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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-24521
CORECOMM LIMITED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Bermuda Not Applicable
- ------------------------------------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Cedar House Assistant Secretary CoreComm Limited
41 Cedar Avenue 110 East 59th Street
Hamilton, HM 12, Bermuda New York, NY 10022
(441) 295-2244 (212) 906-8485
- ------------------------------------ ------------------------------------
(Address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number, including
area code of Registrant's area code of agent for service)
principal executive offices)
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
----- -----
The number of shares outstanding of the issuer's common stock as of September
30, 1998 was 13,198,336.
<PAGE>
CoreComm Limited and Subsidiaries
Index
PART I. FINANCIAL INFORMATION Page
- ------ --------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1998 and March 31, 1998........................... 2
Condensed Consolidated Statements of Operations -
For the Period from April 1, 1998 (date operations
commenced) to September 30, 1998 ............................... 3
Condensed Consolidated Statement of Shareholders' Equity -
For the Period from Incorporation to September 30, 1998 ....... 4
Condensed Consolidated Statements of Cash Flows -
For the Period from April 1, 1998 (date operations
commenced) to September 30, 1998 ............................... 5
Notes to Condensed Consolidated Financial Statements ........... 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ............................. 9
PART II. OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K ............................... 13
SIGNATURES............................................................... 14
- ----------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CoreComm Limited and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, March 31,
1998 1998
-----------------------------------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 152,423,000 $ -
Accounts receivable-trade, less allowance for
doubtful accounts of $451,000 1,540,000 -
Inventory 170,000 -
Other 406,000 -
-----------------------------------
Total current assets 154,539,000 -
Fixed assets, net 2,923,000 -
Goodwill, net of accumulated amortization of $120,000 2,288,000 -
LMDS license costs 25,366,000 25,241,000
Other 1,664,000 2,185,000
-----------------------------------
$ 186,780,000 $ 27,426,000
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 605,000 $ -
Accrued expenses 1,773,000 5,241,000
Due to affiliate 8,847,000 -
Deferred revenue 13,000 -
-----------------------------------
Total current liabilities 11,238,000 5,241,000
Commitments and contingent liabilities
Shareholders' equity:
Series preferred stock - $.01 par value, authorized
1,000,000 shares; issued and outstanding none - -
Common stock - $.01 par value; authorized 75,000,000 shares;
issued and outstanding 13,198,000 (September)
and 1,200,000 shares (March) 132,000 12,000
Additional paid-in capital 185,417,000 22,173,000
Deficit (10,007,000) -
-----------------------------------
175,542,000 22,185,000
-----------------------------------
$ 186,780,000 $ 27,426,000
===================================
</TABLE>
Note: The balance sheet at March 31, 1998 has been derived from the audited
balance sheet at that date.
See accompanying notes.
2
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Period
The Predecessor from April 1, The Predecessor
(OCOM) 1998 (date (OCOM)
Three Months Three Months operations Nine Months
Ended Ended commenced) to Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
---------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
REVENUES
Telecommunications $ 2,457,000 $ 815,000 $ 3,658,000 $ 2,776,000
Telephone equipment and other 94,000 - 154,000 -
-------------------------------- -----------------------------------
2,551,000 815,000 3,812,000 2,776,000
COSTS AND EXPENSES
Cost of telephone equipment sold 56,000 - 71,000 -
Operating 2,050,000 352,000 3,102,000 1,172,000
Selling, general and administrative 4,874,000 1,512,000 6,291,000 3,962,000
Compensation charge from the
issuance of stock options 4,586,000 - 4,586,000 -
Depreciation 300,000 121,000 397,000 250,000
Amortization 59,000 3,000 120,000 8,000
-------------------------------- -----------------------------------
11,925,000 1,988,000 14,567,000 5,392,000
-------------------------------- -----------------------------------
OPERATING (LOSS) (9,374,000) (1,173,000) (10,755,000) (2,616,000)
Other income (expense), net 748,000 - 748,000 (4,000)
-------------------------------- -----------------------------------
NET (LOSS) $ (8,626,000) $ (1,173,000) $ (10,007,000) $ (2,620,000)
================================ ===================================
Basic and diluted net (loss) per share $ (.65) $ (.09) $ (.76) $ (.20)
================================ ===================================
</TABLE>
See accompanying notes.
3
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------- Paid-In
Shares Par Capital (Deficit)
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Initial contribution 1,200,000 $ 12,000 $ 22,173,000
Capital contributions 11,998,000 120,000 158,658,000
Issuance of stock options 4,586,000
Net (loss) for the period from
incorporation to September 30, 1998 $ (10,007,000)
--------------------------------------------------------------
Balance, September 30, 1998 13,198,000 $ 132,000 $ 185,417,000 $ (10,007,000)
==============================================================
</TABLE>
See accompanying notes.
4
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the period from
April 1, 1998 (date The Predecessor
operations (OCOM)
commenced) to Nine Months Ended
September 30, September 30
1998 1997
--------------------------------------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 3,340,000 $ (2,405,000)
INVESTING ACTIVITIES
Purchase of fixed assets (1,821,000) (965,000)
Proceeds from disposals of fixed assets - 4,000
-----------------------------------
Net cash (used in) investing activities (1,821,000) (961,000)
FINANCING ACTIVITIES
Capital contributions 150,904,000 3,366,000
-----------------------------------
Net cash provided by financing activities 150,904,000 3,366,000
-----------------------------------
Increase in cash and cash equivalents 152,423,000 -
Cash and cash equivalents at beginning of period - -
-----------------------------------
Cash and cash equivalents at end of period $ 152,423,000 $ -
===================================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Capital contributions of noncash net assets $ 30,059,000 $ -
</TABLE>
See accompanying notes.
5
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
CoreComm Limited (the "Company"), formerly a wholly-owned subsidiary of Cellular
Communications of Puerto Rico, Inc. ("CCPR"), was formed in March 1998 in order
to succeed to the businesses and assets that were operated by OCOM Corporation
and as an appropriate vehicle to pursue new telecommunications opportunities
outside of Puerto Rico and the U.S. Virgin Islands in an entrepreneurial
corporate environment. In September 1998, CCPR made a cash contribution to the
Company of $150,000,000 and distributed 100% of the outstanding shares of the
Company on a one-for-one basis to CCPR's shareholders.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the period from April 1, 1998 (date
operations commenced) to September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1998. For
further information, refer to the consolidated balance sheet as of March 31,
1998 and footnotes thereto included in the Company's Form 10/A-2.
The Company's competitive local exchange carrier ("CLEC"), cellular long
distance, landline long distance and cellular resale businesses were formerly
owned and operated by OCOM Corporation ("OCOM"). OCOM is the predecessor
business to the Company.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. The Company has adopted SFAS No. 130, which
had no effect on the consolidated financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way that public enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for financial statements for periods beginning after December 15,
1997. The Company is evaluating the effect of SFAS No. 131 on its financial
statements. The Company will adopt SFAS No. 131 for its fiscal year ending
December 31, 1998.
6
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in fiscal
years beginning after June 15, 1999. Management does not anticipate that the
adoption of the new standard will have a significant effect on earnings or the
financial position of the Company.
NOTE 3. ACQUISITIONS
In April and June 1998, CCPR acquired the stock of Digicom, Inc. and certain
operating assets and related liabilities of the Wireless Outlet and OCOM
Corporation. CCPR contributed these businesses to the Company. These
acquisitions have been accounted for as purchases by CCPR, and, accordingly, the
net assets and results of operations of the acquired businesses have been
included in the consolidated financial statements from the dates of acquisition.
The aggregate purchase price for these acquisitions was cash of $3,787,000 which
exceeded the fair value of the net tangible assets acquired by $2,408,000, which
is classified as goodwill. The goodwill is being amortized on a straight-line
basis over 10 years. The contribution of the assets from CCPR to the Company
were 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". The Company's financial statements include the results of the
contributed companies for all periods owned by CCPR.
The pro forma unaudited consolidated results of operations for the nine months
ended September 30, 1998 and 1997 assuming consummation of the acquisitions and
receipt of the capital contributions from CCPR as of January 1, 1997 are as
follows:
Nine Months Ended
September 30, 1998
------------------------------
Total revenue $ 7,121,000 $ 7,053,000
Net (loss) (8,094,000) (1,730,000)
Basic and diluted net (loss) per share (.61) (.13)
NOTE 4. LMDS LICENSE COSTS
A wholly-owned subsidiary of CCPR, Cortelyou Communications Corp. ("Cortelyou")
was the successful bidder, for an aggregate of $25,241,000, for 15 Block A Local
Multipoint Distribution Service ("LMDS") licenses in Ohio. LMDS frequencies are
expected to be used for the provision of voice, data, video and Internet
services to businesses and homes in competition with incumbent local exchange
telephone companies and/or cable television operators. The FCC has allocated two
blocks of frequencies to be licensed in each of the 493 Basic Trading Areas in
the United States and its territories based on an auction that commenced in
February 1998 and ended in March 1998. In June 1998, CCPR funded Cortelyou's
payment of its bid and the FCC issued the licenses. Costs of $125,000 were
incurred in connection with the auction and the license acquisition. CCPR
contributed Cortelyou to the Company.
7
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
NOTE 5. FIXED ASSETS
Fixed assets at September 30, 1998 consist of:
Operating equipment $ 288,000
Computer equipment 2,134,000
Other equipment 885,000
Construction in progress 5,000
-----------
3,312,000
Accumulated depreciation (389,000)
-----------
$ 2,923,000
===========
NOTE 6. COMPENSATION CHARGE
The compensation charge of $4,586,000 in 1998 is a non-cash charge recorded in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
as a one time charge related to the issuance of the Company's stock options to
holders of CCPR's stock options in connection with the Company's distribution to
CCPR's shareholders.
NOTE 7. NET LOSS PER COMMON SHARE
The denominator for the basic and diluted net loss per common share computations
was 13,195,000 and 13,074,000 for the three months ended September 30, 1998 and
1997, respectively, and 13,187,000 and 13,073,000 for the period from April 1,
1998 (date operations commenced) to September 30, 1998 and the nine months ended
September 30, 1997, respectively. These weighted average shares are equivalent
to CCPR's historical weighted average shares on a one-for-one basis. The shares
issuable upon the exercise of stock options and warrants are excluded from the
calculation of net loss per share as their effect would be antidilutive.
NOTE 8. RELATED PARTY TRANSACTIONS
The Company provides billing and software development services to subsidiaries
of CCPR and to NTL Incorporated. Certain officers and directors of the Company
are officers and directors of CCPR and of NTL Incorporated. The Company charges
an amount in excess of its costs to provide these services. The Company's
general and administrative expenses were reduced by $142,000 for the period from
April 1, 1998 (date operations commenced) to September 30, 1998 as a result of
these charges.
NOTE 9. COMMITMENTS
As of September 30, 1998, the Company has purchase commitments of $968,000
outstanding.
8
<PAGE>
CoreComm Limited and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion of the results of operations of the Company includes a
comparison to the results of operations of OCOM, the predecessor business to the
Company. The Company was formed in March 1998 and did not have any prior
operations. Since OCOM represents a significant portion of the Company's current
business, the comparison with its historical operating results gives the reader
a basis to evaluate the Company's present business. However, the historical
results of OCOM may not be indicative of the Company's future results.
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- ----------------------------------------------
The increase in telecommunications revenues to $2,457,000 from $815,000 is
primarily due to the acquisition of Wireless Outlet and Digicom in April 1998,
which accounted for $1,593,000 of the increase. OCOM's revenues increased to
$864,000 from $815,000 as a result of revenues from CLEC local service which
commenced in the second quarter of 1998, and landline long distance and cellular
service, both of which were introduced in the third quarter of 1997. OCOM's
cellular long distance revenue declined to $471,000 from $778,000 as a result of
customers switching to other long distance providers. The Company expects this
trend in cellular long distance to continue, therefore, it has diversified into
other telecommunications resale businesses.
The income from telephone equipment of $38,000 in 1998 is due to the acquisition
of Wireless Outlet and Digicom in April 1998, which accounted for $43,000 of the
total. OCOM's loss from equipment of $5,000 is the result of sales of cellular
and paging equipment below cost, which is typical in this market. OCOM has kept
its sales of equipment below cost to a minimum to date. OCOM intends to continue
this strategy for the foreseeable future.
Operating costs increased to $2,050,000 from $352,000 primarily due to the
acquisitions of Wireless Outlet and Digicom in April 1998, which accounted for
$1,387,000 of the increase. Operating costs as a percentage of
telecommunications revenues increased to 83.4% from 43.2%. This increase is the
result of a reduction in cellular long distance revenues which to date has the
highest gross margin of the Company's telecommunications businesses.
Selling, general and administrative expenses increased to $4,874,000 from
$1,512,000 as a result of increased selling and marketing costs and increased
customer service costs. These increases were offset by a reduction in billing
costs due to the implementation of in-house billing in the fourth quarter of
1997.
The compensation charge of $4,586,000 in 1998 is a non-cash charge recorded in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
as a one time charge related to the issuance of the Company's stock options to
holders of CCPR's stock options in connection with the Company's distribution to
CCPR's shareholders.
Depreciation expense increased to $300,000 from $121,000 as a result of an
increase in fixed assets, primarily computer equipment.
9
<PAGE>
Corecomm Limited and Subsidiaries
Amortization expense increased to $59,000 from $3,000 due to the amortization of
goodwill from the acquisitions in 1998.
Other income, net, increased to $748,000 from zero primarily due to $750,000 of
interest income on the Company's cash and cash equivalents.
FOR THE PERIOD FROM APRIL 1, 1998 (DATE OPERATIONS COMMENCED) TO SEPTEMBER 30,
1998 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
The increase in telecommunications revenues to $3,658,000 from $2,776,000 is
primarily due to the acquisition of Wireless Outlet and Digicom in April 1998,
which accounted for $2,506,000 of the increase. OCOM's revenues decreased to
$1,152,000 from $2,776,000 because OCOM's revenues prior to its acquistion in
June 1998 are not included in the 1998 amount.
The income from telephone equipment of $83,000 is primarily due to the
acquisition of Wireless Outlet and Digicom in April 1998, which accounted for
$85,000 of the total. OCOM's loss from equipment of $2,000 is the result of
sales of cellular and paging equipment below cost, which is typical in this
market. OCOM has kept its sales of equipment below cost to a minimum to date.
OCOM intends to continue this strategy for the foreseeable future.
Operating costs increased to $3,102,000 from $1,172,000 primarily due to the
acquisitions of Wireless Outlet and Digicom in April 1998, which accounted for
$2,238,000 of the increase. Operating costs as a percentage of
telecommunications revenues increased to 84.8% from 42.2%. This increase is the
result of a reduction in cellular long distance revenues which to date has the
highest gross margin of the Company's telecommunications businesses.
Selling, general and administrative expenses increased to $6,291,000 from
$3,962,000 as a result of increased selling and marketing costs and increased
customer service costs. These increases were offset by a reduction in billing
costs due to the implementation of in-house billing in the fourth quarter of
1997.
The compensation charge of $4,586,000 in 1998 is a non-cash charge recorded in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
as a one time charge related to the issuance of the Company's stock options to
holders of CCPR's stock options in connection with the Company's distribution to
CCPR's shareholders.
Depreciation expense increased to $397,000 from $250,000 as a result of an
increase in fixed assets, primarily computer equipment.
Amortization expense increased to $120,000 from $8,000 due to the amortization
of goodwill from the acquisitions in 1998.
Other income (expense), net, increased to income of $748,000 from expense of
$4,000 primarily due to $750,000 of interest income on the Company's cash and
cash equivalents.
10
<PAGE>
Corecomm Limited and Subsidiaries
LIQUIDITY AND CAPITAL RESOURCES
The Company will require significant capital resources to develop and expand its
existing businesses and licenses, acquire or develop additional
telecommunications-related business, and fund near term operating losses. The
Company intends to fund its near term capital expenses, operating losses and
working capital requirements with cash on hand of $152 million at September 30,
1998. The cash on hand is the result of the $150 million cash capital
contribution from CCPR prior to the spin-off in September 1998. Longer term, it
is likely that the Company will be required to raise additional debt and/or
equity financing to fully implement its goals.
The existing resale businesses will consume capital to acquire new customers and
to finance the working capital required to support these new customers. These
businesses will also require additional billing, customer service and other
back-office infrastructure. These capabilities can be expanded in-house or can
be outsourced to reduce up-front capital requirements. To date, the Company's
strategy has been to utilize the expertise developed by its management to
develop in-house billing and back-office capabilities. In the future, the
Company plans to make further appropriate acquisitions and to purchase and build
telecommunications facilities which may require significant capital
expenditures.
The amount of capital required to construct the LMDS systems is unknown at this
time, but is likely to be several times the cost of the licenses. In addition to
up-front network construction costs, a significant ongoing capital requirement
will be the cost to acquire customer premise equipment to receive and transmit
LMDS signals. The network and customer premise equipment costs are unknown
because a de facto standard has yet to emerge among the LMDS auction winners and
because insufficient orders have been placed with manufacturers who determine
likely prices for equipment. As license holders choose equipment manufacturers
and one or more equipment standard emerges, prices will become more easily
quantifiable.
YEAR 2000
The Company has a comprehensive Year 2000 project designed to identify and
assess the risks associated with its information systems, operations and
infrastructure, suppliers, and customers that are not Year 2000 compliant, and
to develop, implement and test remediation and contingency plans to mitigate
these risks. The project comprises four phases: (1) identification of risks, (2)
assessment of risks, (3) development of remediation and contingency plans and
(4) implementation and testing.
The Company's assessment is primarily focused on both its information technology
("IT") systems, in particular its billing, provisioning and customer service
systems, and the readiness of the third-party facilities-based carriers that the
Company depends upon for its resale services. The Company's leased office space
and other non-IT equipment which may have embedded technology that may be
affected by the year 2000 problem is being separately assessed. The Company has
completed the assessment of its financial IT systems, which will require
upgrades from vendors at nominal additional cost. The evaluation of the billing,
provisioning and customer service IT systems has progressed from assessments to
renovation and validation. The Company expects to incur nominal costs to
complete the renovation and validation of these systems since they are new
systems that were designed to be year 2000 ready. Most of the Company's IT
hardware is currently year 2000 ready. The cost of upgrades and purchases of
hardware and data communications equipment to complete the implementation of
year 2000
11
<PAGE>
Corecomm Limited and Subsidiaries
readiness is part of the Company's planned growth and upgrade capital
expenditures in 1999 and is not expected to be significantly different than
expenditures in previous years. The Company expects to complete the renovation
and validation of the billing, provisioning and customer service IT systems and
the IT hardware upgrades by June 1999. The evaluation of the readiness of the
major third-parties is still in the assessment phase. The Company believes that
all of the facilities-based third-parties that it does business with are
required to report their year 2000 readiness to state public utility
commissions, which will assist the Company in its evaluation of their readiness.
As the Year 2000 project continues, the Company may discover additional
problems, may not be able to develop, implement or test remediation or
contingency plans, or may find that the costs of these activities exceed current
expectations. In many cases, the Company is relying on assurances from suppliers
that new and upgraded information systems and other products will be Year 2000
ready. The Company plans to test such third-party systems and products, but
cannot be sure that its tests will be adequate or that, if problems are
identified, they will be addressed by the supplier in a timely and satisfactory
way.
Because the Company uses a variety of information systems and has additional
systems embedded in its operations and infrastructure, the Company cannot be
sure that all of its systems will work together in a Year 2000-ready fashion.
Furthermore, the Company cannot be sure that it will not suffer business
interruptions, either because of its own Year 2000 problems or those of
third-parties upon whom the Company is reliant for services. The Company is
continuing to evaluate its Year 2000-related risks and corrective actions.
However, the risks associated with the Year 2000 problem are pervasive and
complex; they can be difficult to identify and address, and can result in
material adverse consequences to the Company. Even if the Company, in a timely
manner, completes all of its assessments, identifies and test remediation plans
believed to be adequate, and develops contingency plans believed to be adequate,
some problems may not be identified or corrected in time to prevent material
adverse consequences to the Company.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of 1995.
When used herein, the words, "believe," "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates," "projects," "positioned," "strategy,"
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed or
implied, by such forward-looking statements. Such factors include the following:
general economic and business conditions in Ohio and certain other portions of
the United States, industry trends, the Company's ability to continue to design
and build its network, install facilities, obtain and maintain any required
government licenses or approvals and finance construction and development, all
in a timely manner, at reasonable costs and on satisfactory terms and
conditions, as well as assumptions about customer acceptance, churn rates,
overall market penetration and competition from providers of alternative
services, the impact of new business opportunities requiring significant
up-front investment, Year 2000 readiness and availability, terms and deployment
of capital.
12
<PAGE>
Corecomm Limited and Subsidiaries
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1998.
13
<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.
CORECOMM LIMITED
Date: November 13, 1998 By: /s/ J. Barclay Knapp
-------------------------
J. Barclay Knapp
President, Chief Executive Officer and
Chief Financial Officer
Date: November 13, 1998 By: /s/ Gregg Gorelick
--------------------------
Gregg Gorelick
Vice President-Controller and Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 152,423,000
<SECURITIES> 0
<RECEIVABLES> 1,991,000
<ALLOWANCES> (451,000)
<INVENTORY> 170,000
<CURRENT-ASSETS> 406,000
<PP&E> 3,312,000
<DEPRECIATION> (389,000)
<TOTAL-ASSETS> 186,780,000
<CURRENT-LIABILITIES> 11,238,000
<BONDS> 0
0
0
<COMMON> 132,000
<OTHER-SE> 175,410,000
<TOTAL-LIABILITY-AND-EQUITY> 186,780,000
<SALES> 83,000
<TOTAL-REVENUES> 3,812,000
<CGS> 71,000
<TOTAL-COSTS> 3,173,000
<OTHER-EXPENSES> 6,291,000
<LOSS-PROVISION> 0
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