UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

Commission File No. 0-22616

 

NTL INCORPORATED

(Exact name of registrant as specified in its charter)

 

Delaware		52-1822078
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
909 Third Avenue, Suite 2863 New York, New York		10022
(Address of principal executive offices)		(Zip Code)

 

(212) 906-8440

(Registrant’s telephone number, including area code)

 

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No o

 

The number of shares outstanding of the registrant’s common stock as of July 30, 2004 was 87,496,304.

 

 

NTL INCORPORATED
FORM 10-Q
QUARTER ENDED JUNE 30, 2004

 

INDEX

 

	Page
PART I. FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets - June 30, 2004 and December 31, 2003	4
Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2004 and 2003	6
Condensed Consolidated Statement of Shareholders’ Equity - Six Months Ended June 30, 2004	7
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2004 and 2003	9
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures about Market Risk	44
Item 4. Controls and Procedures	46
PART II. OTHER INFORMATION	47
Item 1. Legal Proceedings	47
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Submission of Matters to a Vote of Security Holders	48
Item 5. Other Information	49
Item 6. Exhibits and Reports on Form 8-K	49
SIGNATURES	50

 

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 our Form 10-K that was filed with the SEC on March 11, 2004, as well as:

 

•                                          potential adverse developments with respect to our liquidity or results of operations;

 

•                                          our significant debt payments and other contractual commitments;

 

•                                          our ability to fund and execute our business plan;

 

•                                          our ability to generate cash sufficient to service our debt;

 

•                                          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;

 

•                                          our ability to integrate our billing systems;

 

•                                          our significant management changes since our emergence from Chapter 11 reorganization;

 

•                                          our ability to develop and maintain back-up for our critical systems;

 

•                                          our ability to respond adequately to technological developments;

 

•                                          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 our recent reorganization and subsequent organizational restructuring.

 

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

 

2

 

Exchange Rates

 

The following tables set forth, for the periods indicated, the period end, period average, high and low 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 U.S. dollars per £1.00 and U.S. dollars per € 1.00. The noon buying rate of the pound sterling on June 30, 2004 was $1.8126 per £1.00 and the noon buying rate of the euro on June 30, 2004 was $1.2179 per €1.00.

 

		U.S. Dollars per £1.00
Six Months Ended June 30,		Period End		Average(1)		High		Low
2003		1.65		1.62		1.68		1.55
2004		1.81		1.82		1.90		1.75
		U.S. Dollars per €1.00
Six Months Ended June  30,		Period End		Average(1)		High		Low
2003		1.15		1.11		1.19		1.04
2004		1.22		1.23		1.29		1.18

 

(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 condensed consolidated financial statements and other financial information appearing in this quarterly report.  Our inclusion of these exchange rates is not meant to suggest that the pound sterling amounts actually represent these U.S. dollar amounts or that these amounts could have been converted into U.S. dollars at any particular rate, if at all.

 

Unless we otherwise indicate, all amounts in U.S. dollars as of June 30, 2004 are based on an exchange rate of $1.8126 to £1.00, all amounts disclosed for the six months ended June 30, 2004 are based on an average exchange rate of $1.8227 to £1.00, and all amounts disclosed for the six months ended June 30, 2003 are based on an average exchange rate of $1.6108 to £1.00. All amounts in U.S. dollars as of December 31, 2003 are based on an exchange rate of $1.7842 to £1.00. All rates are based on the 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. U.S. dollar amounts for the three months ended June 30, 2003 and 2004 are determined by subtracting the U.S. dollar converted financial result for the three months ended March 31, 2003 and 2004 from the U.S. dollar converted financial result for the six months ended June 30, 2003 and 2004, respectively. The variation between the 2003 and 2004 exchange rates has impacted the dollar comparisons.

 

3

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

NTL INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

 

		June 30, 2004			December 31, 2003
		(Unaudited)			(See Note)
Assets
Current assets
Cash and cash equivalents		$	183.9		$	795.9
Accounts receivable - trade, less allowance for doubtful accounts of $41.4 (2004) and $28.8  (2003)		451.7			405.3
Prepaid expenses		119.6			85.2
Other current assets		39.4			55.8
Total current assets		794.6			1,342.2
Fixed assets, net		7,659.4			7,880.5
Reorganization value in excess of amounts allocable to identifiable assets		545.6			539.1
Customer lists, net of accumulated amortization of $338.2 (2004) and $221.9 (2003)		1,084.8			1,178.9
Investments in and loans to affiliates, net		2.0			2.3
Other assets, net of accumulated amortization of $4.1 (2004) and $70.1  (2003)		236.3			229.8
Total assets		$	10,322.7		$	11,172.8

 

Note: The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date.

 

See accompanying notes.

 

4

 

NTL INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(In millions, except per share data)

 

		June 30, 2004			December 31, 2003
		(Unaudited)			(See Note)
Liabilities and shareholders’ equity
Current liabilities
Accounts payable		$	284.7		$	260.0
Accrued expenses		584.9			633.1
Accrued construction costs		34.3			33.6
Interest payable		65.4			194.6
Deferred revenue		287.3			269.9
Other current liabilities		30.3			27.1
Current portion of long-term debt		71.1			2.3
Total current liabilities		1,358.0			1,420.6
Long-term debt, net of current portion		5,431.2