<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
--------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 16, 1999 (DECEMBER
13, 1999)
NTL INCORPORATED
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-25691 13-4051921
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification
Incorporation) No.)
</TABLE>
110 EAST 59TH STREET, NEW YORK, NEW YORK
(Address of Principal Executive Offices)
10022
(Zip Code)
Registrant's telephone number, including area code: (212) 906-8440
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On December 15, 1999, NTL Incorporated ("NTL") announced that it had
launched an issue of $750,000,000 of Convertible Subordinated Notes due 2009
(the "Notes"). The Notes will be convertible into shares of NTL Common Stock
("Common Stock"). The Notes and the Common Stock issuable upon conversion of the
Notes have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws, and unless so registered, may
not be offered or sold except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and
applicable state securities laws. NTL intends to use the proceeds from the
offering of the Notes to finance in part the acquisition of the Cablecom Group.
On December 13, 1999, NTL announced that it had reached an agreement to
acquire the Cablecom Group from Swisscom AG, Siemens Schweiz AG and VEBA for CHF
5.8 billion (approximately $3.7 billion) on a debt free, cash free basis.
Cablecom's revenues for the year ended December 31, 1999 were $388 million.
Cablecom is Switzerland's largest cable operator with 1.38 million
subscribers (reflecting a penetration rate of 96% in its service areas) and
delivers signal via its national fibre backbone to other cable operators who
serve a further 300,000 cable homes. Over 90% of television broadcasting in
Switzerland is delivered over cable networks. Cablecom has a 53% share of the
Swiss cable market and is the major cable operator in 11 of Switzerland's 15
largest cities. Cablecom has been the catalyst for the consolidation of the
Swiss cable market and recently launched digital television and high speed
internet services.
Cablecom also owns SwissOnline, the second largest ISP in Switzerland and
one of the country's most popular portals with approximately 140,000 customers.
Cablecom already has a telecommunications licence to provide data (Internet,
leased lines and ATM) and value added services throughout Switzerland and it
will shortly submit an application to extend the licences for the provisioning
of voice telephony. Cablecom's network is currently being upgraded as part of an
investment programme going through 2003, with over $250 million spent in the
last two years. The network upgrade programme will include the completion of a
national fibre ring which is expected to cover approximately 75% of Switzerland
by the end of 2001 as one of only two national fibre rings in the country.
Through this acquisition, NTL will become the largest alternative fixed
link telecoms operator in the fast growing Swiss telecoms market. NTL will
acquire the cable assets of Cablecom Holding AG together with its subsidiaries.
Part of the purchase price will take the form of the assumption or discharge of
indebtedness of the Cablecom Group. Completion of the acquisition is conditioned
on certain regulatory approvals being obtained and is expected to occur in the
first quarter of 2000.
NTL has reached agreement with Morgan Stanley Dean Witter and The Chase
Manhattan Bank to finance $2.3 billion of the purchase price for the
transaction.
In connection with the offering of the Notes, NTL intends to provide
investors with certain financial information of the Cablecom Group, attached
hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
<TABLE>
<S> <C>
Exhibit 99.1 Financial Statements of the Cablecom Group
</TABLE>
2
<PAGE> 3
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 hereunto duly authorized.
NTL INCORPORATED
/s/ RICHARD J. LUBASCH
By:
--------------------------------------
Name: Richard J. Lubasch
Title: Executive Vice President,
General Counsel and Secretary
Dated: December 16, 1999
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
DESIGNATION DESCRIPTION
- ----------- -----------
<C> <S>
99.1 Financial Statements of the Cablecom Group
</TABLE>
4
<PAGE> 1
EXHIBIT 99.1
GROUP FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS OF THE CABLECOM GROUP FOR 1998
AND REPORT OF THE STATUTORY AUDITORS TO THE GENERAL MEETING
<TABLE>
<C> <S>
4 Consolidated balance sheet
5 Consolidated income statement
6 Consolidated cash flow statement
ANNEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
7-8 Consolidation principles
9-10 Valuation principles
11-16 Notes to the consolidated financial statements
17-19 Other information on the consolidated financial statement
20 Report to the statutory auditors
</TABLE>
<PAGE> 2
CABLECOM GROUP
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
31.12.1998 31.12.1997
NOTES THOUSAND CHF THOUSAND CHF
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................. 32,926 12,464
Securities............................................ 1 2,192 49
Accounts receivable................................... 2 219,489 190,311
Other receivables..................................... 3 30,118 28,748
Inventories........................................... 4 58,729 55,829
Accrued and deferred items............................ 7,856 6,040
--------- ---------
TOTAL CURRENT ASSETS.................................. 351,310 293,441
--------- ---------
FIXED ASSETS
Tangible assets....................................... 5 1,562,519 1,520,029
Financial assets...................................... 6 59,528 75,132
Intangible assets..................................... 7 5,531 3,971
--------- ---------
TOTAL FIXED ASSETS.................................... 1,627,578 1,599,132
--------- ---------
TOTAL ASSETS.......................................... 1,978,888 1,892,573
========= =========
SHORT-TERM LIABILITIES
Financial liabilities................................. 8 94,916 132,493
Accounts payable...................................... 40,095 22,406
Other short-term liabilities.......................... 57,875 53,774
Accrued and deferred items............................ 2 266,118 227,699
--------- ---------
TOTAL SHORT-TERM LIABILITIES.......................... 459,004 436,372
--------- ---------
LONG-TERM LIABILITIES
Financial liabilities................................. 9 992,292 993,568
Provisions............................................ 10 333,155 305,292
--------- ---------
TOTAL LONG-TERM LIABILITIES........................... 1,325,447 1,298,860
--------- ---------
TOTAL LIABILITIES AND PROVISIONS...................... 1,784,451 1,735,232
--------- ---------
MINORITY INTERESTS.................................... 8,817 9,550
SHAREHOLDERS' EQUITY
Share capital......................................... 11 100,000 100,000
Reserves for own shares............................... 11 4,000 4,000
Retained earnings..................................... 11 81,620 43,791
TOTAL SHAREHOLDERS' EQUITY............................ 185,620 147,791
--------- ---------
TOTAL LIABILITIES..................................... 1,978,888 1,892,573
========= =========
</TABLE>
4
<PAGE> 3
CABLECOM GROUP
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
1998 1997
NOTES THOUSAND CHF THOUSAND CHF
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income from products and services................... 12 562,468 497,662
Inventory change -- work in hand........................ 11,204 10,458
Work for own account.................................... 85,931 31,616
Costs of goods sold and services supplied............... -267,095 -196,378
--------- ---------
GROSS PROFIT............................................ 392,508 343,358
--------- ---------
Personnel costs......................................... 13 -111,709 -105,102
Depreciation............................................ 5 -125,703 -109,069
Other operating expenses................................ -70,625 -57,079
--------- ---------
OPERATING PROFIT BEFORE INTEREST AND TAX................ 84,471 72,108
--------- ---------
Financial income........................................ 14 1,933 1,599
Financial expenses...................................... 14 -32,845 -29,261
--------- ---------
OPERATING PROFIT BEFORE TAX............................. 53,559 44,446
--------- ---------
Exceptional expenses.................................... 15 -53,268 -11,364
Exceptional income...................................... 15 67,734 10,517
Non-operating income.................................... 1,974 987
Non-operating expenses.................................. 16 1,492 -2,232
--------- ---------
PROFIT BEFORE TAX....................................... 68,507 42,354
--------- ---------
Taxes................................................... -21,980 -18,397
NET PROFIT.............................................. 46,527 23,957
Minority interests...................................... -310 -199
--------- ---------
NET PROFIT OF THE GROUP................................. 46,217 23,758
========= =========
</TABLE>
5
<PAGE> 4
CABLECOM GROUP
CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
1998 1997
NOTES THOUSAND CHF THOUSAND CHF
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net profit of the Group................................. 46,217 23,758
Depreciation............................................ 5 125,703 109,069
Change in provisions and other variations not taken to
income................................................ 43,949 -3,818
-------- --------
CASH FLOW BEFORE CHANGE IN NET CURRENT ASSETS........... 215,869 129,009
Change in net current assets............................ -16,280 64,279
-------- --------
OPERATING CASH FLOW..................................... 199,589 193,288
-------- --------
Investments in tangible assets.......................... 5 -154,481 -99,988
Acquisition of shareholdings............................ -25,815 -68,425
Investments in other intangible assets.................. -3,603 --
Sale of tangible assets................................. 256 --
Sale of shareholding interests.......................... 19,292 7,855
Change in lendings...................................... -1,670 12,438
CASH FLOW ON INVESTMENT ACTIVITY........................ -166,021 -148,120
Distributed profit...................................... 11 -9,687 -9,336
Repayment of loans...................................... -1,276 -30,906
CASH FLOW ON FINANCING ACTIVITY......................... -10,963 -40,242
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS AND SECURITIES.... 22,605 4,926
-------- --------
Cash and cash equivalents and securities at start of
year.................................................. 12,513 7,587
======== ========
Cash and cash equivalents at end of year................ 35,118 12,513
======== ========
</TABLE>
6
<PAGE> 5
CABLECOM GROUP
BASIS OF FINANCIAL STATEMENTS
The consolidated financial statements of Cablecom Group have been compiled
in compliance with the Accounting and Reporting Recommendations (ARR). They are
based on the acquisition cost principle (historical values) and on the annual
financial statements of the individual Group member companies compiled according
to uniform accounting principles.
All the figures in the consolidated statement of accounts are quoted in
thousand Swiss franc (TCHF).
METHOD AND SCOPE OF CONSOLIDATION
The term "Group companies" denotes all companies in which Cablecom Holding
AG either directly or indirectly owns over 50% of the share capital or voting
rights, or is entitled to appoint a majority of members of the Board of
Directors and management bodies or exercises a controlling influence. These
companies are taken into the Group accounts by the full consolidation method,
i.e. 100% of the assets and liabilities together with costs and income are
stated. Credits, liabilities, income and expenditure between consolidated
companies are mutually offset. Minority shareholding interests are stated
separately in the Group accounts.
All the subsidiary companies have a uniform account closing date, i.e. 31
December. Cablecom Holding AG ends its financial year on 31 March. For
consolidation purposes, an interim statement of accounts is therefore compiled
for Cablecom Holding AG for the period from 1 January to 31 December.
In the case of associated companies, the shareholding interest ranges from
20 to 50%. Where these companies are not under the uniform management of the
parent company, they are taken into the Group accounts by the equity method.
Shareholding interests of less than 20%, together with minor or inactive
companies, are designated as non-consolidated shareholding interests and stated
under financial fixed assets. They appear in the balance sheet at their purchase
value, less any appropriate depreciation for operational purposes.
CAPITAL CONSOLIDATION
The capital has been consolidated by the Anglo-Saxon purchase method. In
this method, the purchase value of the shareholding interest is offset against
the proportionate equity at the time of the acquisition.
If there is a positive difference, the acquired added values contained in
this item are apportioned to the relevant balance sheet headings on the causal
principle. Any remaining goodwill is imputed to shareholders' equity.
Sales of shareholding interests during the year are not shown in the
consolidated annual financial statements. Shareholding interests acquired in the
reporting year are consolidated from the time of acquisition.
Group member companies with minority shares are also included by the full
consolidation method. However, minority shares are stated separately in the
Group balance sheet and Group income statement.
7
<PAGE> 6
INTERCOMPANY TRANSACTIONS
All amounts owed or receivable, as well as income or expenses and retained
profits between fully consolidated Group companies, are eliminated from the
consolidated annual financial statements.
FOREIGN CURRENCY TRANSLATION
The annual financial statements of Group member companies drawn up in a
foreign currency are translated into Swiss francs by the closing/current rate
method. The resulting translation differences are stated under shareholders'
equity without affecting income.
Business transactions in a foreign currency are translated and stated at
the current rate at the time when the business was transacted.
Translation of foreign currency positions shown in the annual financial
statement into the local currency is made at the exchange rate applicable on the
balance sheet return date (31 December). Exchange rate gains and losses are
taken to income and stated under the financial income or financial costs
headings.
8
<PAGE> 7
CASH AND CASH EQUIVALENTS
This heading primarily comprises current account credit balances and
fixed-term investments due within three months, together with credit balances on
post office accounts. Cash and cash equivalents are valued at par. Inventories
or balances in a foreign currency are translated at the exchange rate applicable
on the balance sheet return date.
ACCOUNTS RECEIVABLE
This heading comprises payments due from customers exclusively in respect
of transactions which are part of normal business activities. They are stated at
par value. As the accounts receivables for most Group member companies consist
of a large number of small individual credit items, a value adjustment is
calculated for these balances in the light of experience. Value adjustments for
other individual credit items are allowed when they can be calculated.
INVENTORIES
Marketable goods are valued at most at the average cost price or lower
market price on the balance sheet return date. Non-current goods are depreciated
individually or overall by product groups, applying the lower of cost or market
value principle. Rented appliances are stated at cost price and depreciated over
their life cycle.
In the case of goods or products which do not satisfy the quality
requirements, appropriate value adjustments have been made.
TANGIBLE ASSETS
The tangible assets are valued at purchase or manufacturing cost, less the
accrued depreciation necessary for operational purposes. Depreciation is allowed
on a straight-line basis over the estimated life cycle of the assets concerned
according to the following table:
<TABLE>
<S> <C>
COMMUNICATION EQUIPMENT
Communication networks................ 16 years
Backbone.............................. 6-20 years
Other communication equipment......... 3-6 years
OTHER TANGIBLE ASSETS
Real estate........................... 33-50 years
Other tangible assets................. 3-6 years
</TABLE>
9
<PAGE> 8
LIABILITIES ON SHORT-TERM LIABILITIES
Bank credits with no fixed period or with a fixed period of notice less
than 12 months are stated as financial liabilities under the short-term
liabilities heading.
Accounts payable consist primarily of commitments arising out of the
procurement of equipment, auxiliary and operating materials needed for the
production of goods and the use of services. These commitments are stated as
accounts payable under the short-term liabilities heading if they fall due
within one year.
LIABILITIES ON LONG-TERM LIABILITIES
Bank credits with a fixed life or a fixed period of notice exceeding 12
months on which notice had not been given on the balance sheet return date are
stated as financial liabilities under long-term liabilities.
Loans with a period of notice exceeding one year are stated at par as
financial liabilities in cases where notice of termination of these loans has
not been given on the balance sheet return date.
PROVISIONS
Provisions are set up for contingent liabilities, threatened losses or
existing and detectable risks. The various risks are assessed and determined
individually.
Provisions for profit and capital tax comprise all the tax effectively due
up to and in the current financial year. If the valuation principles used for
tax purposes differ from those used for consolidation of the accounts, valuation
differences arise for which deferred tax is allowed. The apportionment of
deferred profit tax is based on a balance sheet-led approach and in principle
takes account of all future impacts under profit tax legislation by the
"comprehensive method".
Deferred tax is calculated for all taxpayers in the Group in the same way
as in the previous year at a uniform 22% rate on the pretax profit. Any deferred
profit tax receivable is offset against liabilities of the individual taxpayers.
10
<PAGE> 9
The following notes numbered 1 to 16 refer to the consolidated
balance sheet, income statement and cash flow statement.
1 SECURITIES
As at 31 December 1998, SwissOnline AG had assigned securities worth TCHF
2,123 (TCHF 0 in the previous year) as security for bank loans.
2 ACCOUNTS RECEIVABLE
Accounts receivable include subscription charges already invoiced for the
following year. These are stated in all cases on the liabilities side under
accrued and deferred items.
As at 31 December 1998, accounts receivable worth TCHF 400 (TCHF 3,396 in
the previous year) had been assigned as security for bank borrowings.
3 OTHER RECEIVABLES
<TABLE>
<CAPTION>
OTHER RECEIVABLES INCLUDE THE FOLLOWING ITEMS: 31.12.1998 31.12.1997
- ------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Current accounts on non-consolidated companies.............. 754 12,503
Other customary receivables................................. 29,364 16,245
TOTAL OTHER RECEIVABLES..................................... 30,118 28,748
</TABLE>
4 INVENTORIES
<TABLE>
<CAPTION>
INVENTORIES COMPRISE THE FOLLOWING ITEMS: 31.12.1998 31.12.1997
- ------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Material and goods inventories.............................. 24,320 23,169
Rented devices with customers............................... 23,363 24,153
Work in hand................................................ 11,046 8,507
TOTAL INVENTORIES........................................... 58,729 55,829
</TABLE>
11
<PAGE> 10
5 TANGIBLE ASSETS
<TABLE>
<CAPTION>
TANGIBLE ASSETS COMPRISE THE FOLLOWING ITEMS COMMUNICATION OTHER TOTAL
AND HAVE UNDERGONE THE FOLLOWING CHANGES: EQUIPMENT REAL ESTATE TANGIBLE ASSETS TANGIBLE ASSETS
- --------------------------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF THOUSAND CHF THOUSAND CHF
<S> <C> <C> <C> <C>
HISTORICAL PROCUREMENT COSTS
As at 1 January 1997....................... 1,569,661 64,083 56,396 1,690,140
Restatements not taken to income........... 0 -10,760 0 -10,760
Changes in scope of consolidation/mergers... 48,401 468 1,892 50,761
Investments................................ 89,819 7 10,162 99,988
Disposals.................................. -192 0 -21,481 -21,673
Translation differences and transfers in
accounts................................. -10,157 -1 -336 -10,494
AS AT 31 DECEMBER 1997..................... 1,697,532 53,797 46,633 1,797,962
Changes in scope of consolidation/mergers... 9,724 0 5,530 15,254
Investments................................ 135,192 0 19,289 154,481
Disposals.................................. -345 0 -7,295 -7,640
Translation differences and transfers in
accounts................................. 298 -968 -721 -1,391
--------- ------- ------- ---------
AS AT 31 DECEMBER 1998..................... 1,842,401 52,829 63,436 1,958,666
========= ======= ======= =========
</TABLE>
<TABLE>
<CAPTION>
COMMUNICATION OTHER TOTAL
EQUIPMENT REAL ESTATE TANGIBLE ASSETS TANGIBLE ASSETS
- ------------------------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF THOUSAND CHF THOUSAND CHF
<S> <C> <C> <C> <C>
CUMULATIVE DEPRECIATION
As at 1 January 1997...................... -146,445 -2,605 -46,727 -195,777
Change in scope of
consolidation/mergers................... -2,800 0 -731 -3,531
Depreciation(1)........................... -100,258 -1,338 -6,603 -108,199
Disposals................................. 162 0 18,050 18,212
Translation differences and transfers in
accounts................................ 9,085 -11 2,288 11,362
--------- ------- ------- ---------
AS AT 31 DECEMBER 1997.................... -240,256 -3,954 -33,723 -277,933
========= ======= ======= =========
Changes in scope of
consolidation/mergers................... -3,710 0 -843 -4,553
Depreciation(1)........................... -107,209 -1,123 -10,213 -118,545
Disposals................................. 89 0 3,110 3,199
Translation differences and transfers in
accounts................................ -43 964 764 1,685
--------- ------- ------- ---------
AS AT 31 DECEMBER 1998.................... -351,129 -4,113 -40,905 -396,147
========= ======= ======= =========
BALANCE SHEET VALUES NET 31 DECEMBER
1997.................................... 1,457,276 49,843 12,910 1,520,029
BALANCE SHEET VALUES NET 31 DECEMBER
1998.................................... 1,491,272 48,716 22,531 1,562,519
</TABLE>
- ---------------
(1) The depreciation of TCHF 125,703 (TCHF 109,069 in the previous year) shown
in the income statement comprises depreciation on tangible assets and
depreciation on intangible assets in the amount of TCHF 7,158 (TCHF 870 in
the previous year).
As of 31 December 1998, intangible assets worth TCHF 23,071 (previous year
TCHF 37,424) have been pledged as collateral to secure bank borrowings.
The fire insurance value of the tangible assets is TCHF 257,634 (previous
year TCHF 199,699) as at 31 December 1998. In the case of communication
equipment, only the technical equipment in the head stations is insured; the
line networks are not covered by the fire insurance value.
12
<PAGE> 11
6 FINANCIAL ASSETS
<TABLE>
<CAPTION>
FINANCIAL ASSETS COMPRISE THE FOLLOWING ITEMS: 31.12.1998 31.12.1997
- ------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Non-consolidated shareholding interests..................... 41,039 55,837
Loans to non-consolidated companies......................... 4,060 4,060
Own shares.................................................. 13,098 13,098
Other financial assets...................................... 1,331 2,137
------ ------
TOTAL FINANCIAL ASSETS...................................... 59,528 75,132
====== ======
</TABLE>
<TABLE>
<CAPTION>
THE NON-CONSOLIDATED SHAREHOLDING INTERESTS
COMPRISE THE FOLLOWING COMPANIES: BUSINESS ACTIVITY CAPITAL SHARE THOUSAND CHF
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balcab AG, Basel.................................. T 41% CHF 22,080
IRPSA, France(1).................................. T 48% FRF 170,000
</TABLE>
- ---------------
Abbreviations
T = Cable TV
FRF = French Francs
(1) The share capital was increased to TFRF 170,000 from TFRF 98,000 in the year
under review; the capital share remained unchanged.
The Balcab AG shareholding is again shown in the consolidated financial
statements as an unconsolidated shareholding interest, as was the case last
year. The impact of non-inclusion of the Balcab AG shareholding on the
consolidated financial statements is insignificant in terms of proportionate
asset value. This shareholding interest has therefore not been treated as
equity.
The Valvision SA (France) and Gvanim Cable TV Ltd. (Israel) interests were
sold in 1998. The intention is also to sell the IRPSA interest, which is
therefore stated as a non-consolidated shareholding in the consolidated annual
financial statement for 1998, as was already the case last year.
7 INTANGIBLE ASSETS
The depreciation period for the long-term rights of utilisation of fiber
optic lines was adjusted in 1998 as these will be replaced by our own cable
networks by the end of 1999.
The intangible assets primarily comprised EDP software and development
costs of SwissOnline AG at the end of 1998.
8 SHORT-TERM FINANCIAL LIABILITIES
The stated amount consists primarily of short-term fixed bank loans and the
balance of the cash pool. Following the sale of shareholding interests, the
short-term liability over the year-end was significantly lower than in the
previous year. Short-term fixed bank loans were repaid in the first quarter of
1999 using payments received on invoices for the year.
13
<PAGE> 12
9 LONG-TERM FINANCIAL LIABILITIES
<TABLE>
<CAPTION>
THE LONG-TERM FINANCIAL LIABILITIES COMPRISE THE FOLLOWING ITEMS: 31.12.1998 31.12.1997
- -------------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Bank loans.................................................... 516,284 520,992
Shareholders' loans........................................... 444,000 454,000
Other long-term financial liabilities......................... 32,008 18,576
------- -------
TOTAL LONG-TERM FINANCIAL LIABILITIES......................... 992,292 993,568
======= =======
</TABLE>
Shareholders' loans were reduced by TCHF 10,000 following the absorption of
Fischer Holding AG by Cablecom Holding AG as of 1 April 1998.
10 PROVISIONS
<TABLE>
<CAPTION>
PROVISIONS COMPRISE THE FOLLOWING ITEMS: 31.12.1998 31.12.1997
- --------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Provisions on non-consolidated companies in which an
interest is owned........................................... 14,807 22,300
Provisions for current profit and capital taxes............. 44,183 34,167
Provisions for deferred taxes............................... 226,694 233,890
Other provisions............................................ 47,471 14,935
------- -------
TOTAL PROVISIONS............................................ 333,155 305,292
======= =======
</TABLE>
11 SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
RESERVE FOR RETAINED
THE SHAREHOLDERS' EQUITY HAS VARIED AS FOLLOWS: SHARE CAPITAL OWN SHARES EARNINGS TOTAL EQUITY
- -----------------------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF THOUSAND CHF THOUSAND CHF
<S> <C> <C> <C> <C>
As at 1 January 1997........................ 100,000 -- 40,752 140,752
======= ===== ======= =======
Restatements not taken to income............ -- -- -21,263 -21,263
Change in scope of consolidation/mergers.... -- -- 13,455 13,455
Dividend payments........................... -- -- -9,336 -9,336
Reserve for own shares...................... -- 4,000 -4,000 --
Translation differences..................... -- -- 425 425
------- ----- ------- -------
Profit for the year 1997.................... -- -- 23,758 23,758
------- ----- ------- -------
AS AT 31 DECEMBER 1997...................... 100,000 4,000 43,791 147,791
======= ===== ======= =======
Changes in scope of consolidation/mergers... -- -- 1,313 1,313
Dividend payments........................... -- -- -9,687 -9,687
Translation differences..................... -- -- -14 -14
Profit for the year 1998.................... -- -- 46,217 46,217
------- ----- ------- -------
AS AT 31 DECEMBER 1998...................... 100,000 4,000 81,620 185,620
======= ===== ======= =======
</TABLE>
The restatements not taken to income heading is the result of the
revaluations made for the 1997 financial year pursuant to the Accounting and
Reporting Recommendations (ARR).
As in the previous year, the share capital comprises 100,000 registered
shares with a par value of CHF 1,000. Siemens Schweiz AG, Swisscom AG and Veba
Telecom GmbH each own 32%. The remaining 4% are owned by the Cablecom Group
itself. In the 1997 financial year, a reserve for own shares was accordingly set
up in an amount equivalent to the original acquisition price of TCHF 4,000.
14
<PAGE> 13
12 NET INCOME FROM PRODUCTS AND SERVICES (INFORMATION ON SEGMENTS)
<TABLE>
<CAPTION>
THE NET INCOME FROM PRODUCTS AND SERVICES CAN BE SUBDIVIDED
INTO THE FOLLOWING BUSINESS AREAS AND GEOGRAPHICAL MARKETS: 1998 1997
- ------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
BREAKDOWN BY BUSINESS AREA
Systems..................................................... 67,500 33,595
Television.................................................. 318,534 318,421
Digital..................................................... 25,774 25,273
Internet.................................................... 31,977 0
Consumer electronics........................................ 118,683 120,373
------- -------
TOTAL NET INCOME FROM PRODUCTS AND SERVICES................. 562,468 497,662
======= =======
BREAKDOWN BY GEOGRAPHICAL MARKETS
Switzerland................................................. 556,880 492,700
Austria..................................................... 5,588 4,962
------- -------
TOTAL....................................................... 562,468 497,662
======= =======
</TABLE>
13 PERSONNEL
<TABLE>
<CAPTION>
31.12.1998 31.12.1997 CHANGE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF EMPLOYEES BY BUSINESS AREAS
Systems..................................................... 180 114 66
Television.................................................. 403 551 -148
Digital..................................................... 16 14 2
Internet.................................................... 103 0 103
Consumer electronics........................................ 540 585 -45
Cablecom Holding AG......................................... 64 24 40
----- ----- ----
TOTAL....................................................... 1,306 1,288 18
===== ===== ====
</TABLE>
Following the reorganization, staff transfers were made between the
Television and Systems business area and Cablecom Holding AG.
15
<PAGE> 14
14 FINANCIAL INCOME AND EXPENSES
<TABLE>
<CAPTION>
IN THE FINANCIAL INCOME AND EXPENSES ARE INCLUDED THE
FOLLOWING POSITIONS IN RELATION TO NON-CONSOLIDATED
AND OTHER AFFILIATED COMPANIES: 1998 1997
- ------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Interest due to shareholders................................ 9,132 10,245
Interest income from non-consolidated companies............. 132 344
Dividends from non-consolidated companies................... 657 492
</TABLE>
15 EXCEPTIONAL EXPENSES AND INCOME
The exceptional expenses include restructuring expenses of Rediffusion AG,
further accrued and deferred risk items for the commitment in France,
exceptional expenses in relation to digitization and goodwill depreciation of
the SwissOnline AG shareholding. As the depreciation period for the goodwill on
the SwissOnline AG shareholding cannot be determined, the total goodwill at the
time of the acquisition amounting to TCHF 26,898 has been entered under
exceptional expenses. This constitutes an exception to the treatment of a
residual asset value stated in the Accounting and Reporting Recommendations
(ARR) and the consolidation principles, which either provide for the systematic
depreciation over the useful life of the asset or offset against shareholders'
equity at the time of first consolidation.
Exceptional income comprises the profit on the sale of shareholding
interests and tax refunds.
16 NON-OPERATING EXPENSES
Non-operating expenses include real estate costs of Rera AG
Immobiliengesellschaft.
16
<PAGE> 15
CONTINGENT LIABILITIES
<TABLE>
<CAPTION>
THE FOLLOWING CONTINGENT LIABILITIES EXISTED AT THE END OF THE YEAR: 31.12.98 31.12.1997
- --------------------------------------------------------------------------------------------------
THOUSAND CHF THOUSAND CHF
<S> <C> <C>
Sureties........................................................ 0 10,446
Guarantee commitments........................................... 7,622 4,212
TOTAL CONTINGENT LIABILITIES.................................... 7,622 14,658
</TABLE>
FINANCIAL DERIVATIVES
In the 1997 financial year, OTC Interest Swaps with a four-year time to
maturity worth a total of TCHF 400,000 were acquired. In 1998, these contracts
were extended by one year and a new contract taken out for an amount of TCHF
100,000 with a five-year duration. All these contracts therefore run until 2003.
Under the terms of these contracts, variable interest rates are exchanged for
fixed rates. The fixed interest rate is 2.9%.
Interest caps (OTC options) worth a total of TCHF 100,000 are also held.
These were acquired in the 1995 (TCHF 75,000) and 1996 financial years (TCHF
25,000). The average strike rate is 5 1/3%. The adjusting payments fall due
throughout the lifetime of the caps. All the interest caps run until the year
2000.
These swaps and caps must be regarded as interest rate hedging on the bank
and shareholders' loans (in Swiss francs) stated under long-term liabilities.
17
<PAGE> 16
COMPANIES IN WHICH SHAREHOLDING INTERESTS ARE OWNED
<TABLE>
<CAPTION>
THE CONSOLIDATED INCOME STATEMENTS FOR 1998
COMPRISE THE FOLLOWING MAIN COMPANIES IN WHICH SHARE CAPITAL CAPITAL SHARE CONSOLIDATION
AN INTEREST IS OWNED: BUSINESS IN THOUSAND OWNED METHOD
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMPANY
Cablecom (Bern) AG......................... T CHF 1,000 100% V
Cablecom Engineering AG.................... S CHF 2,000 100% V
Cablecom (Grischa) AG...................... T CHF 5,200 98% V
Cablecom Kabelkommunikation GmbH........... T ATS 500 100% V
Cablecom Media AG.......................... D CHF 1,000 100% V
Cablecom (Mittelland) AG................... T CHF 9,100 100% V
Cablecom (Ostschweiz) AG................... T CHF 6,300 100% V
Cablecom Romandie SA....................... T CHF 1,000 100% V
Cablecom SECE AG(2)........................ F CHF 10,800 100% V
Cablecom (Suisse Romande) SA............... T CHF 6,000 100% V
Cablecom (Zurich) AG....................... T CHF 12,000 100% V
Cablecom (Ticino) SA....................... T CHF 10,000 100% V
Cablecom (Zentralschweiz) AG............... T CHF 4,510 100% V
Cable Signal Olten AG...................... T CHF 500 67% V
Catec AG................................... S CHF 2,500 100% V
Coditel SA................................. T CHF 4,500 100% V
FGA Hagendorf AG........................... T CHF 120 92% V
KASAG Kabelfernseh Steckborn AG............ T CHF 200 56% V
Nordex AG.................................. F CHF 100 100% V
Rediffusion AG............................. C CHF 5,000 100% V
Rera AG Immobiliengesellschaft............. L CHF 3,000 100% V
Tele-Cables Payerne SA(2).................. T CHF 1,200 100% V
Telereseau Yvonand SA...................... T CHF 100 90% V
Tele-Serpeliou SA.......................... T CHF 100 90% V
Video 2000 SA.............................. T CHF 1,000 60% V
SwissOnline AG(1).......................... I CHF 6,667 63% V
SOL Vision AG(1)........................... F CHF 600 100% V
</TABLE>
- ---------------
Abbreviations
<TABLE>
<S> <C>
S = Systems V = Full consolidation by purchase
method ATS = Austrian schillings
T = Television
D = Digital
I = Internet
C = Consumer electronics
F = Finance company/holding
L = Real property company
</TABLE>
(1) These shareholding interests were acquired in the 1998 financial year. For
the remaining 37% of the SwissOnline AG shareholding interest, a put/call
contract has been concluded between the minority shareholders and Cablecom
Holding AG. The related costs have already been set aside in the
consolidated financial statements as at 31 December 1998.
(2) For these companies the shareholding was increased as follows in the year
under review:
<TABLE>
<S> <C>
Cablecom SECE AG from 99.9 to 100%
Tele-Cables Payerne SA from 41 to 100%
</TABLE>
18
<PAGE> 17
<TABLE>
<CAPTION>
IN THE FINANCIAL YEAR 1998, THE FOLLOWING CHANGES OCCURRED IN
RESPECT OF THE INDIVIDUAL COMPANIES IN WHICH A SHAREHOLDING
INTEREST IS OWNED: CHANGE
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
COMPANY
Regionalantenne UZE AG.................................. Merger with Cablecom (Ostschweiz) AG
Cablecom (Berner Oberland) AG........................... Merger with Cablecom (Bern) AG
Cablecom (Bienne) SA.................................... Merger with Cablecom (Bern) AG
Muster Kabelfernseh AG.................................. Merger with Cablecom (Bern) AG
Steffisburger Kabelfernseh AG........................... Merger with Cablecom (Bern) AG
Teledysa SA............................................. Merger with Cablecom (Suisse Romande) SA
Teleregion SA........................................... Merger with Cablecom (Suisse Romande) SA
expert Casar Kalin AG................................... Merger with Cablecom (Zentralschweiz) AG
GA Altdorf AG........................................... Merger with Cablecom (Zentralschweiz) AG
Fischer Holding AG...................................... Merger with Cablecom Holding AG
Interkabel Service AG................................... Merger with Catec AG
Telechene-Bourg SA...................................... Merger with Coditel SA
Telethonex SA........................................... Merger with Coditel SA
Televernier SA.......................................... Merger with Coditel SA
Cablecom (Zurich) AG.................................... Merger with Cablecom Television AG
Cablecom Television AG.................................. Name changed to Cablecom (Zurich) AG
Cablecom Romandie Holding SA............................ Name changed to Cablecom Romandie SA
Francditel SA........................................... Acquisition and merger with Cablecom Romandie SA
Telerguel SA............................................ Acquisition and merger with Cablecom Romandie SA
</TABLE>
19
<PAGE> 18
REPORT OF THE STATUTORY AUDITORS TO THE GENERAL MEETING
OF CABLECOM HOLDING AG, FRAUENFELD
As statutory auditors, we have audited the consolidated financial
statements of the Cablecom Group for the financial year ending 31 December 1998
figuring on pages 4 to 19.
The Board of Directors is responsible for the consolidated financial
statements. Our task is to express an opinion on these financial statements
based on our audit. We confirm that we meet the legal requirements concerning
professional qualifications and independence.
Our audit was conducted in accordance with auditing standards promulgated
by the profession, which require that an audit be planned and performed to
obtain reasonable assurance as to whether the consolidated financial statements
are free from material misstatement. We have examined on a test basis evidence
supporting the amounts and disclosures in the financial statements. We have also
assessed the accounting principles used, significant estimates made and the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair
view of the assets, financial and earnings positions in accordance with the
Accounting and Reporting Recommendations (ARR) and have been properly prepared
in accordance with the law, with the exception of the position detailed in
Section 15 of the Notes to the consolidated financial statements.
We recommend that the consolidated financial statements submitted to you be
approved.
PricewaterhouseCoopers AG
Hansjorg Sagesser Daniel Lustenberger
Berne, 23 April 1999
20
