UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
| For the quarterly period ended September 30, 2002 | ||||
| OR | ||||
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-30673
NTL INCORPORATED
| Delaware | 13-4105887 | |
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| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 110 East 59th Street, New York, New York | 10022 | |
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| (Address of principal executive offices) | (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 [X] No [ ]
The number of shares outstanding of the issuer’s common stock as of September 30, 2002 was 276,626,476.
NTL Incorporated (Debtor-in Possession) and Subsidiaries
Index
| Page | ||||||||
| PART I. FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements | |||||||
| Condensed Consolidated Balance Sheets- September 30, 2002 and December 31, 2001 | 2 | |||||||
| Condensed Consolidated Statements of Operations- Three and nine months ended September 30, 2002 and 2001 | 4 | |||||||
| Condensed Consolidated Statement of Shareholders’ (Deficiency)- Nine Months ended September 30, 2002 | 5 | |||||||
| Condensed Consolidated Statements of Cash Flows- Nine months ended September 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 | 36 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 63 | ||||||
| Item 4. | Controls and Procedures | 65 | ||||||
| Risk Factors | 65 | |||||||
| PART II. OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 75 | ||||||
| Item 2. | Changes in Securities and Use of Proceeds | 75 | ||||||
| Item 3. | Defaults Upon Senior Securities | 75 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K | 79 | ||||||
| SIGNATURES | 80 | |||||||
IN REVIEWING THIS DOCUMENT, YOU
ARE CAUTIONED TO READ THE SECTION ENTITLED
“RISK FACTORS” WHICH FORMS AN IMPORTANT PART OF THIS REPORT.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions)
| September 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
| (unaudited) | (see note) | ||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents, including $183.6 of
restricted cash (2002) |
$ | 319.5 | $ | 230.7 | |||||
Marketable securities – restricted |
11.0 | – | |||||||
Accounts receivable-trade, less allowance for doubtful
accounts of $13.1 (2002) and $7.7 (2001) |
50.8 | 197.4 | |||||||
Other |
75.0 | 94.4 | |||||||
Discontinued operations |
13,519.9 | 13,275.1 | |||||||
Total current assets |
13,976.2 | 13,797.6 | |||||||
Fixed assets, net |
1,613.3 | 1,497.8 | |||||||
Intangible assets, net |
1,157.7 | 1,082.5 | |||||||
Investments in and loans to affiliates, net |
75.7 | 267.8 | |||||||
Other assets, net of accumulated amortization of
$45.9 (2002) and $24.9 (2001) |
153.9 | 192.8 | |||||||
Total assets |
$ | 16,976.8 | $ | 16,838.5 | |||||
2
NTL Incorporated (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets-continued
(in millions)
| September 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
| (unaudited) | (see note) | ||||||||
Liabilities and shareholders’ (deficiency) |
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Liabilities not subject to compromise |
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Current liabilities: |
|||||||||
Accounts payable |
$ | 42.8 | $ | 40.5 | |||||
Accrued expenses and other |
103.0 | 166.9 | |||||||
Interest payable |
38.2 | 50.5 | |||||||
Deferred revenue |
85.6 | 191.4 | |||||||
Current portion of long-term debt |
2,550.1 | 3,460.2 | |||||||
Discontinued operations |
17,571.7 | 16,393.0 | |||||||
Total current liabilities |
20,391.4 | 20,302.5 | |||||||
Long-term debt |
– | – | |||||||
Other |
93.2 | 159.2 | |||||||
Commitments and contingent liabilities |
|||||||||
Deferred income taxes |
120.4 | 145.5 | |||||||
Redeemable preferred stock-$.01 par value, plus
accreted dividends; liquidation preference $2,967.5; less
unamortized discount of $35.0 (2002) and $53.4 (2001);
issued and outstanding 2.1 (2002) and 2.1 (2001) shares |
– | 2,773.7 | |||||||
Liabilities subject to compromise, including redeemable preferred
stock |
4,296.9 | – | |||||||
Shareholders’ (deficiency): |
|||||||||
Series preferred stock-$.01 par value; authorized
10.0 shares; liquidation preference $3,101.8; issued
and outstanding 3.0 (2002) and 3.0 (2001) shares |
– | – | |||||||
Common stock-$.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 |
13,576.6 | 13,720.0 | |||||||
Accumulated other comprehensive (loss) |
(701.3 | ) | (1,072.8 | ) | |||||
(Deficit) |
(20,803.2 | ) | (19,192.4 | ) | |||||
| (7,925.1 | ) | (6,542.4 | ) | ||||||
Total liabilities and shareholders’ (deficiency) |
$ | 16,976.8 | $ | 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 | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
Revenues |
$ | 127.2 | $ | 106.4 | $ | 348.3 | $ | 313.1 | |||||||||
Costs and expenses |
|||||||||||||||||
Operating expenses (exclusive of depreciation shown separately below) |
66.2 | 45.7 | 170.6 | 126.6 | |||||||||||||
Selling, general and administrative expenses |
35.5 | 44.0 | 120.6 | 134.5 | |||||||||||||
Other charges |
16.3 | 3.3 | 31.9 | 3.3 | |||||||||||||
Corporate expenses |
3.2 | 11.4 | 14.4 | 33.1 | |||||||||||||
Depreciation |
53.6 | 45.0 | 148.9 | 121.5 | |||||||||||||
Amortization |
32.8 | 97.7 | 69.5 | 298.4 | |||||||||||||
| 207.6 | 247.1 | 555.9 | 717.4 | ||||||||||||||
Operating (loss) |
(80.4 | ) | (140.7 | ) | (207.6 | ) | (404.3 | ) | |||||||||
Other income (expense) |
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Interest income and other, net |
2.0 | 11.9 | 17.5 | 9.8 | |||||||||||||
Interest expense (contractual interest of $167.3 (2002)) |
(36.3 | ) | (51.1 | ) | (133.2 | ) | (143.3 | ) | |||||||||
Share of (losses) from equity investments |
(81.4 | ) | (48.2 | ) | (168.1 | ) | (141.8 | ) | |||||||||
Foreign currency transaction gains (losses) |
1.6 | (5.9 | ) | 6.8 | (15.4 | ) | |||||||||||
(Loss) before recapitalization items, income taxes and
discontinued operations |
(194.5 | ) | (234.0 | ) | (484.6 | ) | (695.0 | ) | |||||||||
Recapitalization items, net |
10.1 | – | (11.6 | ) | – | ||||||||||||
(Loss) before income taxes and discontinued operations |
(184.4 | ) | (234.0 | ) | (496.2 | ) | (695.0 | ) | |||||||||
Income tax benefit |
14.7 | 12.7 | 40.1 | 38.6 | |||||||||||||
(Loss) from continuing operations |
(169.7 | ) | (221.3 | ) | (456.1 | ) | (656.4 | ) | |||||||||
Discontinued operations: |
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(Loss) from discontinued operations, net of income tax benefit
$33.7 (2002) and $8.0 (2001) |
(279.3 | ) | (810.2 | ) | (1,163.3 | ) | (2,447.2 | ) | |||||||||
Gain on sale of discontinued operations, net of income tax
expense of $4.6 |
0.2 | – | 8.6 | – | |||||||||||||
(Loss) from discontinued operations |
(279.1 | ) | (810.2 | ) | (1,154.7 | ) | (2,447.2 | ) | |||||||||
Net (loss) |
(448.8 | ) | (1,031.5 | ) | (1,610.8 | ) | (3,103.6 | ) | |||||||||
Preferred stock dividends (contractual dividends of $279.4 (2002)) |
(1.6 | ) | (88.7 | ) | (143.5 | ) | (229.6 | ) | |||||||||
Net (loss) available to common shareholders |
$ | (450.4 | ) | $ | (1,120.2 | ) | $ | (1,754.3 | ) | $ | (3,333.2 | ) | |||||
Basic and diluted net (loss) per common share: |
|||||||||||||||||
(Loss) from continuing operations |
$ | (0.62 | ) | $ | (1.12 | ) | $ | (2.17 | ) | $ | (3.21 | ) | |||||
(Loss) from discontinued operations |
(1.01 | ) | (2.93 | ) | (4.17 | ) | (8.88 | ) | |||||||||
Net (loss) per common share |
$ | (1.63 | ) | $ | (4.05 | ) | $ | (6.34 | ) | $ | (12.09 | ) | |||||
Weighted average shares |
276.6 | 276.5 | 276.6 | 275.8 | |||||||||||||
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 |
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Comprehensive loss: |
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Net loss for the nine months ended
September 30, 2002 |
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Currency translation adjustment |
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Unrealized net losses on investments |
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Unrealized net losses on derivatives |
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Total |
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Balance, September 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 |
(18.3 | ) | |||||||||||||||||||||||
Comprehensive loss: |
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Net loss for the nine months ended
September 30, 2002 |
$ | (1,610.8 | ) | ||||||||||||||||||||||