Back to GetFilings.com

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Form 10-K

or

Commission file number 0-24792

NTL (Triangle) LLC

110 East 59th Street

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.     X

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)     Yes   No X

As of March 31, 2003, there were 800,000 membership interests of the Registrant outstanding. The Registrant is an indirect, wholly-owned subsidiary of NTL Incorporated, and there is no market for the Registrant’s membership interests.

The Registrant meets the conditions set forth in General Instructions I(1)(a) and I(1)(b) to Form 10-K and is filing this Form 10-K with the reduced disclosure format set forth in General Instruction I(2) thereto.

DOCUMENTS INCORPORATED BY REFERENCE

Table of Contents

TABLE OF CONTENTS

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained herein constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. When used in this Form 10-K, the words, “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Registrant, or industry results, to be materially different from those contemplated or projected, forecasted, estimated or budgeted, whether expressed or implied, by such forward-looking statements. Such factors include, among others, those set forth under the caption “Risk Factors” in this Form 10-K as well as: the ability of the Company to obtain trade credit and shipments and terms with vendors and service providers for current orders; the Company’s ability to maintain contracts that are critical to its operations; potential adverse developments with respect to the Company’s liquidity or results of operations; the ability to fund and execute its business plan; the ability to attract, retain and compensate key executives and associates; the ability of the Company to attract and retain customers; general economic and business conditions, technological developments, the Company’s ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and development, all in a timely manner at reasonable costs and on satisfactory terms and conditions, as well as assumptions about customer acceptance, churn rates, overall market penetration and competition from providers of alternative services, the impact of restructuring and integration actions, the impact of new business opportunities requiring significant up-front investment and interest rate and currency exchange rate fluctuations. We assume no obligation to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting such statements.

In this Annual Report on Form 10-K, the Company, we, us and our refer to NTL (Triangle) LLC and its subsidiaries except where we expressly state that we are only referring to NTL (Triangle) LLC or the context otherwise requires that we are only referring to NTL (Triangle) LLC and “NTL” refers to NTL Incorporated and its consolidated subsidiaries except where we expressly state that we are only referring to NTL Incorporated or the context otherwise requires that we are only referring to NTL Incorporated.

i

Table of Contents

PART I

NTL CORPORATE STRUCTURE

The following chart shows on a condensed basis the corporate structure of NTL through which its operations are conducted, as of January 10, 2003. This chart does not show NTL’s operating or other intermediate companies.

Item 1. Business

RECENT DEVELOPMENTS

NTL’s Completed Restructuring

     We are an indirect, wholly-owned subsidiary of NTL Incorporated. On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.), NTL Europe, Inc. (then known as NTL Incorporated and the former parent company of NTL Communications Corp.) and certain of their subsidiaries filed a pre-arranged joint reorganization plan, referred to in this annual report as the Plan, under Chapter 11 of the US Bankruptcy Code. We were not included in the Chapter 11 filing, nor were the operating subsidiaries of NTL Incorporated and NTL Europe, Inc. The Plan became effective on January 10, 2003, at which time NTL Incorporated, our indirect parent company, emerged from Chapter 11 reorganization.

     Pursuant to the Plan, the entity formerly known as NTL Incorporated and its subsidiaries and affiliates were split into two separate groups, and NTL Incorporated and NTL Europe, Inc. each emerged as independent public companies. The entity formerly known as NTL Communications Corp. was renamed “NTL Incorporated” and became the holding company for the former NTL group’s principal UK and Ireland assets including our ultimate parent company. Prior to consummation of the Plan, we were a wholly-owned, indirect subsidiary of the entity then known as NTL Incorporated, which, pursuant to the Plan, was renamed “NTL Europe, Inc.” and which became the holding company for the former NTL group’s continental European and certain other assets.

Table of Contents

History

     NTL (Triangle) LLC (formerly Comcast UK Cable Partners Limited) (formerly NTL (Bermuda) Limited) (formerly NTL (Bermuda) LLC) (the “Company” or “NTL Triangle”) is a holding company which holds all of the shares of various companies principally engaged in the development, construction, management and operation of broadband communications networks for telephone, cable television and Internet services in the United Kingdom and Ireland. The Company owns the companies that have franchises to provide telecommunications services in Darlington and Teesside (collectively “Teesside”) and Cambridge in the UK, and NTL Communications (Ireland) Limited (formerly Cablelink Limited) (“Cablelink”), which owns the companies that provide telecommunications services in Dublin, Galway and Waterford, Ireland.

     In July 1999, the entity then known as NTL Communications Corp. (now NTL Incorporated), which was at that time an indirect wholly-owned subsidiary of NTL Incorporated, acquired Cablelink for IR£535.18 million (£421.9 million). In December 1999, the former NTL Communications Corp. sold its 100% interest in Cablelink to the Company for £423.6 million in cash. This transaction was accounted for at historical cost in a manner consistent with a transfer of entities under common control which is similar to that used in a “pooling of interests.” Accordingly, the Company’s financial statements include the results of Cablelink from July 1999.

     In November 1999, the Company converted to a Delaware limited liability company and thereby changed its name to NTL (Triangle) LLC. Under the Delaware Limited Liability Company Act, the Company is deemed to be the same entity as it was prior to the conversion.

     The Company is an indirect wholly-owned subsidiary of NTL Incorporated. NTL (Triangle) LLC’s executive office is located at 110 East 59th Street, New York, NY 10022 and its telephone number is (212) 906-8440.

Item 2. Properties

     The Company does not own or lease any significant real or personal property other than through its subsidiaries Teesside, Cambridge and Cablelink.

     Teesside, Cambridge and Cablelink own their cable and telephony plant and equipment and generally own or lease, under long-term leases, the head-end and switching node sites. The Company believes that its subsidiaries’ facilities are adequate to serve their existing customers.

Item 3. Legal Proceedings

     The Company is subject to legal proceedings and claims that arise in the ordinary course of its business, none of which is expected to have a material adverse effect on its financial position, results of operations or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders

     Omitted pursuant to General Instruction I(2)(c) to Form 10-K.

PART II

Item 5. Market for the Registrant’s Common Equity and Related Shareholder Matters

     The Company is an indirect wholly-owned subsidiary of NTL Incorporated, and there is no market for the Company’s membership interests.

2

Table of Contents

Item 6. Selected Financial Data

     The following table sets forth certain financial data for each of the five years ended December 31, 2002. The information has been derived from and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II Item 8 of this Form 10-K.

Notes to Selected Financial Data

(1)		Beginning in the fourth quarter of 1999, a subsidiary of NTL Incorporated began charging the Company for infrastructure and management support services. The Company was charged £70.0 million, £60.8 million, £29.7 million and £2.9 million in 2002, 2001, 2000 and 1999, respectively. In the fourth quarter of 2001, the Company incurred asset impairment charges of £291.6 million and other charges of £5.7 million. In the fourth quarter of 2002, the Company incurred asset impairment charges of £19.3 million.
(2)		In 1999, the Company sold its 50.0% ownership interest in Cable London to Telewest Communications plc for £428.0 million and recognized a gain on the sale of £404.8 million. In addition, the results of operations and financial position include Cablelink beginning July 1999.
(3)		In 1998, the Company sold its 27.5% ownership interest in Birmingham Cable Corporation Limited to Telewest Communications plc for £130.0 million and recognized a gain on the sale of £110.5 million.
(4)		As of December 31, 2002 and 2001 there was long-term debt of £323,045,000 and £358,150,000, respectively classified as current.

     Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     Liquidity and Capital Resources

NTL’s Completed Restructuring

     We are an indirect, wholly-owned subsidiary of NTL Incorporated. On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.), NTL Europe, Inc. (then known as NTL Incorporated and the former parent company of NTL Communications Corp.) and certain of their subsidiaries filed a pre-arranged joint

3

Table of Contents

reorganization plan under Chapter 11 of the US Bankruptcy Code. We were not included in the Chapter 11 filing, nor were the operating subsidiaries of NTL Incorporated and NTL Europe, Inc. The Plan became effective on January 10, 2003, at which time NTL Incorporated, our indirect parent company, emerged from Chapter 11 reorganization.

     Pursuant to the Plan, the entity formerly known as NTL Incorporated and its subsidiaries and affiliates were split into two separate groups, and NTL Incorporated and NTL Europe, Inc. each emerged as independent public companies. The entity formerly known as NTL Communications Corp. was renamed “NTL Incorporated” and became the holding company for the former NTL group’s principal UK and Ireland assets including our ultimate parent company. Prior to consummation of the Plan, we were a wholly-owned subsidiary of the entity then known as NTL Incorporated, which, pursuant to the Plan, was renamed “NTL Europe, Inc.” and which became the holding company for the former NTL group’s continental European and certain other assets.

Background of Restructuring

     Both the equity and debt capital markets experienced periods of significant volatility in 2001 and 2002, particularly for securities issued by telecommunications and technology companies. As a result, the ability of our former ultimate parent company, then known as NTL Incorporated (now NTL Europe, Inc.) and its subsidiaries to access those markets as well as its ability to obtain financing from its bank lenders and equipment suppliers became severely restricted. In addition, the former NTL Incorporated and its subsidiaries had no further funds available, or were unable to draw upon funds under its credit facilities. As a result of these factors, together with its substantial leverage, on January 31, 2002, the former NTL Incorporated announced that it had appointed professional advisors to advise on strategic and recapitalization alternatives to strengthen its balance sheet, reduce debt and put an appropriate capital structure in place for its business.

     Promptly upon obtaining the requisite waivers from the lenders under its credit facilities, in March 2002, the former NTL Incorporated commenced negotiations with a steering committee of the unofficial committee of its bondholders and the committee’s legal and financial advisors.

     The former NTL Incorporated and its subsidiaries failed to make interest payments on some of the outstanding notes starting on April 1, 2002. It also failed to declare or pay dividends on certain series of its outstanding preferred stock, due to a lack of available surplus under Delaware law.

     On April 16, 2002, the former NTL Incorporated announced that it and the unofficial committee of its public bondholders had reached an agreement in principle on a comprehensive recapitalization of the former NTL group. To implement the proposed recapitalization plan, on May 8, 2002, the former NTL Incorporated and certain of its subsidiaries, including ou current ultimate parent company, then known as NTL Communications Corp. (now NTL Incorporated) (collectively, the “Debtors”) filed cases and a pre-arranged joint reorganization plan under Chapter 11 of the US Bankruptcy Code. In connection with the filing, some members of the unofficial creditors’ committee of bondholders entered into a credit facility agreement, referred to in this annual report as the DIP facility, committing to provide a wholly-owned subsidiary of the current NTL Incorporated with up to $500 million in new debt financing (NTL Delaware committed to provide up to an additional $130 million to the current NTL Incorporated and its subsidiaries under the DIP facility).

     As a result of the payment defaults as well as the voluntary filing under Chapter 11 by the Debtors on May 8, 2002, there was an event of default under all of the former NTL Incorporated and its subsidiaries’ credit facilities and the indentures governing all of their publicly traded debt, other than debt of NTL Triangle.

     The Plan was confirmed by the Bankruptcy Court on September 5, 2002. During the fall of 2002, the former NTL Incorporated negotiated with a group of lenders to enter into a new financing arrangement to repay the DIP facility, to repay certain obligations and to provide liquidity to NTL. The Plan became effective on January 10, 2003 (referred to as the Effective Date), at which time the Debtors emerged from Chapter 11 reorganization. In connection with the Debtors’ emergence from Chapter 11 reorganization, the current NTL Incorporated and certain of its subsidiaries issued $558.249 million aggregate principal face amount of 19% Senior Secured Notes due 2010 (the Exit Notes) on January 10, 2003. Initial purchasers of the Exit Notes also purchased 500,000 shares of the current NTL Incorporated’s common stock on that date. The gross proceeds from the sale of the Exit Notes and such

4

Table of Contents

shares totaled $500 million. The proceeds were used in part to repay amounts outstanding under the DIP facility (which was repaid on the Effective Date) and to purchase from NTL Delaware a £90 million note of NTL (UK) Group Inc. and to repay certain other obligations. Also on January 10, 2003, NTL Incorporated and its lending banks amended its existing credit facilities.

     The Company has historically incurred operating losses and negative operating cash flow. In addition, the Company required and expects to continue to require significant amounts of capital to finance construction of its networks, connection of customers to the networks, other capital expenditures and for working capital needs including debt service requirements.

     As of December 31, 2002, the Company had approximately £18.2 million in cash and cash equivalents on hand. The Company expects to require additional cash in the twelve months from January 1, 2003 to December 31, 2003. The Company estimates that its capital expenditures and debt service requirements, net of cash from operations, will aggregate up to approximately £32.0 million from January 1, 2003 to December 31, 2003. Management of the Company believes that cash and cash equivalents on hand at December 31, 2002, and cash from NTL Incorporated will be sufficient for its and its subsidiaries’ cash requirements during the twelve months from January 1, 2003 to December 31, 2003.

     Over the long term, the Company will continue to require cash to fund operations, service its remaining debt and implement its strategy. In order to fund these requirements, the Company anticipates that it will use cash flow from operations and may also need to issue additional debt or equity securities or may need to secure additional bank financing. Given the restrictions on incurring additional debt that are in the indentures governing our outstanding notes, there can be no assurance that these sources of funds will be available to us.

     During NTL’s recapitalization process, the Company maintained normal and regular trade terms with its suppliers and customers. There can be no assurance that the Company’s suppliers will continue to provide normal trade credit or credit on acceptable terms, if at all, or that customers will continue to do business or enter into new business with NTL. See also “Risk Factors” for a summary of risks related to NTL’s business in general and the recapitalization process in particular.

Description of Indebtedness

     In November 1995, the Company issued $517.3 million principal amount at maturity of 11.2% Senior Discount Debentures due 2007 (the “2007 Discount Debentures”). Interest accreted on the 2007 Discount Debentures at 11.2% per annum compounded semiannually from November 15, 1995 to November 15, 2000, after which date interest became payable in cash on each May 15 and November 15 through November 15, 2007. The 2007 Discount Debentures contain restrictive covenants which limit the Company’s ability to pay dividends.

     In October 2000, Cablelink entered into a loan agreement with a subsidiary of NTL under which £75.2 million and £68.0 million had been borrowed at December 31, 2002 and 2001, respectively. The outstanding borrowings are due in October 2007. Interest is payable quarterly in arrears beginning March 31, 2001. The annual interest rate is set on January 1 of each year at the 12-month EURIBOR rate plus 1%. The effective interest rate at December 31, 2002 and 2001 was 4.32% and 5.69%, respectively.

Consolidated Statement of Cash Flows

     Net cash provided by (used in) operating activities amounted to £16.6 million, £(45.5) million and £19.7 million for the years ended December 31, 2002, 2001 and 2000, respectively. The changes in net cash provided by operating activities are primarily due to movements in working capital as a result of the timing of receipts and disbursements.

     Net cash used in investing activities was £35.3 million, £66.9 million and £96.2 million for the years ended December 31, 2002, 2001 and 2000, respectively. Net cash used in investing activities in 2002, 2001 and 2000 was primarily used for capital expenditures and has reduced as a result of the Company’s continued effort to conserve cash.

     Net cash provided by financing activities was £1.7 million, £142.7 million and £53.5 million for the years ended December 31, 2002, 2001 and 2000, respectively. Net cash provided by financing activities in 2002 includes £2.7 million in cash received by Cablelink from a subsidiary of NTL Incorporated. Net cash provided by financing activities in 2001 includes £43.8 million in cash received by Cablelink from a subsidiary of NTL Incorporated and contributions from NTL Group Limited of £99.4 million. Net cash provided by financing activities in 2000 includes contributions from NTL Group Limited of £30.1 million and cash received by Cablelink from a subsidiary of NTL Incorporated of £24.8 million.

Contractual Obligations and Commercial Commitments

     The Company’s consolidated contractual obligations are summarized below, and are fully disclosed in the Notes to Consolidated Financial Statements.

     The Company has no significant commercial commitments as of December 31, 2002.

     The following table includes aggregate information about the Company’s contractual obligations as of December 31, 2002 and the periods in which payments are due.

5

Table of Contents

Critical Accounting Policies

     The consolidated financial statements of the Company and related financial information are based on the application of accounting principles generally accepted in the United States, referred to as GAAP. GAAP requires the use of estimates, assumptions, judgements and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported, as well as disclosures about contingencies, risk and financial condition. The following critical accounting policies have the potential to have a more significant impact on the Company’s financial statements, either because of the significance of the financial statement item to which they relate, or because they require more judgement and estimation due to the uncertainty involved in measuring, at a specific point in time, transactions which are continuous in nature.

	•		A subsidiary of NTL provides infrastructure and management support services to the Company. The related charges represent the Company’s portion of costs incurred by the subsidiary of NTL for the benefit of all UK operations within NTL. The charges are made on the basis of an allocation formula appropriate to each category of charge. The allocation is based on management’s judgement of a reasonable methodology given the facts and circumstances.
	•		The Company maintains an allowance for doubtful accounts receivable for estimated losses resulting from the potential inability of its customers to make payments. The allowance is estimated based on the current aging of receivables, prior collection experience and future expectations of conditions that might impact the collectibility. If the financial condition of our customers was to deteriorate resulting in an impairment in their ability to make payments, additions to the allowances may be required.
	•		The Company’s determination of the treatment of contingent liabilities in the financial statements is based on a view of the expected outcome of the applicable contingency. Legal counsel is consulted on matters related to litigation. Experts both within and outside the company are consulted with respect to other matters that arise in the ordinary course of business. A liability is accrued if the likelihood of an adverse outcome is probable and the amount is estimable.
	•		The Company reviews long-lived assets and goodwill for impairment as described in the Notes to Consolidated Financial Statements. In analyzing potential impairments, projections of future cash flows from the asset are used. The projections are based on assumptions, judgements and estimates of growth rates for the related business, anticipated future economic, regulatory and political conditions, the assignment of discount rates relative to risk and estimates of terminal values. Changes to these variables in the future may necessitate impairment charges to reduce the carrying value to fair value.
	•		Fixed assets and intangible assets are assigned useful lives which impact the annual depreciation and amortization expense. The assignment of useful lives involves significant judgements and the use of estimates. Changes in technology or changes in intended use of these assets may cause the estimated useful life to change.

Selected Operating Data

     The following table sets forth certain operating data of the Company as of December 31, 2002. Comparative figures for December 31, 2001 are not available.

6

Table of Contents

1.		Homes passed is the number of homes that have ducting buried outside.
2.		Homes marketed is the number of homes activated for which the initial marketing phase (including door to door direct marketing) has been completed.
3.		Penetration is calculated by dividing the number of customers by the number of homes marketed.
4.		Cablelink is in the process of instituting a more rigorous credit policy that is expected to lead to the involuntary disconnection of certain customers. As a result of this, Cablelink anticipates that its residential customer base will decline by approximately 25,000 net customers in 2003. As a result, we expect a decline in revenue, programming costs and bad debt expense, but taken together we believe these changes will not have a significant overall impact on our results of operations or cash flows.

Results of Operations

     Summary consolidated financial information for the Company for the three years ended December 31, 2002, is as follows (in thousands, “NM” denotes percentage is not meaningful):

7

Table of Contents