SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-K

 

 

 

NTL (Triangle) LLC

(Exact name of registrant as specified in its charter)

 

 

 

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

 

NONE

 

 

Securities Registered Pursuant to Section 12(g) of the Act:

 

NONE

 

 

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 ý  No o

 

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. ý

 

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

 

As of March 23, 2004, 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

 

NONE

 

 

TABLE OF CONTENTS

 

PART I		4
NTL CORPORATE STRUCTURE		4
Item 1.	Business	7
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Submission of Matters to a Vote of Security Holders	10
PART II		11
Item 5.	Market for the Registrant’s Common Equity and Related Shareholder Matters	11
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
Item 9A.	Controls and Procedures	28
PART III		29
Items 10, 11, 12 and 13.  Omitted pursuant to General Instruction I(2)(c) to Form 10-K		29
Item 14.	Principal Accountants’ Fees and Services	29
PART IV		31
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	31
SIGNATURES		33
Index to Consolidated Financial Statements and Financial Statement Schedules		F-1

 

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

 

Various statements contained in this document constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Words like “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from those contemplated whether expressed or implied, by these forward-looking statements. These factors include those set forth under the caption “Risk Factors” in the Form 10-K filed on March 11, 2004 by our ultimate parent company, NTL Incorporated, or NTL, such as:

 

•                                          potential adverse developments with respect to NTL’s and our liquidity or results of operations;

 

•                                          NTL’s significant debt payments commencing in 2005 and its and our other contractual commitments coming due over the next several years;

 

•                                          the success of NTL’s proposed refinancing transaction;

 

•                                          NTL’s and our ability to fund and execute its and our business plan;

 

•                                          the impact of new business opportunities requiring significant up-front investments;

 

•                                          our ability to attract and retain customers, increase our overall market penetration and react to competition from providers of alternative services;

 

•                                          NTL’s ability to integrate its billing systems;

 

•                                          NTL’s significant management changes;

 

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•                                          NTL’s and our ability to develop and maintain back-up for its and our critical systems;

 

•                                          our ability to respond adequately to technological developments;

 

•                                          NTL’s and our ability to maintain contracts that are critical to our operations;

 

•                                          our ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and development, in a timely manner at reasonable costs and on satisfactory terms and conditions;

 

•                                          interest rate and currency exchange rate fluctuations; and

 

•                                          the impact of NTL’s recent reorganization and subsequent organizational restructuring.

 

We assume no obligation to update these forward-looking statements contained in this Annual Report to reflect actual results, changes in assumptions or changes in factors affecting these statements.

 

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PART I

 

NTL CORPORATE STRUCTURE

 

NTL’s Completed Restructuring

 

We are an indirect, wholly-owned subsidiary of NTL. On May 8, 2002, NTL (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.

 

Historical Structure of the Company

 

We are a holding company that holds all of the shares of several 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. We own 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) (“NTL Ireland”), 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 NTL Ireland for IR£535.18 million (£421.9 million). In December 1999, the former NTL Communications Corp. sold its 100% interest in NTL Ireland to us 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, our financial statements include the results of NTL Ireland from July 1999.

 

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

 

We are an indirect wholly-owned subsidiary of NTL Incorporated, or NTL, and are reliant upon the support of NTL to continue our operations. Our executive office is located at, ntl House, Bartley Wood Business Park, Hook, Hampshire, RG27 9UP, England.

 

The following chart shows on a condensed basis the corporate structure of NTL through which its operations are conducted as of December 31, 2003. This chart does not show NTL’s operating or other intermediate companies.

 

 

*                                         Includes Diamond Holdings Limited, or Diamond Holdings, the issuer of the 10% Senior Notes due 2008 and 9 ¹/₈% Senior Notes due 2008 and Diamond Cable Communications Limited, the guarantor of those series of Notes and the parent company of Diamond Holdings.

 

**                                  Includes the subsidiaries which secure NTL’s Senior Credit Facility.

 

***                           Includes us, the issuer of the 11.2% Senior Discount Debentures due 2007, and our subsidiaries.

 

Exchange rates

 

The following table sets forth, for the periods indicated, the high, low, period average and period end noon buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York expressed as US dollars per £1.00. The noon buying rate of the UK pound on March 23, 2004 was $1.85 per £1.00.

 

Year Ended December 31,		Period End		Average(1)		High		Low
1999		1.62		1.61		1.68		1.55
2000		1.49		1.51		1.65		1.40
2001		1.45		1.44		1.50		1.37
2002		1.61		1.51		1.61		1.41
2003		1.78		1.64		1.78		1.55
2004 (through March 23, 2004)		1.85		1.83		1.90		1.79

 

(1)                                  The average rate is the average of the noon buying rates on the last day of each month during the relevant period.

 

The above rates may differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this Annual Report on Form 10-K. Our inclusion of these exchange rates is not meant to suggest that the UK pound amounts actually represent these US dollar amounts or that these amounts could have been converted into US dollars at any particular rate, if at all.

 

Unless we otherwise indicate, all US dollar amounts as of December 31, 2003 are translated to UK pound sterling at an exchange rate of $1.7842 to £1.00, and all amounts disclosed for the year ended December 31, 2003 are based on an average exchange rate of $1.6348 to £1.00. All amounts disclosed as of December 31, 2002 are based on an exchange rate of $1.6095 to £1.00, and all amounts disclosed for the year ended December 31, 2002 are based on an average exchange rate of $1.5025 to £1.00. All amounts disclosed as of December 31, 2001 are based on an exchange rate of $1.4543 to £1.00, and all amounts disclosed for the year ended December 31, 2001 are based on an average exchange rate of $1.4392 to £1.00.

 

The assets and liabilities of our Irish subsidiary as of December 31, 2003 have been translated to UK pound sterling

 

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at an exchange rate of £0.706 to €1, and revenues and expenses for the year ended December 31, 2003 have been translated to UK pound sterling at an exchange rate of £0.6923 to €1. The assets and liabilities of our Irish subsidiary as of December 31, 2002 have been translated to UK pound sterling at an exchange rate of £0.6514 to €1, and revenues and expenses for the year ended December 31, 2002 have been translated to UK pound sterling at an exchange rate of £0.6292 to €1. The assets and liabilities of our Irish subsidiary as of December 31, 2001 have been translated to UK pound sterling at an exchange rate of £0.612 to €1, and revenues and expenses for the year ended December 31, 2001 have been translated to UK pound sterling at an exchange rate of £0.622 to €1.

 

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ITEM 1.        BUSINESS

 

Recent Developments

 

On March 8, 2004, NTL entered into a commitment letter with Credit Suisse First Boston, Deutsche Bank, AG London, Goldman Sachs International and Morgan Stanley Senior Funding, Inc relating to a £2.425 billion new credit facility. The commitment by these lenders is subject to customary conditions as well as the issuance by NTL Cable PLC, a newly-formed wholly-owned subsidiary of NTL, of up to approximately £800 million equivalent in sterling, US dollar and euro denominations of ten-year senior notes. The proceeds of the high-yield bond offering, together with the proceeds from the new credit facility, will be used to repay in full NTL’s existing senior credit facilities, the existing notes issued by Diamond Holdings and our debentures. The aim of any new financing is to extend the maturity of NTL’s indebtedness and to reduce NTL’s weighted average cost of debt. NTL cannot provide any assurance that this refinancing transaction will be consummated.

 

About NTL (Triangle) LLC

 

We are a holding company that holds all of the shares of several 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. We own 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) (“NTL Ireland”), which owns the companies that provide telecommunications services in Dublin, Galway and Waterford, Ireland. We are an indirect, wholly-owned subsidiary of NTL and we are reliant upon the support of NTL and its subsidiaries to continue our operations.

 

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ITEM 2.        PROPERTIES

 

We do not own or lease any significant real or personal property other than through our subsidiaries Teesside, Cambridge and NTL Ireland.

 

Teesside, Cambridge and NTL Ireland own their cable and telephone plant and equipment and generally own or lease, under long-term leases, the head-end and switching node sites. We believe that our subsidiaries’ facilities are adequate to serve their existing customers.

 

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ITEM 3.        LEGAL PROCEEDINGS

 

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

 

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ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

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

 

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PART II

 

ITEM 5.        MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

 

We are an indirect wholly-owned subsidiary of NTL and there is no market for our membership interests.

 

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ITEM 6.        SELECTED FINANCIAL DATA

 

The selected consolidated financial information of NTL (Triangle) LLC presented below under the captions income statement data for the years ended December 31, 2003, 2002, 2001, 2000 and 1999, and balance sheet data as of December 31, 2003, 2002, 2001, 2000 and 1999 was derived from our consolidated financial statements audited by Ernst & Young LLP. This information should be read in conjunction with the consolidated financial statements and notes thereto and the information contained in our Management Discussion and Analysis appearing elsewhere in this Annual Report. Historical results are not necessarily indicative of future results.

 

		Year Ended December 31,
		2003			2002			2001			2000			1999(2)
		(in £’000s)
Income Statement Data:
Revenue		£	217,408		£	194,241		£	180,893		£	160,734		£	118,963
Operating income (loss)(1)		367			(69,427		)	(381,049		)	(80,556		)	(35,999		)
Equity in net losses of affiliates		—			—			—			—			(6,801		)
Net (loss) income		(10,116		)	(70,056		)	(431,048		)	(139,424		)	329,465

 

		Year Ended December 31,
		2003			2002			2001			2000			1999(2)
		(in £’000s)
Balance Sheet Data: