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 quarter ended September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_________
Commission File No. 333-05017
UIH Australia/Pacific, Inc.
(Exact name of Registrant as specified in its charter)
State of Colorado 84-1341958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4643 South Ulster Street, #1300
Denver, Colorado 80237
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (303) 770-4001
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The Company has no publicly-traded shares of capital stock. As of November
14, 1997, the Company had 13,864,941 shares of common stock outstanding.
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UIH AUSTRALIA/PACIFIC, INC.
TABLE OF CONTENTS
<TABLE>
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Page
Number
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PART I - FINANCIAL INFORMATION
------------------------------
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Item 1 - Financial Statements
- ------
Condensed Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 (Unaudited)........ 2
Condensed Consolidated Statements of Operations For the Three and Nine Months Ended
September 30, 1997 and 1996 (Unaudited)............................................................. 3
Condensed Consolidated Statement of Stockholder's (Deficit) Equity For the Nine Months Ended
September 30, 1997 (Unaudited)...................................................................... 4
Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1997
and 1996 (Unaudited)................................................................................ 5
Notes to Condensed Consolidated Financial Statements (Unaudited)........................................ 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations............... 10
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PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings................................................................................... 16
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Item 5 - Other Information................................................................................... 16
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Item 6 - Exhibits and Reports on Form 8-K.................................................................... 17
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</TABLE>
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<TABLE>
<CAPTION>
UIH AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in thousands, except share and per share amounts)
(Unaudited)
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................................ $ 45,689 $ 19,220
Short-term investments........................................................... -- 18,640
Subscriber receivables........................................................... 2,519 1,625
Related party receivables........................................................ 2,194 1,958
Other current assets............................................................. 2,645 2,393
-------- --------
Total current assets......................................................... 53,047 43,836
Marketable equity securities, including other investments in affiliated companies... 2,031 1,372
Property, plant and equipment, net of accumulated depreciation of $67,449 and
$27,038, respectively............................................................ 191,496 193,170
License fees, net of accumulated amortization of $3,324 and $2,520, respectively.... 8,644 10,387
Goodwill, net of accumulated amortization of $6,932 and $3,835, respectively........ 53,839 58,134
Other non-current assets, net, including related party receivables of $1,600 and
$1,600, respectively............................................................. 14,872 12,424
-------- --------
Total assets................................................................. $323,929 $319,323
======== ========
LIABILITIES AND STOCKHOLDER'S (DEFICIT) EQUITY
Current liabilities
Accrued liabilities and accounts payable, including related party payables of
$18,653 and $1,905, respectively............................................... $ 37,624 $ 20,336
Construction payables............................................................ 6,924 38,407
Accrued funding obligation....................................................... 904 1,270
Related party note payable....................................................... 4,999 --
Current portion of long-term debt................................................ 1,286 1,108
-------- --------
Total current liabilities.................................................... 51,737 61,121
Due to parent....................................................................... 4,112 2,758
Senior discount notes and other liabilities......................................... 370,183 251,397
-------- --------
Total liabilities............................................................ 426,032 315,276
-------- --------
Minority interest in subsidiary..................................................... 13,227 --
-------- --------
Stockholder's (deficit) equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
and outstanding................................................................ -- --
Common stock, $0.01 par value, 30,000,000 shares authorized, 13,864,941 and
13,864,941 shares issued and outstanding, respectively......................... 139 139
Additional paid-in capital....................................................... 118,331 112,346
Unrealized loss on investment.................................................... (2,753) (3,412)
Cumulative translation adjustments............................................... (9,734) 1,867
Accumulated deficit.............................................................. (221,313) (106,893)
-------- --------
Total stockholder's (deficit) equity......................................... (115,330) 4,047
-------- --------
Total liabilities and stockholder's (deficit) equity......................... $323,929 $319,323
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
2
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<TABLE>
<CAPTION>
UIH AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands, except share and per share amounts)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- ----------------------------
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Service and other revenue .................................. $ 18,341 $ 7,392 $ 49,052 $ 13,262
System operating expense, including related party
expense of $853, $0, $2,174 and $362, respectively ...... (13,988) (6,262) (35,857) (13,276)
System selling, general and administrative expense ......... (14,220) (9,383) (37,025) (19,625)
Corporate general and administrative expense,
including management fees to a related party of
$203, $188, $588 and $563, respectively ................. (309) (214) (885) (746)
Depreciation and amortization .............................. (22,061) (7,686) (57,797) (15,935)
-------- -------- --------- --------
Net operating loss .................................. (32,237) (16,153) (82,512) (36,320)
Equity in losses of affiliated companies ................... (557) (1,933) (2,000) (4,501)
Interest income ............................................ 247 1,967 526 3,284
Interest expense, including related party interest
expense of $555, $0, $633 and $0, respectively .......... (11,214) (8,647) (29,676) (12,855)
Other (expense) income, net ................................ (342) 383 (1,109) 1,001
-------- -------- --------- --------
Net loss before minority interest ................... (44,103) (24,383) (114,771) (49,391)
Minority interest in subsidiaries .......................... 351 457 351 2,062
-------- -------- --------- --------
Net loss ............................................ $(43,752) $(23,926) $(114,420) $(47,329)
======== ======== ========= ========
Net loss per common share .................................. $ (3.16) $ (1.73) $ (8.25) $ (3.48)
======== ======== ========= ========
Weighted-average number of common shares outstanding ....... 13,864,941 13,837,211 13,864,941 13,615,372
========== ========== ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
UIH AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S (DEFICIT) EQUITY
(Stated in thousands, except share amounts)
(Unaudited)
Common Stock Additional Unrealized Cumulative
------------------ Paid-In Loss on Translation Accumulated
Shares Amount Capital Investment Adjustments Deficit Total
------ ------ ---------- ---------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1996 .......... 13,864,941 $139 $112,346 $(3,412) $ 1,867 $(106,893) $ 4,047
Gain on sale of stock by
subsidiary ......................... -- -- 5,985 -- -- -- 5,985
Change in unrealized loss on
investment ......................... -- -- -- 659 -- -- 659
Change in cumulative translation
adjustments ........................ -- -- -- -- (11,601) -- (11,601)
Net loss ............................. -- -- -- -- -- (114,420) (114,420)
---------- ---- -------- ------- ------- --------- ---------
Balances, September 30, 1997......... 13,864,941 $139 $118,331 $(2,753) $(9,734) $(221,313) $(115,330)
========== ==== ======== ======= ======= ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
UIH AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands)
(Unaudited)
For the Nine Months Ended
September 30,
---------------------------
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ..................................................................................... $(114,420) $(47,329)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization ............................................................. 57,797 15,935
Equity in losses of affiliated companies .................................................. 2,000 4,501
Minority interest share of losses ......................................................... (351) (2,062)
Increase in technical assistance agreement payables ....................................... 2,248 1,772
Accretion of interest on senior discount notes ............................................ 26,969 12,028
Increase in subscriber receivables ........................................................ (1,079) (3,580)
Decrease (increase) in other assets ....................................................... 165 (6,855)
Increase in accounts payable, accrued liabilities and other ............................... 19,992 17,473
--------- --------
Net cash flows used in operating activities .................................................. (6,679) (8,117)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments ........................................................... (3,663) (132,887)
Proceeds from sale of short-term investments ................................................. 22,303 105,257
Restricted cash deposited .................................................................... -- (10,000)
Investments in and advances to affiliated companies and other investments .................... (2,366) (10,651)
Purchase of property, plant and equipment .................................................... (67,948) (105,899)
(Decrease) increase in construction payables ................................................. (29,385) 5,636
--------- --------
Net cash flows used in investing activities .................................................. (81,059) (148,544)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions from parent ............................................................ -- 10,664
Cash contribution from minority interest partner ............................................. 20,336 --
Proceeds from offering of senior discount notes .............................................. 29,925 225,115
Deferred debt offering costs ................................................................. (4,632) (9,624)
Borrowing on related party payables to parent ................................................ 4,999 15,073
Payment on bridge loan payable to parent ..................................................... -- (25,000)
Borrowing on other debt ...................................................................... 65,971 13
Payment on other debt ........................................................................ (959) --
--------- --------
Net cash flows provided by financing activities .............................................. 115,640 216,241
--------- --------
EFFECT OF EXCHANGE RATES ON CASH ............................................................. (1,433) 918
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS ........................................................ 26,469 60,498
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............................................... 19,220 8,730
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ..................................................... $ 45,689 $ 69,228
========= ========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash stock issuance for purchase of 50% interest in Saturn ........................... $ -- $ 7,800
========= ========
Gain on issuance of shares by a wholly-owned subsidiary .................................. $ 5,985 $ --
========= ========
Decrease (increase) in unrealized loss on investment ..................................... $ 659 $ (784)
========= ========
Assets acquired with capital leases ...................................................... $ -- $ 1,707
========= ========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash received for interest ............................................................... $ 377 $ 131
========= ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
5
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UIH AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1997
(Monetary amounts stated in thousands)
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
UIH Australia/Pacific, Inc. (the "Company"), and all subsidiaries where it
exercises majority control and owns a majority economic interest. Austar
Entertainment Pty Limited ("Austar"), Telefenua S.A. ("Telefenua") and United
Wireless Pty Limited ("United Wireless") were consolidated for all periods
presented. The Company has consolidated the operations of Saturn Communications
Limited ("Saturn") since July 1, 1996. Prior to that time, the Company accounted
for its investment in Saturn under the equity method. All significant
intercompany accounts and transactions have been eliminated in consolidation.
In November 1997, the Company effected a stock split whereby the 500
shares of common stock outstanding were exchanged for 13,864,941 shares of
common stock. All share and per share amounts have been retroactively restated
to reflect this event.
In management's opinion, all adjustments (of a normal recurring nature)
have been made which are necessary to present fairly the financial position of
the Company as of September 30, 1997 and the results of its operations for the
three and nine months ended September 30, 1997 and 1996. For a more complete
understanding of the Company's financial position and results of its operations,
see the consolidated financial statements of the Company included in the
Company's annual report on Form 10-K for the year ended December 31, 1996.
INVESTMENTS IN AND ADVANCES TO AN AFFILIATED COMPANY, ACCOUNTED FOR UNDER THE
EQUITY METHOD
The Company accounts for its investment in XYZ Entertainment Pty Limited
("XYZ Entertainment") under the equity method of accounting. Under this method,
the investment, originally recorded at cost, is adjusted to recognize the
Company's proportionate share of net earnings or losses of the affiliate,
limited to the extent of the Company's investment in and advances to the
affiliate, including any debt guarantees or other contractual funding
commitments. The Company's proportionate share of net earnings or losses of XYZ
Entertainment includes the amortization of basis differences related to the
excess of cost over net tangible assets acquired. Investments in and advances to
XYZ Entertainment are as follows:
<TABLE>
<CAPTION>
As of
September 30, 1997
------------------------------------------------------------------------
Investments in Cumulative Equity Cumulative
and Advances to in Losses of Translation
Affiliated Company Affiliated Company Adjustments Total
------------------ ------------------ ------------ -----
<S> <C> <C> <C> <C>
XYZ Entertainment.................. $18,202(1) $(18,312) $110 $ --
======= ======== ==== =====
</TABLE>
<TABLE>
<CAPTION>
As of
December 31, 1996
------------------------------------------------------------------------
Investments in Cumulative Equity Cumulative
and Advances to in Losses of Translation
Affiliated Company Affiliated Company Adjustments Total
------------------ ------------------ ------------ -----
<S> <C> <C> <C> <C>
XYZ Entertainment.................. $16,202(1) $(16,312) $110 $ --
======= ======== ==== =====
</TABLE>
(1) Includes an accrued funding obligation of $904 and $1,270 at
September 30, 1997 and December 31, 1996, respectively. The Company
does not have a contractual funding obligation to XYZ Entertainment;
however, the Company would face significant and punitive dilution if
it did not make the scheduled fundings.
6
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UIH AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Additions, replacements
and major improvements are capitalized, and costs for normal repair and
maintenance of property, plant and equipment are charged to expense as incurred.
All subscriber premises equipment and capitalized installation labor is
depreciated over three years. Upon disconnection of a subscriber, the remaining
book value of the subscriber equipment, excluding converters which are recovered
upon disconnection, and the capitalized labor are written off. Depreciation
expense is computed using the straight-line method over the estimated useful
lives shown below. Detail of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
As of As of
September 30, December 31, Average
1997 1996 Life
------------- ------------ -------
<S> <C> <C> <C>
Subscriber premises equipment and converters....... $155,860 $125,238 3
MMDS distribution facilities....................... 58,217 57,073 5-10
Cable distribution networks........................ 16,297 11,672 5-10
Furniture and fixtures............................. 2,005 2,031 5-10
Leasehold improvements............................. 3,272 3,465 6-10
Other.............................................. 23,294 20,729 3-5
-------- --------
258,945 220,208
Accumulated depreciation................... (67,449) (27,038)
-------- --------
Net property, plant and equipment.......... $191,496 $193,170
======== ========
</TABLE>
Assets acquired under capital leases are included in property, plant and
equipment. The initial amount of the leased asset and corresponding lease
liability are recorded at the present value of future minimum lease payments.
Leased assets are amortized over the life of the relevant lease.
SAB 51 ACCOUNTING POLICY
Under Staff Accounting Bulletin No. 51 ("SAB 51"), the gain of $5,985
recognized by the Company upon the issuance by Saturn of newly issued shares in
exchange for the sale of a 35% interest in Saturn was credited directly to
equity (see Note 4). The Company has adopted a SAB 51 policy to record all gains
as a result of stock sales by its subsidiaries in the statement of operations,
except for any transactions which must be credited directly to equity in
accordance with the provisions of SAB 51.
FOREIGN OPERATIONS
The functional currency for the Company's foreign operations is the
applicable local currency for each affiliate company. Assets and liabilities of
foreign subsidiaries are translated at the exchange rate in effect at
period-end, and the statements of operations are translated at the average
exchange rates during the period. Exchange rate fluctuations on translating
foreign currency financial statements into U.S. dollars that result in
unrealized gains or losses are referred to as translation adjustments.
Cumulative translation adjustments are recorded as a separate component of
stockholder's (deficit) equity.
Transactions denominated in currencies other than the local currency are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes in exchange rates result in transaction gains and losses which are
reflected in income as unrealized (based on period-end translations) or realized
upon settlement of the transactions.
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations in foreign
countries are calculated at average rates based on their reporting currencies.
As a result, amounts related to assets and liabilities reported on the Condensed
Consolidated Statements of Cash Flows will not agree to changes in the
corresponding balances on the Condensed Consolidated Balance Sheets. The effects
of exchange rate changes on cash balances held in foreign currencies are
reported as a separate line below cash flows from financing activities.
7
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UIH AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
2. SENIOR DISCOUNT NOTES AND OTHER LIABILITIES
Senior discount notes and other liabilities consists of the following:
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
May 1996 Notes (as defined below), net of unamortized discount............. $272,094 $245,182
September 1997 Notes (as defined below), net of unamortized discount....... 29,982 --
Austar Bank Facility (as defined below).................................... 63,144 --
Capitalized lease obligations.............................................. 3,990 4,522
Mortgage note, interest at 7.885%, 7 year term............................. 1,158 1,464
Other...................................................................... 1,101 1,337
-------- --------
371,469 252,505
Less current portion................................................... (1,286) (1,108)
-------- --------
$370,183 $251,397
======== ========
</TABLE>
On May 14, 1996, the Company raised total gross proceeds of approximately
$225,115 from the private placement of $443,000 aggregate principal amount of
14% senior discount notes (the "May 1996 Notes"). On and after May 15, 2001,
cash interest will accrue and will be payable semi-annually on each May 15 and
November 15, commencing November 15, 2001. The May 1996 Notes are due May 15,
2006. Effective May 16, 1997, the interest rate on these notes increased by an
additional 0.75% per annum to 14.75%, until such time as the Company consummates
an issuance of its capital stock resulting in gross proceeds to the Company of
at least $70,000 (an "Equity Sale"). Due to this increase in the interest rates,
the May 1996 Notes will accrete to a principal amount of $455,574 if an Equity
Sale is not consummated prior to maturity.
On September 23, 1997, the Company received total gross proceeds of $29,925
from the private placement of $45,000 aggregate principal amount of 14% senior
discount notes (the "September 1997 Notes"). On and after May 15, 2001, cash
interest will accrue and will be payable semi-annually on each May 15 and
November 15, commencing November 15, 2001. The September 1997 Notes are due May
15, 2006. Effective September 23, 1997, the interest rate on these notes
increased by an additional 0.75% per annum to 14.75%, until such time as the
Company consummates an Equity Sale. Due to this increase in interest rates, the
September 1997 Notes will accrete to a principal amount of $46,277 if an Equity
Sale is not consummated prior to maturity.
If the Company does not consummate an Equity Sale prior to November 16,
1997, the then holders of the May 1996 Notes and the September 1997 Notes
(collectively, the "Notes") will be entitled to receive warrants to purchase
3.4% of the common stock of the Company for an aggregate exercise price of
approximately $5,100. The Company plans to issue such warrants on November 17,
1997, as it will not conclude an Equity Sale prior to November 16, 1997.
In July 1997, Austar secured a financing facility from a bank for a Senior
Syndicated Term Debt Facility in the amount of Australian $("A$")200,000
(US$155,000) (the "Austar Bank Facility"). The proceeds of the Austar Bank
Facility will be used to fund Austar's subscriber acquisition and working
capital needs. The Austar Bank Facility consists of three sub-facilities: (i)
A$50,000 revolving working capital facility; (ii) A$60,000 cash advance facility
available upon the contribution of additional equity on a 2:1 debt-to-equity
basis; and (iii) A$90,000 term loan facility, which will be available on the
basis of Austar having achieved minimum subscriber and operating cash flow
levels. The maximum amount of equity required in (ii) above would be A$30,000,
approximately A$18,500 of which has already been contributed through September
30, 1997, and the remainder of which is expected to be contributed by the
Company from the proceeds of the September 1997 Notes or by UIH Asia/Pacific
Communications, Inc. ("UAP") or United International Holdings, Inc. ("UIH"). The
cash advance and term loan facilities are fully repayable pursuant to an
amortization schedule beginning December 31, 2001 and ending June 30, 2004. As
of September 30, 1997, Austar had drawn A$87,000 (US$63,144 converted using the
September 30, 1997 exchange rate) on the Austar Bank Facility.
8
<PAGE>
UIH AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. RELATED PARTY
The Company and UIH Management, Inc. ("UIH Management"), an indirect
wholly-owned subsidiary of UIH, executed a 10-year management services agreement
(the "Management Agreement"), pursuant to which UIH Management will perform
certain administrative, accounting, financial reporting and other services for
the Company, which has no separate employees of its own. Effective March 31,
1997, UIH Management assigned its rights and obligations under the Management
Agreement to UAP. Pursuant to the Management Agreement, the management fee was
$750 for the first year of such agreement (beginning May 1, 1996), and it
increases on each anniversary date of the Management Agreement by 8% per year.
In addition, the Company shall reimburse UAP for any out-of-pocket expenses
incurred by UAP in performance of its duties under the Management Agreement,
including travel, lodging and entertainment expenses.
Austar, Saturn, Telefenua and United Wireless are also parties to technical
service agreements with UAP for which such operating companies pay to UAP fees
based, in part, on their respective gross revenues.
As of September 30, 1997, United International Properties, Inc. ("UIPI"),
the immediate parent of UAP, had loaned $4,999 to UIH Australia/Pacific Finance,
Inc., a wholly-owned subsidiary of the Company. This loan accrues interest at
15% and is due on demand.
Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1997 1996
------------- -----------
<S> <C> <C>
Payable to UIH and UAP for management fees, invoices and capital
contributions paid by UIH on the Company's behalf..................... $17,024 $ 317
Austar technical assistance agreement obligations....................... 2,614 1,135
Telefenua technical assistance agreement obligations.................... 2,497 1,879
Saturn technical assistance agreement obligations....................... 205 1,002
Other................................................................... 425 330
------- ------
22,765 4,663
Less current portion................................................ (18,653) (1,905)
------- ------
$ 4,112 $2,758
======= ======
</TABLE>
4. SATURN TRANSACTION
In July 1997, SaskTel Holdings (New Zealand), Inc. ("SaskTel") purchased a
35% equity interest in Saturn by investing approximately New Zealand
$("NZ$")30,000 (US$19,600) for its shares (the "Saturn Transaction"). The
Company believes that SaskTel, a division of Saskatchewan Telecommunications
Holdings Corporation of Saskatchewan, Canada, will contribute telephony
expertise to Saturn in providing cable/telephony service in the Wellington, New
Zealand area.
5. SUBSEQUENT EVENT
Australis Media Limited ("Australis"), a supplier of movie and sports
programming as well as satellite distribution services to Austar, has publicly
announced that it may need to appoint a receiver owing to liquidity issues. The
Company is currently in negotiations with Australis and other programming
suppliers for these types of programming and, therefore, currently believes it
will be able to make satisfactory programming arrangements in the event of a
disruption in service from Australis. There can be no assurance, however, that
such arrangements will be concluded, or will be concluded on terms favorable to
Austar.
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Monetary amounts stated in thousands)
THE FOLLOWING DISCUSSION CONTAINS, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND IN THE
COMPANY'S REPORT ON FORM 8-K DATED MAY 15, 1997.
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Company's
condensed consolidated financial statements and related notes thereto included
elsewhere herein. Such condensed consolidated financial statements provide
additional information regarding the Company's financial activities and
condition.
The Company conducts no operations other than through its operating
companies in which it holds varying interests. Because the operating companies
have, since inception, been engaged primarily in organizational, start-up and
construction activities and have not yet achieved the expected subscriber
penetration levels anticipated with mature operating systems, the Company
believes that its historical results of operations discussed herein are not
indicative of the results of operations which will follow the completion of
construction, initial marketing of service and the achievement of anticipated
subscriber penetration levels by the operating companies.
The Company has no employees of its own. UAP, the Company's parent,
provides various management, financial reporting, accounting and other services
for the Company pursuant to the terms of the Management Agreement between UAP
and the Company. Austar, Saturn, Telefenua and United Wireless are also parties
to technical service agreements with UAP for which such operating companies pay
to UAP fees based, in part, on their respective gross revenues (see Note 3).
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased $26,469 from $19,220 as of December 31,
1996 to $45,689 as of September 30, 1997. Principal sources of cash during the
nine months ended September 30, 1997 included $65,971 of borrowings on the
Austar Bank Facility, $29,925 gross proceeds from the issuance of the September
1997 Notes, $20,336 from the Saturn Transaction, the net sale of the remaining
balance in short-term investments of $18,640 and a loan from UIPI of $4,999.
These funds were used principally for purchases of property, plant and equipment
totaling $67,948 to continue the build-out of the Company's existing projects,
primarily Austar, and to pay down related construction payables that existed as
of December 31, 1996 totaling $29,385, as well as funding operating activities
of $6,679 during the period. During the nine months ended September 30, 1997,
the Company incurred a net loss of $114,420 of which $57,797 was from non-cash
depreciation and amortization expense and $26,969 was from non-cash accretion of
interest on the Notes. In addition, accounts payable, accrued liabilities and
other increased $19,992, the majority of which was due to an increase in the
amounts owed to UIH and UAP for capital contributions paid by UIH on the
Company's behalf.
During the nine months ended September 30, 1996, cash and cash equivalents
increased $60,498 from $8,730 as of December 31, 1995 to $69,228 as of September
30, 1996. Principal sources of cash during this period included $225,115 gross
proceeds from the issuance of the May 1996 Notes, loans from UIH totaling
$15,073 and capital contributions from UIH totaling $10,664. These funds were
used principally to purchase property, plant and equipment totaling $105,899 to
construct Austar's and Telefenua's systems, to purchase net short-term
investments of $27,630, to pay down the $25,000 owed to UIH under a bridge loan
and to contribute $10,651 to Saturn and XYZ Entertainment to meet the Company's
funding obligations, as well as funding operating activities of $8,117 during
the period. During the nine months ended September 30, 1996, the Company
incurred a net loss of $47,329 of which $15,935 was from non-cash depreciation
and amortization expense and $12,028 was from non-cash accretion of interest on
the May 1996 Notes. In addition, accounts payable, accrued liabilities and other
increased $17,473, the majority of which was related to the build-out of the
operating systems.
If the Company does not consummate an Equity Sale prior to November 16,
1997, the then holders of the Notes would be entitled to receive warrants to
purchase 3.4% of the common stock of the Company for an aggregate exercise price
of approximately $5,100. The Company plans to issue such warrants on November
17, 1997, as it will not conclude an Equity Sale prior to November 16, 1997.
10
<PAGE>
The Company is responsible for its proportionate share of the capital
requirements of the operating companies. The Company has funded its
proportionate share to date with capital contributed by UIH and proceeds of the
Notes and has reduced its proportionate share to date with the Austar Bank
Facility (see Note 2) and the Saturn Transaction (see Note 4).
The following table sets forth, as of September 30, 1997, (i) the total
estimated funding required for the construction and initial marketing of the
operating companies' systems in their existing license areas, including any
capital invested to date and the application of any operating cash flow sources
for such operating companies, (ii) the total amount of capital invested in each
of the operating companies and the portion funded by the Company and by bank
facilities and (iii) the total estimated additional funding required based on
the assumptions stated in (i) above and the Company's estimated portion of such
funding. Such amounts are expected to be funded over the next 24 to 36 months.
The estimated required additional funding numbers below have not been reduced to
give effect to any surplus cash flow of any one operating company which might be
available to fund the requirements of another operating company. To the extent
the operating companies fund their construction and other costs through project
financing, the Company's portion of estimated additional funding would be
reduced proportionately. The Company's portion of estimated additional funding
would be increased proportionately to the extent cash flow from the operating
companies and other sources of financing are not sufficient to meet project
funding requirements. To the extent that the other shareholders of Saturn and
XYZ Entertainment fail to fund their pro rata share of the additional
shareholder capital, the Company may elect to fund all or a portion of such
shortfall.
<TABLE>
<CAPTION>
Estimated Total Project Capital Invested Estimated Required
Funding Requirements As of September 30, 1997(1) Additional Funding
Operating --------------------------- ---------------------------- ----------------------------
Company The Company Total The Company(2) Total(2) The Company Total
--------- ----------- -------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Austar $391,000 $391,000 $290,202(3) $290,202(3) $100,798(4) $100,798(4)
Saturn 83,015 130,464 31,296(5) 50,896(6) 51,719 79,568
Telefenua 17,400 17,400 16,737 16,737 663 663
XYZ Entertainment 13,974 55,896 13,185 52,740 789 3,156
United Wireless 8,226 8,226 7,087 7,087 1,139 1,139
-------- -------- -------- -------- -------- --------
Total $513,615 $602,986 $358,507 $417,662 $155,108 $185,324
======== ======== ======== ======== ======== ========
</TABLE>
(1) Certain amounts contributed by the Company's partners were contributed in
currencies other than U.S. dollars. Such amounts have been translated to
U.S. dollars using a convenience translation.
(2) Includes amounts contributed to Austar (approximately $11,000) and Saturn
(approximately $2,920) by shareholders other than the Company which were
contributed by such shareholders prior to the acquisition of their
respective interests by the Company.
(3) Includes A$87,000 (US$67,545 converted using the exchange rate on each
funding date) of amounts borrowed under the Austar Bank Facility. Does not
include the $58,600 paid by the Company to increase its economic interest
in Austar to approximately 100%.
(4) The Austar Bank Facility of A$200,000 (US$155,000) reduces the Company's
portion of the remaining funding requirements. As of September 30, 1997,
Austar had drawn A$87,000 on this facility leaving A$113,000 (US$82,015
converted using the September 30, 1997 exchange rate) that can be drawn
down, assuming compliance with certain financial covenants (see Note 2).
(5) Does not include the value of shares of common stock exchanged for shares
of the Company to increase the Company's interest in Saturn to 100%
effective July 1996.
(6) Includes the $19,600 invested by SaskTel for its 35% interest in Saturn in
July 1997. Does not include the value of shares of common stock exchanged
for shares of the Company to increase the Company's interest in Saturn to
100% effective July 1996.
The Company received total gross proceeds of $29,925 from the issuance of
the September 1997 Notes. The Company plans to use the proceeds from the sale to
fund capital expenditure and working capital requirements of its subsidiaries
and affiliates as permitted by the terms of the Company's indentures.
The Company believes that it will be required to fund a total of
approximately $155,108 in order to build-out its existing projects over the next
three years. To the extent the operating companies fund their construction and
other costs through project financing, the Company's portion of estimated
additional funding would be reduced proportionately. In addition to the Austar
Bank Facility (see Note 2) and cash on hand, the Company intends to raise
additional capital through capital contributions from its parent corporation,
11
<PAGE>
further issuances of debt either by the Company or the operating companies, or
by the sale of all or a part of its equity in certain of its operating
subsidiaries. The Company's indentures and UIH's indentures place restrictions
on the Company and certain of its subsidiaries with respect to the amount of
additional debt each may incur. The Company and all of the operating companies
are currently restricted under the UIH indentures. The Company, Austar and
Telefenua are restricted under the Company's indentures. The restrictions
imposed by the indentures will be eliminated upon the retirement of UIH's notes
at their maturity in November 1999 and upon the retirement of the Company's
Notes at their maturity in May 2006.
The Company is negotiating to sell all or a portion of its interest in
Telefenua, the proceeds of which would be used to fund its other businesses.
There can be no assurance that the Company will be successful in completing this
sale.
Australis, a supplier of movie and sports programming as well as satellite
distribution services to Austar, has publicly announced that it may need to
appoint a receiver owing to liquidity issues. The Company is currently in
negotiations with Australis and other programming suppliers for these types of
programming and, therefore, currently believes it will be able to make
satisfactory programming arrangements in the event of a disruption in service
from Australis. There can be no assurance, however, that such arrangements will
be concluded, or will be concluded on terms favorable to Austar.
RESULTS OF OPERATIONS
SERVICE AND OTHER REVENUE. The Company's service and other revenue increased
$10,949 and $35,790 for the three and nine months ended September 30, 1997,
respectively, compared to the amounts for the corresponding periods in the prior
year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
1997 1996 1997 1996
------- ------ ------- -------
<S> <C> <C> <C> <C>
AUSTRALIA:
Austar........................................ $16,986 $6,418 $45,510 $10,544
United Wireless............................... 134 37 265 42
NEW ZEALAND:
Saturn........................................ 133 44 314 44
TAHITI:
Telefenua ................................... 1,088 893 2,963 2,632
------- ------ ------- -------
Total service and other revenue........... $18,341 $7,392 $49,052 $13,262
======= ====== ======= =======
</TABLE>
AUSTAR
Service and other revenue for Austar increased $10,568, or
164.7%, from $6,418 for the three months ended September 30, 1996 to
$16,986 for the three months ended September 30, 1997. This increase
was primarily due to subscriber growth (178,832 at September 30, 1997
compared to 60,276 at September 30, 1996) as Austar continues to
roll-out its services.
Service and other revenue for Austar increased $34,966, or
331.6%, from $10,544 for the nine months ended September 30, 1996 to
$45,510 for the nine months ended September 30, 1997. This increase is
due to the aforementioned subscriber growth.
SATURN
The Company began consolidating the results of Saturn effective
July 1, 1996. Accordingly, the Company reported no service revenue for
Saturn for the six months ended June 30, 1996. For the three and nine
months ended September 30, 1997, Saturn reported service revenue of
$133 and $314, respectively, compared with service revenue of $44 and
$148 for the corresponding periods in 1996. The increase each period
was primarily due to an increase in subscribers (2,829 at September
30, 1997 compared to 1,235 at September 30, 1996).
TELEFENUA
Telefenua's service revenue increased to $1,088 and $2,963 from
$893 and $2,632 for the three and nine months ended September 30, 1997
and 1996, respectively. The increase was primarily attributable to
subscriber growth (6,257 at September 30, 1997 compared to 4,678 at
September 30, 1996).
12
<PAGE>
SYSTEM OPERATING EXPENSE. System operating expense increased $7,726 and $22,581
for the three and nine months ended September 30, 1997, respectively, compared
to the amounts for the corresponding periods in the prior year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Austar................................................. $11,375 $4,830 $29,841 $10,111
Saturn................................................. 802 599 2,461 599
Telefenua.............................................. 566 569 1,451 1,642
United Wireless........................................ 414 264 1,273 924
Other.................................................. 831 -- 831 --
------- ------ ------- -------
Total system operating expense.................. $13,988 $6,262 $35,857 $13,276
======= ====== ======= =======
</TABLE>
AUSTAR
Operating expense for Austar increased $6,545, or 135.5%, from
$4,830 for the three months ended September 30, 1996 to $11,375 for
the three months ended September 30, 1997. This increase was due to an
increase in satellite programming fees and copyright costs totaling
$4,088 which corresponds to the increase in subscribers and additional
basic programming services, an increase in salaries and benefits of
$206 as a result of additional personnel to support Austar's launch of
local and state offices in its markets, an increase in customer
subscriber management expenses of $914 related to volume increases in
billing and collections, with the remainder due to increases in system
travel, maintenance, vehicle costs and management fees.
Operating expense for Austar increased $19,730, or 195.1%, from
$10,111 for the nine months ended September 30, 1996 to $29,841 for
the nine months ended September 30, 1997. This increase was due to an
increase in satellite programming fees and copyright costs totaling
$12,108 which corresponds to the increase in subscribers and
additional basic programming services, an increase in salaries and
benefits of $1,677 as a result of additional personnel to support
Austar's launch of local and state offices in its markets, an increase
in customer subscriber management expenses of $2,259 related to volume
increases in billing and collections, with the remainder due to
increases in system travel, maintenance, vehicle costs and management
fees.
Austar is experiencing high operating expense relative to service
revenue due to certain fixed operating expenses (such as management
overhead, license fees and certain office-related costs). Austar
expects operating expense as a percentage of service revenue to
decline as start-up costs decrease and as certain fixed operating
expenses are spread over expected increases in service revenues.
SATURN
The Company began consolidating the results of Saturn effective
July 1, 1996. Accordingly, the Company reported no operating expense
for Saturn for the six months ended June 30, 1996. For the three and
nine months ended September 30, 1997, Saturn reported system operating
expense of $802 and $2,461, respectively, compared with system
operating expense of $599 and $1,319 for the corresponding periods in
1996. System operating personnel expenses decreased $85 and increased
$296 for the three and nine months ended September 30, 1997,
respectively, in order to support Saturn's build-out of its hybrid
fiber coaxial network in the Wellington area.
TELEFENUA
Operating expense at Telefenua decreased to $566 and $1,451 for
the three and nine month period ended September 30, 1997,
respectively, from $569 and $1,642 for the corresponding periods in
1996. These decreases were primarily due to decreases in
technical-related repairs and maintenance costs as well as a weakening
in the local currency, partially offset by increased programming costs
associated with the increase in subscribers.
13
<PAGE>
OTHER
In September 1997, the Company began paying a satellite service
fee of approximately $480 per month as part of their five-year
agreement with Optus Vision Pty Limited ("Optus"). In addition, the
Company expensed a related deposit charged by Optus during the
quarter. In future periods, these costs will be incurred at the
operating system level based on usage of the satellite.
SYSTEM SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. System selling, general and
administrative expense increased $4,837 and $17,400 for the three and nine
months ended September 30, 1997, respectively, compared to the amounts for the
corresponding periods in the prior year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Austar............................................... $12,301 $7,482 $31,910 $16,305
Saturn............................................... 934 889 2,330 889
Telefenua............................................ 492 691 1,503 1,959
United Wireless...................................... 493 321 1,282 472
------- ------ ------- -------
Total system selling, general and
administrative expense...................... $14,220 $9,383 $37,025 $19,625
======= ====== ======= =======
</TABLE>
AUSTAR
System selling, general and administrative expense for Austar
increased $4,819, or 64.4%, from $7,482 for the three months ended
September 30, 1996 to $12,301 for the three months ended September 30,
1997. This increase was primarily due to an increase in salaries
associated with the National Customer Operations Center and Austar's
corporate headquarters of $1,519 as a result of additional personnel
necessary to support the increase in subscribers, an increase in
marketing costs related to print, radio and television advertisements
of $1,484 associated with subscriber acquisition and an increase in
direct sales commissions of $393 due to subscriber growth. In
addition, $855 of the increase related to one-time charges for the
restructuring and consolidation of various regional offices.
System selling, general and administrative expense for Austar
increased $15,605, or 95.7%, from $16,305 for the nine months ended
September 30, 1996 to $31,910 for the nine months ended September 30,
1997. This increase was primarily due to an increase in salaries
associated with the National Customer Operations Center and Austar's
corporate headquarters of $5,526 as a result of additional personnel
necessary to support the increase in subscribers, an increase in
marketing costs related to print, radio and television advertisements
of $4,413 associated with subscriber acquisition and an increase in
direct sales commission of $2,261 due to subscriber growth. In
addition, $855 of the increase related to one-time charges for the
restructuring and consolidation of various regional offices.
Austar expects that system selling, general and administrative
expense as a percent of service revenue will continue to decline over
the remainder of 1997 as certain fixed expenses are spread over
expected increases in service revenues.
SATURN
The Company began consolidating the results of Saturn effective
July 1, 1996. Accordingly, the Company reported no system selling,
general and administrative expense for Saturn for the six months ended
June 30, 1996. Saturn's system selling, general and administrative
expense was $934 and $2,330 for the three and nine months ended
September 30, 1997, respectively, compared to $889 and $1,690 for the
comparable periods in 1996. System selling and marketing salaries and
expenses increased $111 and $524 for the three and nine months ended
September 30, 1997, respectively, related to increases in direct sales
commissions due to subscriber growth and marketing/promotion costs for
subscriber acquisition.
14
<PAGE>
TELEFENUA
System selling, general and administrative expense consolidated
by the Company from Telefenua decreased to $492 and $1,503 for the
three and nine months ended September 30, 1997, respectively, from
$691 and $1,959 for the same periods in the prior year. These
decreases were primarily due to a reduction in marketing costs during
1997 as well as a weakening of the local currency.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSE. Corporate general and
administrative expense increased $95 and $139 for the three and nine months
ended September 30, 1997, respectively, compared to the amounts for the
corresponding periods in the prior year.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
increased $14,375, or 187.0%, from $7,686 for the three months ended September
30, 1996 to $22,061 for the three months ended September 30, 1997. This increase
was primarily attributable to a larger asset base due to the significant
deployment of operating assets to meet subscriber growth during the latter part
of 1996 and, to a lesser extent, in 1997. For the three months ended September
30, 1997, depreciation and amortization expense at Austar was $19,982, an
increase of $13,696 compared to the same quarter in the prior year.
Depreciation and amortization expense increased $41,862, or 262.7%, from
$15,935 for the nine months ended September 30, 1996 to $57,797 for the nine
months ended September 30, 1997, for the reasons discussed above. For the nine
months ended September 30, 1997, depreciation and amortization expense at Austar
was $51,914, an increase of $39,645 compared to the corresponding period in
1996.
EQUITY IN LOSSES OF AFFILIATED COMPANIES. The Company experienced decreases in
equity in losses of affiliated companies of $1,376 and $2,501 for the three and
nine months ended September 30, 1997, respectively, compared to the amounts for
the corresponding periods in the prior year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
XYZ Entertainment.................................... $557 $1,933 $2,000 $3,571
Saturn (1)........................................... -- -- -- 930
---- ------ ------ ------
Total equity in losses of affiliated
companies................................... $557 $1,933 $2,000 $4,501
==== ====== ====== ======
</TABLE>
(1) The Company acquired a 50% interest in Saturn in July 1994. The Company
increased its ownership in Saturn to 100% and began consolidating its
results effective July 1, 1996. In July 1997, the Company reduced its
interest in Saturn to 65% from 100% (see Note 4).
INTEREST INCOME. Interest income decreased $1,720 and $2,758 for the three and
nine months ended September 30, 1997, respectively, compared to the amounts for
the corresponding periods in the prior year. The decreases were due to reduced
cash and short-term investment balances related to the funding of the Company's
investments in affiliated companies.
INTEREST EXPENSE. Interest expense increased $2,567 and $16,821 for the three
and nine months ended September 30, 1997, respectively, compared to the amounts
for the corresponding periods in the prior year. The increase for the nine
months ended September 30, 1997 resulted from having the May 1996 Notes
outstanding for the entire nine month period. The Notes currently accrete
interest at a rate of 14.75% compounded semi-annually. In addition, interest
expense related to the Austar Bank Facility was $951 and $1,692 for the three
and nine months ended September 30, 1997, respectively.
15
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - LEGAL PROCEEDINGS
Carl M. Johnson, an individual who claimed to have worked with UIH in
connection with the acquisition by Austar of certain of its licenses, filed a
complaint in 1996 claiming that UIH owed him an equity interest in unspecified
subsidiaries of UIH. This matter was settled in September 1997.
ITEM 5 - OTHER INFORMATION
SUMMARY OPERATING DATA
The following tables set forth certain unaudited operating data:
<TABLE>
<CAPTION>
As of
September 30, 1997
-------------------------------------------------------------------------
Television
Homes in Economic
Service Homes Basic Basic Ownership
Operating System Area Serviceable Subscribers Penetration Interest
---------------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Austar............................. 1,622,000 1,589,000 178,832 11.3% 100%
Saturn............................. 141,000 20,124 2,829 14.1% 65%
Telefenua.......................... 31,000 20,128 6,257 31.1% 90%
XYZ Entertainment.................. N/A(1) N/A 524,000(2) N/A 25%
--------- --------- -------
Total........................ 1,794,000 1,629,252 711,918
========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
As of
September 30, 1996
-------------------------------------------------------------------------
Television
Homes in Economic
Service Homes Basic Basic Ownership
Operating System Area Serviceable Subscribers Penetration Interest
---------------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Austar............................. 1,537,000 1,371,115 60,276 4.4% 100%
Saturn............................. 141,000 10,468 1,235 11.8% 100%
Telefenua.......................... 31,000 18,633 4,678 25.1% 90%
XYZ Entertainment.................. N/A(1) N/A 258,210(2) N/A 25%
--------- --------- -------
Total........................ 1,709,000 1,400,216 324,399
========= ========= =======
</TABLE>
(1) The Company expects that XYZ Entertainment's programming package will be
marketed to virtually all of Australia's 6.5 million television households
by Australian multi-channel television providers, including Austar,
Australis, Foxtel Management Pty Limited and East Coast Television Pty
Limited.
(2) This figure represents the total estimated subscribers to the eight
channel Galaxy package to which XYZ Entertainment supplies four channels.
In addition, XYZ Entertainment launched a fifth channel, the Lifestyle
Channel, on September 1, 1997.
16
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1A Articles of Amendment to Articles of Incorporation of the
Company, incorporated by reference to the Registration Statement
on Form S-3, Amendment No. 1, of the Company filed with the
Commission on November 14, 1997 (File No. 333-37651)
4.1 The Indenture dated as of September 23, 1997, between the Company
and Firststar Bank of Minnesota, N.A. (the "Indenture"),
incorporated by reference to the Registration Statement on Form
S-4 of the Company filed with the Commission on November 6, 1997
(File No. 333-39707)
10.2 Purchase Agreement dated September 16, 1997, between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
incorporated by reference to the Registration Statement on Form
S-4 of the Company filed with the Commission on November 6, 1997
(File No. 333-39707)
10.3 Registration Rights Agreement dated September 23, 1997, between
the Company and DLJ, incorporated by reference to the
Registration Statement on Form S-4 of the Company filed with the
Commission on November 6, 1997 (File No. 333-39707)
10.15 Subscription and Investment Agreement dated July 21, 1997, among
SaskTel, Saskatchewan Telecommunications Holding Corporation, UIH
New Zealand Holdings, Inc. ("UIHNZ"), UAP and Saturn, as amended,
incorporated by reference to the Registration Statement on Form
S-4 of the Company filed with the Commission on November 6, 1997
(File No. 333-39707)
10.16 Shareholders Agreement dated July 23, 1997, among SaskTel, UIHNZ
and Saturn, incorporated by reference to the Registration
Statement on Form S-4 of the Company filed with the Commission on
November 6, 1997 (File No. 333-39707)
10.26 A$200,000,000 Syndicated Senior Secured Debt Facility Agreement,
dated July 31, 1997, among Austar, Chase Securities Australia
Limited, the Guarantors named therein and the financial
institutions named therein*
10.31 Amendment No. 1 to Technical Assistance Agreement dated July 23,
1997, between Saturn and UAP, incorporated by reference to the
Registration Statement on Form S-4 of the Company filed with the
Commission on November 6, 1997 (File No. 333-39707)
10.32 Technical Assistance Agreement dated July 23, 1997, between
SaskTel and Saturn, incorporated by reference to the Registration
Statement on Form S-4 of the Company filed with the Commission on
November 6, 1997 (File No. 333-39707)
10.37 Warrant Agreement dated as of November 15, 1997, between the
Company and Firststar Bank of Minnesota, N.A., incorporated by
reference to the Registration Statement on Form S-4 of the
Company filed with the Commission on November 6, 1997 (File No.
333-39707)
27.1 Financial Data Schedule
- ---------------
* To be filed by Amendment.
(b) Reports on Form 8-K filed during the quarter.
None.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UIH AUSTRALIA/PACIFIC, INC.
Date: November 14, 1997
-------------------------------------
By: /S/ J. Timothy Bryan
-------------------------------------
J. Timothy Bryan
Chief Financial Officer and Treasurer
(A Duly Authorized Officer and Principal Financial Officer)
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UIH
AUSTRALIA/PACIFIC, INC.'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 45,689
<SECURITIES> 2,031
<RECEIVABLES> 2,519
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 53,047
<PP&E> 258,945
<DEPRECIATION> 67,449
<TOTAL-ASSETS> 323,929
<CURRENT-LIABILITIES> 51,737
<BONDS> 370,183
0
0
<COMMON> 139
<OTHER-SE> (102,982)
<TOTAL-LIABILITY-AND-EQUITY> 323,929
<SALES> 0
<TOTAL-REVENUES> 49,052
<CGS> 0
<TOTAL-COSTS> 35,857
<OTHER-EXPENSES> 57,797
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,676
<INCOME-PRETAX> (114,420)
<INCOME-TAX> 0
<INCOME-CONTINUING> (114,420)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,420)
<EPS-PRIMARY> (8.25)
<EPS-DILUTED> 0
</TABLE>
