UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2002
OR
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-30673
NTL INCORPORATED
| Delaware (State or other jurisdiction of incorporation or organization) |
13-4105887 (I.R.S. Employer Identification No.) |
|
| 110 East 59th Street, New York, New York (Address of principal executive offices) |
10022 (Zip Code) |
(212) 906-8440
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
The number of shares outstanding of the issuer’s common stock as of June 30, 2002 was 276,626,476.
NTL Incorporated (Debtor-in Possession) and Subsidiaries
Index
| Page | ||||||||
| PART I. FINANCIAL INFORMATION
|
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| Item 1. | Financial Statements | |||||||
| Condensed Consolidated Balance Sheets- June 30, 2002 and December 31, 2001 | 2 | |||||||
| Condensed Consolidated Statements of Operations- Three and Six months ended June 30, 2002 and 2001 | 4 | |||||||
| Condensed Consolidated Statement of Shareholders’ (Deficiency)- Six Months ended June 30, 2002 | 5 | |||||||
| Condensed Consolidated Statements of Cash Flows- Six months ended June 30, 2002 and 2001 | 7 | |||||||
| Notes to Condensed Consolidated Financial Statements | 8 | |||||||
| Item 2. | Management’s Discussion and Analysis of Results of Operations and Financial Condition | 34 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 58 | ||||||
| Risk Factors | 60 | |||||||
| PART II. OTHER INFORMATION
|
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| Item 3. | Defaults Upon Senior Securities | 66 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K | 70 | ||||||
| SIGNATURES | 71 | |||||||
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions)
| June 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
| (unaudited) | (see note) | ||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ | 911.5 | $ | 481.8 | |||||
Marketable securities |
36.0 | – | |||||||
Accounts receivable-trade, less allowance for
doubtful accounts of $109.9 (2002) and $133.8
(2001) |
552.7 | 713.6 | |||||||
Other |
406.8 | 329.9 | |||||||
NTL Australia assets |
– | 405.0 | |||||||
Total current assets |
1,907.0 | 1,930.3 | |||||||
Fixed assets, net |
12,633.3 | 12,338.1 | |||||||
Intangible assets, net |
1,955.3 | 1,849.8 | |||||||
Investments in and loans to affiliates, net |
207.3 | 272.4 | |||||||
Other assets, net of accumulated amortization of
$181.7 (2002) and $150.0 (2001) |
397.6 | 447.9 | |||||||
Total assets |
$ | 17,100.5 | $ | 16,838.5 | |||||
2
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets-continued
(in millions)
| June 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
| (unaudited) | (see note) | ||||||||
Liabilities and shareholders’ (deficiency) |
|||||||||
Liabilities not subject to compromise |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ | 356.7 | $ | 431.1 | |||||
Accrued expenses and other |
948.1 | 1,007.9 | |||||||
Accrued construction costs |
50.5 | 107.8 | |||||||
Interest payable |
227.4 | 302.5 | |||||||
Deferred revenue |
478.5 | 481.6 | |||||||
Current portion of long-term debt |
7,974.0 | 17,666.1 | |||||||
NTL Australia liabilities |
– | 182.9 | |||||||
Total current liabilities |
10,035.2 | 20,179.9 | |||||||
Long-term debt |
– | – | |||||||
Other |
128.8 | 168.1 | |||||||
Commitments and contingent liabilities |
|||||||||
Deferred income taxes |
230.2 | 259.2 | |||||||
Redeemable preferred stock-$.01 par value, plus
accreted dividends; liquidation preference
$2,905.1; less
unamortized discount of $36.6 (2002) and $53.4
(2001);
issued and outstanding 2.1 (2002) and 2.1 (2001)
shares |
– | 2,773.7 | |||||||
Liabilities
subject to compromise, including redeemable preferred stock |
14,263.5 | – | |||||||
Shareholders’ (deficiency): |
|||||||||
Series preferred stock -$.01 par value; authorized
10.0 shares; liquidation preference $3,055.3; issued
and outstanding 3.0 (2002) and 3.0 (2001) shares |
– | – | |||||||
Common stock — $.01 par value; authorized 800.0 shares;
issued and outstanding 276.6 (2002) and 276.6 (2001)
shares |
2.8 | 2.8 | |||||||
Additional paid-in capital |
13,578.1 | 13,720.0 | |||||||
Accumulated other comprehensive (loss) |
(795.1 | ) | (1,072.8 | ) | |||||
(Deficit) |
(20,343.0 | ) | (19,192.4 | ) | |||||
| (7,557.2 | ) | (6,542.4 | ) | ||||||
Total liabilities and shareholders’ (deficiency) |
$ | 17,100.5 | $ | 16,838.5 | |||||
Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date.
See accompanying notes.
3
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in millions, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
Revenues |
||||||||||||||||||
Consumer telecommunications and television |
$ | 624.3 | $ | 618.4 | $ | 1,232.7 | $ | 1,229.3 | ||||||||||
Business telecommunications |
215.6 | 197.6 | 431.2 | 398.8 | ||||||||||||||
Broadcast transmission and other |
76.5 | 68.4 | 146.5 | 136.5 | ||||||||||||||
| 916.4 | 884.4 | 1,810.4 | 1,764.6 | |||||||||||||||
Costs and expenses |
||||||||||||||||||
Operating expenses (exclusive of depreciation shown
separately below) |
413.7 | 435.4 | 849.5 | 874.1 | ||||||||||||||
Selling, general and administrative expenses |
248.5 | 290.8 | 460.8 | 613.0 | ||||||||||||||
Other charges |
16.7 | 17.9 | 19.3 | 25.3 | ||||||||||||||
Corporate expenses |
8.0 | 19.3 | 21.6 | 31.8 | ||||||||||||||
Depreciation |
385.4 | 359.2 | 748.3 | 690.5 | ||||||||||||||
Amortization |
34.4 | 442.0 | 67.1 | 865.9 | ||||||||||||||
| 1,106.7 | 1,564.6 | 2,166.6 | 3,100.6 | |||||||||||||||
Operating (loss) |
(190.3 | ) | (680.2 | ) | (356.2 | ) | (1,336.0 | ) | ||||||||||
Other income (expense) |
||||||||||||||||||
Interest income and other, net |
9.7 | 5.2 | 24.8 | 14.2 | ||||||||||||||
Interest expense (contractual interest of $777.5
(2002)) |
(269.3 | ) | (329.7 | ) | (641.2 | ) | (684.8 | ) | ||||||||||
Share of (losses) from equity investments |
(37.3 | ) | (57.6 | ) | (86.2 | ) | (100.5 | ) | ||||||||||
Foreign currency transaction (losses) gains |
(59.3 | ) | 22.6 | (64.3 | ) | 8.9 | ||||||||||||
(Loss) before recapitalization items, income taxes
and discontinued operations |
(546.5 | ) | (1,039.7 | ) | (1,123.1 | ) | (2,098.2 | ) | ||||||||||
Recapitalization items, net |
(37.8 | ) | – | (83.6 | ) | – | ||||||||||||
Loss before income taxes and discontinued operations |
(584.3 | ) | (1,039.7 | ) | (1,206.7 | ) | (2,098.2 | ) | ||||||||||
Income tax benefit |
26.0 | 12.3 | 48.0 | 28.4 | ||||||||||||||
(Loss) from continuing operations |
(558.3 | ) | (1,027.4 | ) | (1,158.7 | ) | (2,069.8 | ) | ||||||||||
Discontinued operations: |
||||||||||||||||||
Loss from operations of NTL Australia, net of
income tax benefit of $0.7 (2002) and $3.3
(2001) |
(0.5 | ) | (1.8 | ) | (0.3 | ) | (2.3 | ) | ||||||||||
Gain on sale of NTL Australia, net of income tax
expense of $4.5 |
8.4 | – | 8.4 | – | ||||||||||||||
Income (loss) from discontinued operations |
7.9 | (1.8 | ) | 8.1 | (2.3 | ) | ||||||||||||
Net (loss) |
(550.4 | ) | (1,029.2 | ) | (1,150.6 | ) | (2,072.1 | ) | ||||||||||
Preferred stock dividends (contractual dividends of
$191.8 (2002)) |
(43.5 | ) | (75.8 | ) | (141.9 | ) | (140.9 | ) | ||||||||||
Net (loss) available to common shareholders |
$ | (593.9 | ) | $ | (1,105.0 | ) | $ | (1,292.5 | ) | $ | (2,213.0 | ) | ||||||
Basic and diluted net (loss) per common share: |
||||||||||||||||||
(Loss) from continuing operations |
$ | (2.18 | ) | $ | (3.99 | ) | $ | (4.70 | ) | $ | (8.03 | ) | ||||||
Income (loss) from discontinued operations |
0.03 | (0.01 | ) | 0.03 | (0.01 | ) | ||||||||||||
Net (loss) per common share |
$ | (2.15 | ) | $ | (4.00 | ) | $ | (4.67 | ) | $ | (8.04 | ) | ||||||
Weighted average shares |
276.6 | 276.3 | 276.6 | 275.4 | ||||||||||||||
See accompanying notes.
4
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statement of Shareholders’ (Deficiency)
(Unaudited)
(in millions)
| Series Preferred | |||||||||||||||||
| Stock $.01 Par | Common Stock | ||||||||||||||||
| Value | $.01 Par Value | ||||||||||||||||
| Shares | Par | Shares | Par | ||||||||||||||
Balance, December 31, 2001 |
3.0 | $ | – | 276.6 | $ | 2.8 | |||||||||||
Accreted dividends on preferred stock |
|||||||||||||||||
Accretion of discount on preferred stock |
|||||||||||||||||
Comprehensive loss: |
|||||||||||||||||
Net loss for the six months ended
June 30, 2002 |
|||||||||||||||||
Currency translation adjustment |
|||||||||||||||||
Unrealized net losses on investments |
|||||||||||||||||
Unrealized net losses on derivatives |
|||||||||||||||||
Total |
|||||||||||||||||
Balance, June 30, 2002 |
3.0 | $ | – | 276.6 | $ | 2.8 | |||||||||||
5
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statement of Shareholders’ (Deficiency)
(Unaudited) – continued
(in millions)
| Accumulated Other | |||||||||||||||||||||||||
| Comprehensive Loss | |||||||||||||||||||||||||
| Unrealized | Unrealized | ||||||||||||||||||||||||
| Additional | Foreign | Net | Net | ||||||||||||||||||||||
| Paid-In | Comprehensive | Currency | Losses on | Losses on | |||||||||||||||||||||
| Capital | Loss | Translation | Investments | Derivatives | (Deficit) | ||||||||||||||||||||
Balance, December 31, 2001 |
$ | 13,720.0 | $ | (1,042.5 | ) | $ | (15.3 | ) | $ | (15.0 | ) | $ | (19,192.4 | ) | |||||||||||
Accreted dividends on preferred stock |
(125.1 | ) | |||||||||||||||||||||||
Accretion of discount on preferred stock |
(16.8 | ) | |||||||||||||||||||||||
Comprehensive loss: |
|||||||||||||||||||||||||
Net loss for the six months ended
June 30, 2002 |
$ | (1,150.6 | ) | ||||||||||||||||||||||