |               | $                     | 760 |              |  |               | 20% |              |  | $             | 504 |         |  |  | 21% |     |  | $ | 256 |     |  |  | 51% |    
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |     | 708          |  |               |     | 19%          |  |               |     | 474     |  |  |     | 20% |  |   |     | 234 |  |  |     | 49% | 
|                  
|                  
|                  
|                  
|                   | International |                       |     | 52           |  |               |     | 1%           |  |               |     | 30      |  |  |     | 1%  |  |   |     | 22  |  |  |     | 73% | 
|Three Months Ended |               |                       |     |              |  |               |     |              |  |               |     |         |  |  |     |     |  |   |     |     |  |  |     |    
|                  
|                  
|                  
|                  
|Cost of revenues   |               | $                     | 286 |              |  |               | 20% |              |  | $             | 175 |         |  |  | 20% |     |  | $ | 111 |     |  |  | 63% |    
|                  
|                  
|                  
|                  
|                   | Domestic      |                       |     | 263          |  |               |     | 18%          |  |               |     | 163     |  |  |     | 18% |  |   |     | 100 |  |  |     | 61% | 
|                  
|                  
|                  
|                  
|                   | International |                       |     | 23           |  |               |     | 2%           |  |               |     | 12      |  |  |     | 2%  |  |   |     | 11  |  |  |     | 92% | 

Domestic cost of revenues increased primarily as a result of
variable costs related to interconnect costs on higher minutes
of use and increased site ground lease costs and utilities that
we incurred due to an increase of about 79% in the number of
digital switches in service and an increase of about 47% in
transmitter and receiver sites and related equipment placed in
service from September 30, 1999 to September 30, 2000.

18



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##### Table of Contents



The increase in international cost of revenues is attributable
primarily to costs associated with about an 86% increase in the
number of transmitter and receiver sites placed in service from
September 30, 1999 to September 30, 2000, as well as
increases in variable interconnect costs to support increased
airtime usage resulting from additional subscriber units in
service.

Selling, General and Administrative Expenses.

|                                    |                            |                       |       |              |  |               |     |              |  |               |       |         |  |  |     |     |  |   |     |     |  |  |     |     | 
|----------------------------------- | -------------------------- | --------------------- | ----- | ------------ |  | ------------- | --- | ------------ |  | ------------- | ----- | ------- |  |  | --- | --- |  | - | --- | --- |  |  | --- | --- | 
|                                    |                            |                       |       |              |  |               |     |              |  |              
|                                    |                            |                       |       | % of         |  |               |     | % of         |  | Increase from
|                                    |                            |                       |       | Consolidated |  |               |     | Consolidated |  | Previous Year
|                                    |                            | September 30,         |       | Operating    |  | September 30, |     | Operating    |  |              
|                                    |                            | 2000                  |       | Revenues     |  | 1999          |     | Revenues     |  | Dollars       |       | Percent
|                                    |                            |                       |       |              |  |               |     |              |  |               |       |        
|                                    |                            |                      
|                                    |                            | (dollars in millions)
|Nine Months Ended                   |                            |                       |       |              |  |               |     |              |  |               |       |         |  |  |     |     |  |   |     |     |  |  |     |    
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 2,118 |              |  |               | 56% |              |  | $             | 1,523 |         |  |  | 65% |     |  | $ | 595 |     |  |  | 39% |    
|                                   
|                                   
|                                   
|                                   
|                                    | Selling and marketing      |                       |       | 1,267        |  |               |     | 34%          |  |               |       | 930     |  |  |     | 40% |  |   |     | 337 |  |  |     | 36% | 
|                                   
|                                   
|                                   
|                                   
|                                    | General and administrative |                       |       | 851          |  |               |     | 22%          |  |               |       | 593     |  |  |     | 25% |  |   |     | 258 |  |  |     | 44% | 
|Three Months Ended                  |                            |                       |       |              |  |               |     |              |  |               |       |         |  |  |     |     |  |   |     |     |  |  |     |    
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            | $                     | 771   |              |  |               | 54% |              |  | $             | 539   |         |  |  | 61% |     |  | $ | 232 |     |  |  | 43% |    
|                                   
|                                   
|                                   
|                                   
|                                    | Selling and marketing      |                       |       | 456          |  |               |     | 32%          |  |               |       | 329     |  |  |     | 37% |  |   |     | 127 |  |  |     | 39% | 
|                                   
|                                   
|                                   
|                                   
|                                    | General and administrative |                       |       | 315          |  |               |     | 22%          |  |               |       | 210     |  |  |     | 24% |  |   |     | 105 |  |  |     | 50% | 

Selling, general and administrative expenses declined as a
percentage of consolidated revenues as a result of an increased
revenue base.

The increase in selling, general and administrative expenses
consisted of an increase in domestic expenses of
$517 million and an increase in international expenses of
$78 million for the nine months ended September 30,
2000, and an increase in domestic expenses of $186 million
and an increase in international expenses of $46 million
for the three months ended September 30, 2000.

The increase in selling and marketing expenses in the nine and
three months ended September 30, 2000 from comparable 1999
periods consists primarily of increased costs incurred in
connection with higher consolidated sales of digital subscriber
units including:



| |   |                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $140 million and $47 million of increased consolidated
	advertising and marketing expenses, including $48 million
	and $21 million relating to international operations, due
	to aggressive marketing campaigns directed at growing the
	customer base;                                 
|
| |  | $116 million and $36 million of increased domestic
	commissions and residuals earned by indirect dealers and
	distributors as a result of increased digital subscriber unit
	sales through, and increased reliance on, indirect dealers and
	distributors in 2000; and                  
|
| |  | $81 million and $44 million of increased losses due to
	subsidies generated from increased consolidated sales of digital
	subscriber units and related accessories, including increased
	losses of $29 million and $14 million relating to
	international digital subscriber unit sales.

The increase in general and administrative expenses during the
nine and three months ended September 30, 2000 from the
comparable 1999 periods is primarily attributable to the
following:



| |   |                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $163 million and $66 million of increased domestic
	expenses related to billing, collection, customer care and
	customer retention activities to support a larger customer base;                                            
|
| |  | $94 million and $28 million of increased domestic
	personnel, facilities and general corporate expenses primarily
	reflecting increased staffing for back-office activities
	required to serve the larger customer base; and
|
| |  | $19 million and $15 million of increased international
	general and administrative expenses to support the growth in our
	international markets offset by an $18 million and
	$4 million decrease in bad debt expense.      

19



---



##### Table of Contents



The aggregate amount of selling, general and administrative
expenses are expected to increase both domestically and
internationally as a result of a number of factors, including
but not limited to:



| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | continuing aggressive advertising and marketing campaigns;                                                                                 
|
| |  | increasing costs associated with customer retention;                                                                                       
|
| |  | increasing sales and marketing, customer care and back-office
	support staffing; and                                                       
|
| |  | increasing aggregate amounts of digital subscriber unit
	subsidies as we sell additional digital subscriber units and
	related accessories.

Depreciation and Amortization.

|                              |              |                       |     |              |  |               |    |              |   |                 |     |         |  |  |    |    |   |   |     |     |   |  |    |     |   
|----------------------------- | ------------ | --------------------- | --- | ------------ |  | ------------- | -- | ------------ | - | --------------- | --- | ------- |  |  | -- | -- | - | - | --- | --- | - |  | -- | --- | --
|                              |              |                       |     |              |  |               |    |              |   |                
|                              |              |                       |     |              |  |               |    |              |   | Increase       
|                              |              |                       |     | % of         |  |               |    | % of         |   | (Decrease) from
|                              |              |                       |     | Consolidated |  |               |    | Consolidated |   | Previous Year  
|                              |              | September 30,         |     | Operating    |  | September 30, |    | Operating    |   |                
|                              |              | 2000                  |     | Revenues     |  | 1999          |    | Revenues     |   | Dollars         |     | Percent
|                              |              |                       |     |              |  |               |    |              |   |                 |     |        
|                              |              |                      
|                              |              | (dollars in millions)
|Nine Months ended             |              |                       |     |              |  |               |    |              |   |                 |     |         |  |  |    |    |   |   |     |     |   |  |    |    
|                             
|                             
|                             
|                             
|Depreciation and amortization |              | $                     | 898 |              |  |               | 24 | %            |   | $               | 732 |         |  |  | 31 | %  |   | $ | 166 |     |   |  | 23 | %  
|                             
|                             
|                             
|                             
|                              | Depreciation |                       |     | 756          |  |               |    | 20           | % |                 |     | 575     |  |  |    | 24 | % |   |     | 181 |   |  |    | 31  | % 
|                             
|                             
|                             
|                             
|                              | Amortization |                       |     | 142          |  |               |    | 4            | % |                 |     | 157     |  |  |    | 7  | % |   |     | (15 | ) |  |    | (10 | )%
|Three Months ended            |              |                       |     |              |  |               |    |              |   |                 |     |         |  |  |    |    |   |   |     |     |   |  |    |    
|                             
|                             
|                             
|                             
|Depreciation and amortization |              | $                     | 315 |              |  |               | 22 | %            |   | $               | 261 |         |  |  | 29 | %  |   | $ | 54  |     |   |  | 21 | %  
|                             
|                             
|                             
|                             
|                              | Depreciation |                       |     | 268          |  |               |    | 19           | % |                 |     | 208     |  |  |    | 23 | % |   |     | 60  |   |  |    | 29  | % 
|                             
|                             
|                             
|                             
|                              | Amortization |                       |     | 47           |  |               |    | 3            | % |                 |     | 53      |  |  |    | 6  | % |   |     | (6  | ) |  |    | (11 | )%

Depreciation and amortization increased primarily due to the
increase in depreciation as a result of placing into service, as
well as modifying, additional transmitter and receiver sites and
switches in existing domestic and international markets
primarily to enhance the coverage and capacity of our digital
mobile networks. System assets relating to the development and
expansion of the digital mobile networks, both domestically and
internationally, represent the largest portion of capital
expenditures during the periods. Depreciation begins when system
assets are placed into service in the relevant markets.
Depreciation is expected to increase as we place additional
transmitter and receiver sites switches in service.

During the first quarter of 2000, we changed the estimated
useful lives of some of our digital mobile network and
non-network assets. The effect of this change in estimate was
additional depreciation expense of about $39 million for
the nine months ended September 30, 2000, including
$13 million for the three months ended September 30,
2000. We will continue to evaluate the useful lives of our
assets in light of technology advances and the development of
new services.

Segment Earnings (Losses), Interest Expense, Interest
Income and Other.

|                                              |               |                       |     |              |   |               |    |              |    |                 |     |         |   |  |    |    |    |   |     |     |   |  |     |     |   
|--------------------------------------------- | ------------- | --------------------- | --- | ------------ | - | ------------- | -- | ------------ | -- | --------------- | --- | ------- | - |  | -- | -- | -- | - | --- | --- | - |  | --- | --- | --
|                                              |               |                       |     |              |   |               |    |              |    |                
|                                              |               |                       |     |              |   |               |    |              |    | Increase       
|                                              |               |                       |     | % of         |   |               |    | % of         |    | (Decrease) from
|                                              |               |                       |     | Consolidated |   |               |    | Consolidated |    | Previous Year  
|                                              |               | September 30,         |     | Operating    |   | September 30, |    | Operating    |    |                
|                                              |               | 2000                  |     | Revenues     |   | 1999          |    | Revenues     |    | Dollars         |     | Percent
|                                              |               |                       |     |              |   |               |    |              |    |                 |     |        
|                                              |               |                      
|                                              |               | (dollars in millions)
|Nine Months ended                             |               |                       |     |              |   |               |    |              |    |                 |     |         |   |  |    |    |    |   |     |     |   |  |     |    
|                                             
|                                             
|                                             
|                                             
|Segment earnings (losses)                     |               | $                     | 877 |              |   |               | 23 | %            |    | $               | 319 |         |   |  | 14 | %  |    | $ | 558 |     |   |  | 175 | %  
|                                             
|                                             
|                                             
|                                             
|                                              | Domestic      |                       |     | 977          |   |               |    | 26           | %  |                 |     | 447     |   |  |    | 19 | %  |   |     | 530 |   |  |     | 119 | % 
|                                             
|                                             
|                                             
|                                             
|                                              | International |                       |     | (100         | ) |               |    | (3           | )% |                 |     | (128    | ) |  |    | (5 | )% |   |     | (28 | ) |  |     | (22 | )%
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |               |                       | 912 |              |   |               | 24 | %            |    |                 | 627 |         |   |  | 27 | %  |    |   | 285 |     |   |  | 45  | %  
|                                             
|                                             
|                                             
|                                             
|Interest income                               |               |                       | 298 |              |   |               | 8  | %            |    |                 | 28  |         |   |  | 1  | %  |    |   | 270 |     |   |  | NM  |    
|                                             
|                                             
|                                             
|                                             
|Debt conversion expense                       |               |                       | 23  |              |   |               | 1  | %            |    |                 |    |         |   |  |   |    |    |   | 23  |     |   |  | NM  |    
|                                             
|                                             
|                                             
|                                             
|Equity in losses of unconsolidated affiliates |               |                       | 106 |              |   |               | 3  | %            |    |                 | 49  |         |   |  | 2  | %  |    |   | 57  |     |   |  | 116 | %  

20



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##### Table of Contents



|                                                 |               |                       |     |              |   |               |    |              |    |                 |       |         |   |  |    |    |    |   |      |     |   |  |     |    |   
|------------------------------------------------ | ------------- | --------------------- | --- | ------------ | - | ------------- | -- | ------------ | -- | --------------- | ----- | ------- | - |  | -- | -- | -- | - | ---- | --- | - |  | --- | -- | --
|                                                 |               |                       |     |              |   |               |    |              |    |                
|                                                 |               |                       |     |              |   |               |    |              |    | Increase       
|                                                 |               |                       |     | % of         |   |               |    | % of         |    | (Decrease) from
|                                                 |               |                       |     | Consolidated |   |               |    | Consolidated |    | Previous Year  
|                                                 |               | September 30,         |     | Operating    |   | September 30, |    | Operating    |    |                
|                                                 |               | 2000                  |     | Revenues     |   | 1999          |    | Revenues     |    | Dollars         |       | Percent
|                                                 |               |                       |     |              |   |               |    |              |    |                 |       |        
|                                                 |               |                      
|                                                 |               | (dollars in millions)
|                                                
|                                                
|                                                
|                                                
|Foreign currency transaction gains (losses), net |               | $                     | 9   |              |   |               |   |              |    | $               | (61   | )       |   |  | (3 | )% |    | $ | 70   |     |   |  | 115 | % 
|                                                
|                                                
|                                                
|                                                
|Other, net                                       |               |                       | 27  |              |   |               | 1  | %            |    |                 | 78    |         |   |  | 3  | %  |    |   | (51  | )   |   |  | (65 | )%
|                                                
|                                                
|                                                
|                                                
|Income tax benefit                               |               |                       | 24  |              |   |               | 1  | %            |    |                 | 25    |         |   |  | 1  | %  |    |   | (1   | )   |   |  | (4  | )%
|                                                
|                                                
|                                                
|                                                
|Extraordinary loss                               |               |                       | 104 |              |   |               | 3  | %            |    |                 |      |         |   |  |   |    |    |   | 104  |     |   |  | NM  |   
|                                                
|                                                
|                                                
|                                                
|Loss attributable to common stockholders         |               |                       | 963 |              |   |               | 26 | %            |    |                 | 1,161 |         |   |  | 49 | %  |    |   | (198 | )   |   |  | (17 | )%
|Three Months ended                               |               |                       |     |              |   |               |    |              |    |                 |       |         |   |  |    |    |    |   |      |     |   |  |     |   
|                                                
|                                                
|                                                
|                                                
|Segment earnings (losses)                        |               | $                     | 359 |              |   |               | 26 | %            |    | $               | 175   |         |   |  | 20 | %  |    | $ | 184  |     |   |  | 105 | % 
|                                                
|                                                
|                                                
|                                                
|                                                 | Domestic      |                       |     | 392          |   |               |    | 28           | %  |                 |       | 210     |   |  |    | 24 | %  |   |      | 182 |   |  |     | 87 | % 
|                                                
|                                                
|                                                
|                                                
|                                                 | International |                       |     | (33          | ) |               |    | (2           | )% |                 |       | (35     | ) |  |    | (4 | )% |   |      | (2  | ) |  |     | (6 | )%
|                                                
|                                                
|                                                
|                                                
|Interest expense                                 |               |                       | 333 |              |   |               | 24 | %            |    |                 | 220   |         |   |  | 25 | %  |    |   | 113  |     |   |  | 51  | % 
|                                                
|                                                
|                                                
|                                                
|Interest income                                  |               |                       | 111 |              |   |               | 8  | %            |    |                 | 16    |         |   |  | 2  | %  |    |   | 95   |     |   |  | NM  |   
|                                                
|                                                
|                                                
|                                                
|Equity in losses of unconsolidated affiliates    |               |                       | 35  |              |   |               | 2  | %            |    |                 | 18    |         |   |  | (2 | )% |    |   | 17   |     |   |  | 94  | % 
|                                                
|                                                
|                                                
|                                                
|Foreign currency transaction gains (losses), net |               |                       | 3   |              |   |               |   |              |    |                 | (15   | )       |   |  | (2 | )% |    |   | 18   |     |   |  | 120 | % 
|                                                
|                                                
|                                                
|                                                
|Other, net                                       |               |                       | 18  |              |   |               | 1  | %            |    |                 | 3     |         |   |  |   |    |    |   | 15   |     |   |  | NM  |   
|                                                
|                                                
|                                                
|                                                
|Income tax benefit                               |               |                       | 8   |              |   |               |   |              |    |                 | 8     |         |   |  | 1  | %  |    |   |     |     |   |  |    |   
|                                                
|                                                
|                                                
|                                                
|Loss attributable to common stockholders         |               |                       | 236 |              |   |               | 17 | %            |    |                 | 361   |         |   |  | 41 | %  |    |   | (125 | )   |   |  | (35 | )%



NM-Not Meaningful

We define segment earnings as earnings before interest, taxes,
depreciation and amortization and other nonoperating charges.
Domestic segment earnings are expected to grow due to an
increasing customer base and decreasing operating expenses as a
percentage of revenues due to the economies of scale achieved as
a result of increases in system usage. We expect international
segment losses to continue while we are building out our digital
mobile networks and expanding our presence in international
markets. Based on the current stage of development of each of
our reportable segments, most of our operating revenues,
identifiable assets and segment earnings pertain to our domestic
operations.

The increase in interest expense for both the nine and three
months ended September 30, 2000 compared to the nine and
three months ended September 30, 1999 resulted from the
issuance of senior notes during November 1999, January 2000
and August 2000, as well as a higher average level of
borrowings under our domestic bank credit agreement and Nextel
Internationals bank and vendor credit facilities. This
increase was partially offset by a decrease in the weighted
average interest rate on our total outstanding senior notes.

The increase in interest income for both the nine and three
months ended September 30, 2000 compared to the nine and
three months ended September 30, 1999 is primarily due to
income recognized on the investment of the net proceeds received
by us in November 1999 from both the public offering of our
class A common stock and the issuance of our 9.375% senior notes
due 2009 and proceeds received by us in January 2000 and by
Nextel International in August 2000 from the issuance of senior
notes as well as the additional borrowings under our domestic
bank credit facility.

The debt conversion expense of $23 million in the nine
months ended September 30, 2000 resulted from payments to
induce the conversion of $246 million of our 4.75% convertible
senior notes due 2007. See note 3 in the accompanying financial
statements.

The increase in equity in losses of unconsolidated affiliates
for both the nine and three months ended September 30, 2000
compared to the nine and three months ended September 30,
1999 is due to increased

21



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##### Table of Contents





The foreign currency transaction gain for the nine and three
months ended September 30, 2000 is due primarily to the
strengthening of the Brazilian real relative to the U.S. dollar
during 2000. The foreign currency transaction loss for the nine
and three months ended September 30, 1999 is primarily due
to the weakening of the Brazilian real during the early part of
1999.

Other, net for both the nine and three months ended
September 30, 2000 primarily includes the $15 million
gain recognized on the sale of licenses to Nextel Partners in
September 2000. For the nine months ended
September 30, 1999, other, net consists primarily of a
$70 million gain recognized on the sale of our interest in
a joint venture.

During the first quarter of 2000, we utilized a portion of the
proceeds from our 9.375% senior notes to repurchase and redeem
prior to final maturity all of our outstanding 10.125% senior
notes due 2004 and all of our outstanding 9.75% senior notes due
2004. As a result of the early retirement of these senior notes
repurchased and redeemed during the first quarter of 2000, we
recognized an extraordinary loss of about $104 million,
representing the excess of the purchase price over the carrying
values of the repurchased and redeemed notes and the write-off
of associated unamortized deferred financing costs.

Liquidity and Capital Resources.

We had losses attributable to common stockholders of
$963 million for the nine months ended September 30,
2000, and losses attributable to common stockholders of
$1,161 million for the nine months ended September 30,
1999. The operating expenses and capital expenditures associated
with developing, enhancing and operating our digital mobile
network have more than offset our operating revenues. Our
operating expenses, debt service obligations and anticipated
capital expenditures are expected to continue to more than
offset operating revenues for the next several years. We have
consistently used external sources of funds, primarily from
equity issuances and debt incurrences, to fund operations,
capital expenditures, acquisitions and other nonoperating needs.

Cash Flows.

Working capital increased by $1.5 billion to
$5.3 billion at September 30, 2000 compared to working
capital of $3.8 billion at December 31, 1999 primarily
as a result of about $1.9 billion of borrowings in 2000
under our domestic bank credit facility and about
$1.8 billion in proceeds from the issuance of debt
securities in 2000. This working capital increase was partially
offset by the use of about $2.2 billion to fund capital
expenditures.

Net cash provided by operating activities of $589 million
for the nine months ended September 30, 2000 improved by
$625 million compared to net cash used in operating
activities of $36 million for the nine months ended
September 30, 1999. The increase in net cash provided by
operating activities consisted of a domestic increase of
$579 million and an increase in international operations of
$46 million. This improvement in the cash provided by
operating activities reflects increasing operating revenues and
improved domestic financial performance.

Capital expenditures to fund the continued expansion of our
digital mobile network continue to represent the largest use of
our funds for investing activities. Net cash used in investing
activities for the nine-month period ended September 30,
2000 increased $3,303 million compared to the same period
in 1999 primarily due to the $1,206 million increase in
cash paid for capital expenditures, $1,575 million increase
in net purchases of short term investments and $529 million
increase in cash paid for investments, purchases of licenses and
acquisitions. Cash payments for capital expenditures totaled
$2,281 million for the nine months ended September 30,
2000 and $1,075 million for the nine-month period ended
September 30, 1999, including $277 million for the
nine months ended September 30, 2000 and $110 million
for the nine months ended September 30, 1999 in capital
expenditures for international operations.

22



---



##### Table of Contents



Net cash provided by financing activities for the nine months
ended September 30, 2000 consisted primarily of
$1.8 billion in gross proceeds from the issuance of debt
securities and $1.9 billion in proceeds from borrowings
under our domestic bank credit facility, offset by
$1.2 billion for the retirement of debt securities.

Future Capital Needs and Resources.

We anticipate that, for the foreseeable future, significant
amounts of our available cash will be utilized for:



| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | capital expenditures for the construction and enhancement of the
	digital mobile network, both domestically and internationally;                                    
|
| |  | operating expenses relating to our digital mobile network, both
	domestically and internationally;                                                                  
|
| |  | potential acquisitions including any negotiated acquisitions of
	spectrum from third parties and any future Federal
	Communications Commission auctions of spectrum;
|
| |  | debt service requirements; and                                                                                                                                      
|
| |  | other general corporate expenditures.                                                                                                                               

We anticipate that our cash utilization for capital expenditures
and other investing activities will continue to exceed our
positive cash flows from domestic operating activities through
the remainder of 2000 and 2001, as we build out, expand and
enhance our digital mobile network. See Forward Looking
Statements.

As of September 30, 2000, our domestic bank credit facility
provided for total secured financing capacity of up to
$6.0 billion, subject to the satisfaction or waiver of
applicable borrowing conditions. This facility consists of a
$1.5 billion revolving loan and $3.5 billion in term
loans that mature over a period from December 31, 2007 to
December 31, 2008, as well as a $1.0 billion
incremental term loan borrowed on March 15, 2000, maturing
June 30, 2009. As of September 30, 2000, we had borrowed
the entire $4.5 billion of term loans available under our
bank credit facility. Amounts outstanding under this bank credit
facility are secured by liens on assets of substantially all of
our domestic subsidiaries and bear interest payable quarterly at
an adjustable rate calculated based either on the U.S. prime
rate or LIBOR. The maturity dates of the loans can accelerate if
our credit ratings are below specified levels and if the
aggregate amount of specified debt obligations that mature
before June 30, 2009, including the redemption price of
redeemable stock that is mandatorily redeemable before
June 30, 2009, exceed specified amounts. The availability
of financing under this bank credit facility is subject to
requirements under the indentures governing our public notes and
the terms applicable to some of our preferred stock. As of
September 30, 2000, under the current bank credit
agreement, as amended, we are able to access the entire
$6.0 billion available in compliance with our financial
ratio tests, the debt incurrence covenants contained in our
indentures and the relevant terms of our applicable issues of
preferred stock.

As of September 30, 2000, $197 million had been
borrowed by Nextel International under its equipment financing
with Motorola Credit Corporation, leaving $28 million
available for future borrowings under that facility.
Additionally, as of September 30, 2000, McCaw International
(Brazil), Ltd. had borrowed the full $112 million available
under its vendor financing agreement with Motorola Credit. As of
September 30, 2000, Nextel Argentina S.R.L. had borrowed
the full $100 million under its original bank credit
facility and had borrowed $27 million of the
$50 million in incremental term loans that are available
under that facility, leaving $23 million available for
future equipment borrowings. In January 2000, Nextel
International borrowed the full $57 million in incremental
term loans available under the loan agreement entered into with
Motorola Credit, all of which was outstanding at September 30,
2000. In August 2000, Nextel International received about
$624 million in net cash proceeds from the issuance of its
12.75% senior serial notes due 2010.

We are currently in the early stages of developing our detailed
business plans and related budgets for calendar year 2001. We
are not likely to finalize these processes and the resulting
detailed business plans and related budgets until late 2000 or
early 2001. Moreover, we may later revise any such plans and
budgets 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

23



---



##### Table of Contents





Currently, we expect to maintain the level of domestic capital
expenditures and increase the level of international capital
expenditures during the remainder of 2000 and during 2001. Our
capital spending is expected to be driven by several factors,
including:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the contemplated expansion of digital mobile network coverage
	around most major domestic and selected international markets;
	and                                                                                                         
|
| |  | 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
	domestic and international core market coverage areas.

We provided Nextel International with significant financial
support during the first half of 2000. Although we have no legal
obligation to make any additional equity investments in, or
otherwise advance funds to, Nextel International, in the event
Nextel International is unable to obtain necessary funding from
other sources, we may be called upon to provide additional
financing to Nextel International in 2001. Based on available
cash resources and the cash needs of our domestic and
international operations for capital expenditures and the
combined anticipated operating cash flow of the existing and
expected wireless businesses, we believe that we will be able to
fully fund both our domestic and international operations
through calendar year 2001. See Forward Looking
Statements. In making this assessment, we have considered:



| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the consolidated cash, cash equivalents and short-term
	investments on hand as of September 30, 2000 of about
	$6.4 billion;                                                
|
| |  | the availability of about $1.5 billion of incremental
	funding over the amounts outstanding as of September 30,
	2000 under our domestic bank credit facility;              
|
| |  | the availability at September 30, 2000 of about
	$51 million in aggregate remaining equipment financing
	under Nextel Internationals financing agreements described
	above;
|
| |  | the payment of the $456 million balance due for the
	licenses won in the 700 MHz and 800 MHz auctions in the third
	quarter of 2000; and                                    
|
| |  | the anticipated level of domestic and international capital
	expenditures.                                                                                                  

If our or Nextel Internationals business plans change, or
if economic conditions in any of our combined 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 or
profitability of the domestic or international mobile wireless
businesses conducted by us or Nextel International, the
anticipated cash needs of those businesses, and the conclusions
as to the adequacy of the available sources, each also could
change significantly. Finally, our conclusion that we will be
able to fully fund both our domestic and international
operations through calendar year 2001 does not take into account
the impact of our participation in any auctions for the purchase
of licenses other than those already concluded or any
significant acquisition transactions or the pursuit of any
significant new business opportunities other than those
currently being pursued by us or Nextel International. Any
acquisition or new business opportunity could involve
significant additional funding needs in excess of the identified
currently available sources, and could require us or Nextel
International or both to raise additional equity and debt
funding to meet those needs.

The availability of borrowings under our domestic bank credit
facility and Nextel Internationals financing agreements is
subject to conditions and limitations, and we cannot be sure
that those conditions will continue to be met. The instruments
relating to our financing arrangements and preferred stock
contain provisions that operate to limit the amount of
borrowings that we may incur. The terms of the domestic bank
credit facility and Nextel Internationals financing
agreements also require us and our subsidiaries at specified
times to maintain compliance with specified operating and
financial covenants or ratios, including specified covenants and
ratios specifically related to leverage, which become more
stringent over time. In addition, our

24



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##### Table of Contents







| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | the commercial success of our domestic and international digital
	mobile networks;
|
| |  | the amount and timing of our capital expenditures and operating
	income or losses;
|
| |  | the volatility and demand of the equity and debt markets; and                     
|
| |  | the market price of our common stock.                                             

We have had and may in the future have discussions with third
parties regarding potential equity investments and debt
financing arrangements to satisfy actual or anticipated
financing needs. At present, other than the existing equity or
debt financing arrangements that have been consummated or are
described in this quarterly report and our Annual Report on
Form 10-K for the year ended December 31, 1999, we
have no legally binding commitments or understandings with any
third parties to obtain any material amount of equity or debt
financing. Under the terms of the agreements between us and
Motorola pursuant to which we acquired substantially all of
Motorolas domestic 800 MHz specialized mobile radio
licenses in 1995, we have agreed, under specified circumstances,
not to grant superior governance rights to any third-party
investor without Motorolas consent, which may make
securing certain strategic equity investments more difficult.
Our ability to incur additional indebtedness, including, in
certain circumstances, indebtedness incurred under our domestic
bank credit agreement, is and will be limited by the terms of
our financing agreements and the terms of some series of our
outstanding preferred stock.

Forward Looking Statements.

A number of the statements made in the foregoing
Managements Discussion and Analysis of Financial
Condition and Results of Operations are not historical or
current facts, but deal with potential future circumstances and
developments. They can be identified by the use of
forward-looking words such as believes,
expects, plans, may,
will, would, could,
should, or anticipates or other
comparable words, or by discussions of strategy that involve
risks and uncertainties. We caution you that these
forward-looking statements are only predictions, which are
subject to risks and uncertainties including financial
variations, changes in the regulatory environment, industry
growth and trend predictions. We have attempted to identify, in
context, some of the factors that we currently believe may cause
actual future experience and results to differ from our current
expectations regarding the relevant matter or subject area. The
operation and results of our wireless communications business
also may be subject to the effect of other risks and
uncertainties in addition to the relevant qualifying factors
identified in the foregoing Managements Discussion
and Analysis of Financial Condition and Results of
Operations section, including, but not limited to:



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions in the geographic areas and
	occupational market segments that we are targeting for our
	digital mobile network service;                                               
|
| |  | the availability of adequate quantities of system infrastructure
	and subscriber equipment and components to meet service
	deployment and marketing plans and customer demand;                     
|
| |  | the timely development and availability of new handsets with
	expanded applications and features;                                                                                                  
|
| |  | the success of efforts to improve and satisfactorily address any
	issues relating to our digital mobile network performance;                                                                       
|
| |  | the continued successful performance of the technology being
	deployed in our various market areas and the success of
	technology deployed in connection with our Nextel Online
	services offering;
|
| |  | market acceptance of our new service offerings, including Nextel
	Online and Nextel Worldwide;                                                                                                     
|
| |  | the ability to achieve market penetration and average subscriber
	revenue levels sufficient to provide financial viability to our
	digital mobile network business;                                

25



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to timely and successfully accomplish required
	scale-up of our 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
	receivable being generated by the digital mobile network
	customer base;                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | access to sufficient debt or equity capital to meet operating
	and financing needs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | the quality and price of similar or comparable wireless
	communications services offered or to be offered by our
	competitors, including providers of cellular and personal
	communication services;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | 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 our
	reports filed with the Securities and Exchange Commission
	including our Annual Report on Form 10-K for the year ended
	December 31, 1999 and our Quarterly Reports on
	Form 10-Q for the quarters ended March 31, 2000 and
	June 30, 2000, 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 Nextel Internationals Annual Report
	on Form 10-K for the year ended December 31, 1999 and its
	Quarterly Reports on Form 10-Q for the quarters ended
	March 31, 2000, June 30, 2000 and September 30,
	2000.




Item 3.  Quantitative and Qualitative Disclosures
About Market Risk.

We primarily use mandatorily redeemable preferred stock, senior
notes and bank and vendor credit facilities to finance our
operations. These on-balance sheet financial instruments, to the
extent they provide for variable rates of interest, expose us to
interest rate risk. Our primary interest rate risk exposure
results from changes in LIBOR, the U.S. prime rate, Eurodollar
Rate and Adjusted Base Rate, referred to as ABR, which are used
to determine the interest rates that are applicable to
borrowings under our bank and vendor credit agreements. We use
off-balance sheet derivative financial instruments, including
interest rate swap and collar agreements, to partially hedge
interest rate exposure associated with on-balance sheet
financial instruments. All of our derivative financial
instrument transactions are entered into for non-trading
purposes. The terms and characteristics of the derivative
financial instruments are matched with the existing on-balance
sheet financial instruments and thus do not constitute
speculative or leveraged positions independent of these
exposures.

Nextel Internationals revenues are denominated in foreign
currencies while a portion of its operations are financed
through senior notes and bank and vendor credit facilities which
are denominated in U.S. dollars. As a result, fluctuations in
exchange rates relative to the U.S. dollar, primarily those
related to the Brazilian real and Mexican peso, expose us to
foreign currency exchange rate risk.

As of September 30, 2000, we held about $2.7 billion
of debt securities in the form of commercial paper, U.S.
government securities and certificates of deposit as short-term
investments. As the weighted average maturity from the date of
purchase was less than five months, these short-term investments
do not expose us to a significant amount of interest rate risk.

At September 30, 2000, we had investments in the common
stock of two publicly traded companies, which had an aggregate
fair value of $631 million at September 30, 2000. In
accordance with FASB Statement No. 115, these investments
are recorded at their market value in our financial statements.
Negative fluctuations in the stock prices of these companies
expose us to equity price risk. A 10% decline in their stock
price would result in a $63 million decrease in the fair
value of our investments in these public companies.

The information below summarizes our market risks associated
with fluctuations in interest rates as of September 30,
2000 in U.S. dollars. To the extent that our financial
instruments expose us to interest rate and foreign currency
exchange risk, these instruments are presented within each
market risk category in the table below. The table presents
principal cash flows and related interest rates by year of
maturity for our mandatorily redeemable preferred stock, senior
notes, finance obligation and bank and vendor credit facilities
in effect at September 30, 2000 and, in the case of the
mandatorily redeemable preferred stock and senior notes,
excludes the potential exercise of the relevant redemption or
conversion features. This table also

26



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##### Table of Contents







| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | quoted market prices for mandatorily redeemable preferred stock
	and senior notes;                                        
|
| |  | carrying value for the bank and vendor credit facilities at
	September 30, 2000, as interest rates are reset periodically;
|
| |  | estimates for the finance obligation based on interest rates for
	current term loans with similar terms; and              
|
| |  | estimates obtained from dealers to settle interest rate swap and
	collar agreements.                                      

Descriptions of our mandatorily redeemable preferred stock,
senior notes, bank and vendor credit facilities, and interest
rate risk management agreements are contained in notes 8, 9 and
12 to the consolidated financial statements included in our 1999
Annual Report on Form 10-K and should be read in
conjunction with the following table. The change in the total
and fair values of our mandatorily redeemable preferred stock,
long-term debt and finance obligation as compared to
December 31, 1999 reflect the January 2000 issuance of
convertible notes, the August 2000 issuance of senior notes
by Nextel International, additional borrowings under our bank
and vendor credit facilities, the retirement of two series of
our debt securities, the conversion of some of our 4.75%
convertible senior notes due 2007, the conversion of some of our
zero coupon convertible preferred stock due 2010 and the changes
in the applicable market conditions. The decrease in the
notional amount maturing in 2000, 2001 and 2003 for variable to
fixed rate interest rate swaps as compared to December 31,
1999 is attributable to the termination of three swaps in the
second quarter of 2000 and one swap in third quarter of 2000 in
accordance with their original terms. There were no realized
gains or losses associated with these terminations.

|                                                                               |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------ | --------------------- | -------------------------- | - | --------- | - | ---- | - | ---- | - | ---- | - | ---------- | - | ----------- | - | ---------- | - |  | - | --- | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                               |                       |                            |   |           |   |     
|                                                                               |                       | Year of Maturity           |   |           |   |     
|                                                                               |                       |                            |   | Total Due |   |     
|                                                                               |                       | 2000                       |   | 2001      |   | 2002 |   | 2003 |   | 2004 |   | Thereafter |   | At Maturity |   | Fair Value
|                                                                               |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |           
|                                                                               |                       |                           
|                                                                               |                       | (U.S. dollars in millions)
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|I. Interest Rate Sensitivity                                                   |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|Mandatorily Redeemable Preferred Stock, Long-Term Debt and
	Finance Obligation |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Fixed Rate            |                            | $ | 30        |   |      | $ | 78   |   |      | $ | 82         |   |             | $ | 86         |   |  | $ | 82  |   |  | $ | 12,758 |   |  | $ | 13,116 |   |  | $ | 11,865 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Interest Rate |                            |   | 8         | % |      |   | 9    | % |      |   | 9          | % |             |   | 9          | % |  |   | 9   | % |  |   | 9      | % |  |   | 9      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Variable Rate         |                            | $ | 25        |   |      | $ | 159  |   |      | $ | 162        |   |             | $ | 313        |   |  | $ | 404 |   |  | $ | 3,930  |   |  | $ | 4,993  |   |  | $ | 4,993  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Interest Rate |                            |   | 12        | % |      |   | 12   | % |      |   | 11         | % |             |   | 10         | % |  |   | 10  | % |  |   | 10     | % |  |   | 10     | % |  |   |        |  
|Interest Rate Swaps                                                            |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Variable to Fixed     |                            | $ |          |   |      | $ |     |   |      | $ |           |   |             | $ |           |   |  | $ |    |   |  | $ | 570    |   |  | $ | 570    |   |  | $ | (41    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Pay Rate      |                            |   |          |   |      |   |     |   |      |   |           |   |             |   |           |   |  |   |    |   |  |   | 8      | % |  |   | 8      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Receive Rate  |                            |   |          |   |      |   |     |   |      |   |           |   |             |   |           |   |  |   |    |   |  |   | 7      | % |  |   | 7      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Variable to Variable  |                            | $ |          |   |      | $ | 100  |   |      | $ |           |   |             | $ | 400        |   |  | $ |    |   |  | $ |       |   |  | $ | 500    |   |  | $ | (3     | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Pay Rate      |                            |   |          |   |      |   | 7    | % |      |   |           |   |             |   | 7          | % |  |   |    |   |  |   |       |   |  |   | 7      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Receive Rate  |                            |   |          |   |      |   | 7    | % |      |   |           |   |             |   | 7          | % |  |   |    |   |  |   |       |   |  |   | 7      | % |  |   |        |  
|Interest Rate Collars                                                          |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Collars               |                            | $ |          |   |      | $ |     |   |      | $ |           |   |             | $ | 200        |   |  | $ |    |   |  | $ |       |   |  | $ | 200    |   |  | $ | 1      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Cap           |                            |   |          |   |      |   |     |   |      |   |           |   |             |   | 7          | % |  |   |    |   |  |   |       |   |  |   | 7      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Floor         |                            |   |          |   |      |   |     |   |      |   |           |   |             |   | 4          | % |  |   |    |   |  |   |       |   |  |   | 4      | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|II. Foreign Exchange Rate Sensitivity                                          |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|Long-Term Debt                                                                 |                       |                            |   |           |   |      |   |      |   |      |   |            |   |             |   |            |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Fixed Rate            |                            | $ |          |   |      | $ | 1    |   |      | $ | 1          |   |             | $ |           |   |  | $ |    |   |  | $ | 2,331  |   |  | $ | 2,333  |   |  | $ | 1,840  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Interest Rate |                            |   |          |   |      |   | 14   | % |      |   | 14         | % |             |   |           |   |  |   |    |   |  |   | 13     | % |  |   | 13     | % |  |   |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Variable Rate         |                            | $ | 25        |   |      | $ | 159  |   |      | $ | 115        |   |             | $ | 115        |   |  | $ | 79  |   |  | $ |       |   |  | $ | 493    |   |  | $ | 493    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Average Interest Rate |                            |   | 12        | % |      |   | 12   | % |      |   | 11         | % |             |   | 11         | % |  |   | 12  | % |  |   |       |   |  |   | 12     | % |  |   |        |  

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##### Table of Contents






PART II  OTHER INFORMATION.




Item 1.  Legal Proceedings.

Nextel is involved in certain legal proceedings that are
described in our 1999 Annual Report on Form 10-K. During
the three months ended September 30, 2000, there were no
material changes in the status of or developments regarding
those legal proceedings that have not been previously disclosed
in our 1999 Annual Report on Form 10-K and our Quarterly
Report on Form 10-Q for the quarter ended June 30,
2000, except as set forth below.

Beginning in the second quarter of 2000, allegations of
employment discrimination and harassment were leveled against us
in the press and some related complaints have been filed with
the Equal Employment Opportunity Commission. We and a law firm
claiming to represent the current and former employees of Nextel
and its subsidiaries that have asserted these allegations have
structured mutually acceptable arrangements for processing such
claims, which are being implemented. Based on the specific claim
details and our related investigative results to date, we do not
believe that the claims that have come to our attention are
likely to result in a material liability to us.

We have publicly stated and reiterated our commitment to
creating and sustaining a work environment that encourages
innovation and excellence and accordingly prohibits
discrimination or harassment on the basis of race, gender,
sexual orientation, religion or other inappropriate grounds. We
remain committed to assuring compliance with our long
established and clearly stated policies on those topics, and
will take appropriate actions to remedy any violations that are
established.




Item 6.  Exhibits and Reports on
Form 8-K.

(a)  List of Exhibits.

|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|4.1     |  | Indenture, dated as of August 1, 2000, by and between
	Nextel International, Inc. and The Bank of New York, as Trustee,
	relating to the 12.75% Senior Serial Redeemable Notes due 2010
	(filed on August 2, 2000 as Exhibit 4.1 to Nextel
	Internationals Current Report on Form 8-K dated as of
	August 1, 2000 and incorporated herein by reference).           
|4.2     |  | Registration Rights Agreement, dated as of August 1, 2000,
	by and between Nextel International, Inc. and the placement
	agents named therein relating to the 12.75% Senior Serial Notes
	due 2010 (filed on August 2, 2000 as Exhibit 4.2 to
	Nextel Internationals Current Report on Form 8-K
	dated as of August 1, 2000 and incorporated herein by
	reference).
|27*     |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                            




|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Submitted only with the electronic filing of this document with
	the Securities and Exchange Commission pursuant to
	Regulation S-T under the Securities Act.

(b)  Reports on Form 8-K.



| |     |                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) | Current Report on Form 8-K dated and filed on July 18,
	2000 with the Securities and Exchange Commission reporting under
	Item 5 the announcement of our summary financial results
	and other data for the quarter ended June 30, 2000.

28



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##### Table of Contents






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



| |                            
| | ---------------------------
| | NEXTEL COMMUNICATIONS, INC.



| |     |                      
| | --- | ---------------------
| | By: | /s/ WILLIAM G. ARENDT



| |  |                  
| |  | -----------------
| |  | William G. Arendt

| |                               
| | ------------------------------
| | Vice President and Controller 
| | (Principal Accounting Officer)

29



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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|4.1     |  | Indenture, dated as of August 1, 2000, by and between
	Nextel International, Inc. and The Bank of New York, as Trustee,
	relating to the 12.75% Senior Serial Redeemable Notes due 2010
	(filed on August 2, 2000 as Exhibit 4.1 to Nextel
	Internationals Current Report on Form 8-K dated as of
	August 1, 2000 and incorporated herein by reference).           
|4.2     |  | Registration Rights Agreement, dated as of August 1, 2000,
	by and between Nextel International, Inc. and the placement
	agents named therein relating to the 12.75% Senior Serial Notes
	due 2010 (filed on August 2, 2000 as Exhibit 4.2 to
	Nextel Internationals Current Report on Form 8-K
	dated as of August 1, 2000 and incorporated herein by
	reference).
|27*     |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                            






|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Submitted only with the electronic filing of this document with
	the Securities and Exchange Commission pursuant to
	Regulation S-T under the Securities Act.

30