UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2003 OR |
|
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 000-22616
NTL INCORPORATED
| Delaware | 52-1822078 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| 110 East 59th Street, New York, New York | 10022 | |
| (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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x 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 x No o
The number of shares outstanding of the registrant’s common stock as of September 30, 2003 was 50,908,316.
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
INDEX
| Page | |||||
PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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Condensed Consolidated Balance Sheets -
September 30, 2003 and December 31, 2002 |
1 | ||||
Condensed Consolidated Statements of Operations -
Three and Nine months ended September 30, 2003 and 2002 |
3 | ||||
Condensed Consolidated Statement of Shareholders’ Equity -
Nine months ended September 30, 2003 |
5 | ||||
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 2003 and 2002 |
7 | ||||
Notes to Condensed Consolidated Financial Statements |
9 | ||||
Item 2. Management’s Discussion and Analysis
of Results of Operations and Financial Condition |
38 | ||||
Item 3. Quantitative and Qualitative Disclosures
about Market Risk |
62 | ||||
Item 4. Controls and Procedures |
63 | ||||
Risk Factors |
64 | ||||
PART II. OTHER INFORMATION |
|||||
Item 1. Legal Proceedings |
74 | ||||
Item 2. Changes in Securities and
Use of Proceeds |
74 | ||||
Item 3. Defaults Upon Senior
Securities |
74 | ||||
Item 4. Submission of Matters to a Vote of
Security Holders |
74 | ||||
Item 5. Other Information |
75 | ||||
Item 6. Exhibits and Reports on Form 8-K |
76 | ||||
SIGNATURES |
77 | ||||
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
| September 30, | December 31, | |||||||||||
| 2003 | 2002 | |||||||||||
| Reorganized | Predecessor | |||||||||||
| Company | Company | |||||||||||
| (Unaudited) | (See Note) | |||||||||||
Assets |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
$ | 469.4 | $ | 502.0 | ||||||||
Marketable securities |
— | 5.2 | ||||||||||
Accounts receivable — trade, less allowance for
doubtful accounts of $82.6 (2003) and $92.7 (2002) |
399.2 | 395.9 | ||||||||||
Other |
265.9 | 194.3 | ||||||||||
Due from NTL Europe, Inc |
9.4 | 73.3 | ||||||||||
Total current assets |
1,143.9 | 1,170.7 | ||||||||||
Fixed assets, net |
7,600.9 | 11,088.9 | ||||||||||
Reorganization value in excess of amounts allocable to
identifiable assets |
534.3 | — | ||||||||||
Goodwill |
— | 330.6 | ||||||||||
Intangible assets, net |
1,149.8 | 64.7 | ||||||||||
Investments in and loans to affiliates, net |
3.7 | 8.4 | ||||||||||
Other assets, net of accumulated amortization
of $52.6 (2003) and $184.8 (2002) |
153.4 | 378.1 | ||||||||||
Total assets |
$ | 10,586.0 | $ | 13,041.4 | ||||||||
1
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(dollars in millions)
| September 30, | December 31, | |||||||||||
| 2003 | 2002 | |||||||||||
| Reorganized | Predecessor | |||||||||||
| Company | Company | |||||||||||
| (Unaudited) | (See Note) | |||||||||||
Liabilities and shareholders’ equity (deficiency) |
||||||||||||
Current liabilities |
||||||||||||
Accounts payable |
$ | 294.7 | $ | 385.8 | ||||||||
Accrued expenses and other |
636.0 | 780.5 | ||||||||||
Accrued construction costs |
32.0 | 70.4 | ||||||||||
Interest payable |
153.0 | 177.3 | ||||||||||
Deferred revenue |
420.1 | 359.8 | ||||||||||
Due to NTL Europe, Inc. |
2.2 | 236.1 | ||||||||||
Current portion of long-term debt |
2.4 | 5,955.4 | ||||||||||
Total current liabilities |
1,540.4 | 7,965.3 | ||||||||||
Long-term debt |
6,779.6 | — | ||||||||||
Less: unamortized discount |
(198.5 | ) | — | |||||||||
| 6,581.1 | — | |||||||||||
Other |
116.5 | — | ||||||||||
Deferred income taxes |
36.5 | 94.4 | ||||||||||
Commitments and contingent liabilities |
||||||||||||
Liabilities subject to compromise |
— | 10,157.8 | ||||||||||
Shareholders’ equity (deficiency) |
||||||||||||
Series preferred stock — $.01 par value; authorized 5,000,000 (2003)
and none (2002) shares; issued and outstanding none |
— | — | ||||||||||
Common stock — $.01 par value; authorized 400,000,000 (2003) and
100 (2002) shares; issued and outstanding 50,908,316 (2003) and 13 (2002) shares |
0.5 | — | ||||||||||
Additional paid-in capital |
2,936.5 | 14,045.5 | ||||||||||
Unearned stock compensation |
(4.5 | ) | — | |||||||||
Accumulated other comprehensive income (loss) |
105.1 | (653.6 | ) | |||||||||
(Deficit) |
(726.1 | ) | (18,568.0 | ) | ||||||||
Total shareholders’ equity (deficiency) |
2,311.5 | (5,176.1 | ) | |||||||||
Total liabilities and shareholders’ equity (deficiency) |
$ | 10,586.0 | $ | 13,041.4 | ||||||||
Note: The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date.
See accompanying notes.
2
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in millions, except per share data)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||
| Reorganized | Predecessor | Reorganized | Predecessor | ||||||||||||||||||||
| Company | Company | Company | Company | ||||||||||||||||||||
Revenue |
$ | 894.1 | $ | 830.3 | $ | 2,662.5 | $ | 2,426.0 | |||||||||||||||
Costs and expenses |
|||||||||||||||||||||||
Operating costs (exclusive of depreciation
shown separately below) |
(359.4 | ) | (383.6 | ) | (1,157.2 | ) | (1,128.7 | ) | |||||||||||||||
Selling, general and administrative expenses |
(210.4 | ) | (193.1 | ) | (648.9 | ) | (579.2 | ) | |||||||||||||||
Other charges |
(4.2 | ) | (316.2 | ) | (28.0 | ) | (319.9 | ) | |||||||||||||||
Depreciation |
(296.5 | ) | (385.6 | ) | (871.6 | ) | (1,050.0 | ) | |||||||||||||||
Amortization |
(50.2 | ) | (16.5 | ) | (150.4 | ) | (46.9 | ) | |||||||||||||||
| (920.7 | ) | (1,295.0 | ) | (2,856.1 | ) | (3,124.7 | ) | ||||||||||||||||
Operating (loss) |
(26.6 | ) | (464.7 | ) | (193.6 | ) | (698.7 | ) | |||||||||||||||
Other income (expense) |
|||||||||||||||||||||||
Interest income and other, net |
5.2 | 1.6 | 11.1 | 19.7 | |||||||||||||||||||
Interest expense (contractual interest of $1,041.8 (2002)) |
(188.9 | ) | (100.9 | ) | (552.3 | ) | (652.3 | ) | |||||||||||||||
Recapitalization items, net |
— | (32.6 | ) | — | (95.8 | ) | |||||||||||||||||
Share of (losses) from equity investments |
— | (3.5 | ) | (1.5 | ) | (3.0 | ) | ||||||||||||||||
Foreign currency transaction gains (losses) |
3.4 | 22.1 | 21.0 | (47.4 | ) | ||||||||||||||||||
(Loss) before income taxes |
(206.9 | ) | (578.0 | ) | (715.3 | ) | (1,477.5 | ) | |||||||||||||||
Income tax (expense) benefit |
18.0 | 10.4 | (10.8 | ) | 33.0 | ||||||||||||||||||
Net (loss) |
($188.9 | ) | ($567.6 | ) | ($726.1 | ) | ($1,444.5 | ) | |||||||||||||||
Basic and diluted net (loss) per common share |
|||||||||||||||||||||||
—
(pro forma in 2002) |
($3.73 | ) | ($11.24 | ) | ($14.38 | ) | ($28.60 | ) | |||||||||||||||
Weighted average shares — (pro forma in 2002) |
50.6 | 50.5 | 50.5 | 50.5 | |||||||||||||||||||
See accompanying notes.
3
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(unaudited) (in millions, except per share data)
| January 1, | ||||
| 2003 | ||||
| Predecessor | ||||
| Company | ||||
Gain on debt discharge |
$ | 8,451.6 | ||
Fresh-start adoption — intangible assets |
1,521.7 | |||
Fresh-start adoption — long-term debt |
221.3 | |||
Fresh-start adoption — deferred tax liability |
(68.6 | ) | ||
Fresh-start adoption — accrued expenses |
(120.4 | ) | ||
Fresh-start adoption — fixed assets |
(3,194.9 | ) | ||
Recapitalization expense |
(8.0 | ) | ||
Net income |
$ | 6,802.7 | ||
Pro forma basic and diluted net income per common share |
$ | 134.71 | ||
Pro forma weighted average shares |
50.5 | |||
See accompanying notes.
4
NTL INCORPORATED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(unaudited)
(dollars in millions)
| Series Preferred Stock | Common Stock | ||||||||||||||||||||||||
| $.01 Par Value | $.01 Par Value | Additional | Unearned | ||||||||||||||||||||||
| Paid-In | Stock | ||||||||||||||||||||||||
| Shares | Par | Shares | Par | Capital | Compensation | ||||||||||||||||||||
Predecessor company |
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Balance, December 31, 2002 |
— | $ | — | 13 | $ | — | $ | 14,045.5 | $ | — | |||||||||||||||
Net income January 1, 2003 |
|||||||||||||||||||||||||
Issuance of common stock |
50,499,955 | 0.5 | 1,062.1 | ||||||||||||||||||||||
Fresh start adjustment — other |
— | — | (13 | ) | — | (12,180.5 | ) | ||||||||||||||||||
Reorganized company |
|||||||||||||||||||||||||
Balance, January 1, 2003 |
— | — | 50,499,955 | 0.5 | 2,927.1 | — | |||||||||||||||||||
Issuance of shares into escrow |
133,912 | — | 2.3 | (2.3 | ) | ||||||||||||||||||||
Issuance of restricted stock |
200,000 | — | 1.7 | (1.7 | ) | ||||||||||||||||||||
Issuance of shares as payment of bonus |
8,449 | — | 0.3 | ||||||||||||||||||||||
Exercise of stock options |
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