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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 4, 2000
NTL INCORPORATED
(Exact name of Registrant as Specified in Charter)
Delaware 0-25691 13-4051921
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
110 East 59th Street, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 906-8440
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
In connection with the Company's proposed acquisition of CWC
ConsumerCo., a division of Cable and Wireless plc, and in
connection with the Company's acquisition of Cablecom Group in
March 2000, the Company has prepared unaudited pro forma
financial data which is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
99.1 Unaudited pro forma financial data.
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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
By: /s/ Gregg N. Gorelick
----------------------------
Name: Gregg N. Gorelick
Title: Vice President - Controller
Dated: May 4, 2000
2
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EXHIBIT INDEX
Designation Description
99.1 Unaudited pro forma financial data.
3
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UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited pro forma financial data presented gives effect to the
completed acquisitions of Diamond Cable Communications in March 1999 and
Cablecom Group in March 2000 by NTL and the proposed acquisition of CWC
ConsumerCo by NTL, expected to be completed in the second quarter of 2000. The
pro forma financial data is based on NTL's historical financial statements and
the historical financial statements of Diamond, CWC ConsumerCo and Cablecom.
Certain amounts in these historical financial statements have been reclassified
to conform to NTL's presentation. The unaudited pro forma financial data also
gives effect to France Telecom's agreement to invest an additional (pound
sterling) 2.8 billion ($4.5 billion) in NTL with the investment to be structured
as (pound sterling) 1.6 billion in NTL common stock and (pound sterling) 1.2
billion in NTL series B preferred stock with a 5% dividend and a conversion
price of $80 per share, the proceeds from which will be used to fund, in part,
NTL's acquisition of CWC ConsumerCo. The pro forma financial data also gives
effect to the issue of new NTL preferred stock in March 2000 to France Telecom
and certain commercial banks for an aggregate subscription price of $1.85
billion used to fund, in part, NTL's acquisition of Cablecom.
The Diamond acquisition has been accounted for using the purchase method of
accounting, in which the assets acquired and liabilities assumed have been
recorded at their fair values. The Cablecom acquisition and the proposed
acquisition of CWC ConsumerCo have been accounted for in the pro forma financial
data using the purchase method of accounting. Accordingly, the assets acquired
and liabilities assumed have been recorded at their estimated fair values. NTL
and CWC ConsumerCo are unaware of events other than those disclosed in the
unaudited pro forma notes that would require a material change to the
preliminary purchase price allocation. However, a final determination of
necessary purchase accounting adjustments will be made upon the completion of a
study to be undertaken to determine the fair value of certain assets and
liabilities, including intangible assets. Assuming NTL completes the acquisition
of CWC ConsumerCo, and for the acquisition of Cablecom, the actual financial
position and results of operations will differ, perhaps significantly, from the
unaudited pro forma amounts reflected in this prospectus because of a variety of
factors, including access to additional information, changes in value not
currently identified and changes in operating results between the dates of the
unaudited pro forma financial data and the dates on which the acquisitions take
place.
The pro forma financial data does not give effect to the elimination of
transactions between NTL, CWC ConsumerCo and Cablecom which are not material.
<PAGE> 2
The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1999 gives effect to the acquisitions of Diamond and
Cablecom, the proposed acquisition of CWC ConsumerCo, investments by France
Telecom and issuance of new preferred stock as if they had been consummated on
January 1, 1999. The unaudited pro forma balance sheet at December 31, 1999
gives effect to the acquisition of Cablecom, the proposed acquisition of CWC
ConsumerCo, investments by France Telecom and issuance of new preferred stock as
if they occurred on December 31, 1999.
The pro forma condensed combined statement of operations for the year ended
December 31, 1999 includes the results of CWC ConsumerCo for the year ended
September 30, 1999. CWC ConsumerCo has a fiscal year ending on March 31,
accordingly, the results of CWC ConsumerCo for the year ended September 30, 1999
combine the last six months of fiscal 1999 with the first six months of fiscal
2000. The revenues and net loss relating to each fiscal period are as follows:
Fiscal Fiscal
1999 2000
$'m $'m
------ ------
Revenues.................................................... 577 549
Net loss.................................................... (188) (222)
The pro forma adjustments are based upon available information and
assumptions that NTL believes were reasonable at the time made. The unaudited
pro forma financial data does not purport to present NTL's financial position or
results of operations had the acquisitions occurred on the dates specified, nor
are they necessarily indicative of the financial position or results of
operations that may be achieved in the future. The unaudited pro forma condensed
combined statements of operations do not reflect any adjustments for cost
savings that NTL expects to realize commencing upon consummation of the
acquisitions of CWC ConsumerCo and Cablecom. Upon the closing of the
acquisitions of CWC ConsumerCo and Cablecom, NTL may incur integration related
expenses not reflected in the pro forma financial information as a result of the
elimination of duplicate facilities, operational realignment and related
workforce reductions. Such costs would generally be recognized as a liability
assumed as of the respective acquisition dates resulting in additional goodwill
if they relate to facilities or workforce previously aligned with CWC ConsumerCo
or Cablecom, and would be expensed if they relate to facilities or workforce
previously aligned with NTL. The assessment of integration related expenses is
ongoing. The pro forma adjustments reflecting the consummation of the
acquisitions of CWC ConsumerCo and Cablecom are based upon the assumptions set
forth in the notes to the pro forma financial data. No assurances can be made as
to the amount of cost savings or revenue enhancements, if any, that may be
realized.
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NTL INCORPORATED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
NTL Diamond Cablecom Completed CWC ConsumerCo
(Historical) (Historical) (Historical) Adjustments Acquisitions (Historical) Adjustments Pro Forma
------------ ------------ ------------ ----------- ------------ -------------- ----------- ---------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES............. $1,584 $ 29 $380 $ -- $ 1,993 $1,126 $ -- $ 3,119
Costs and Expenses
Operating
expenses........... 800 10 134 -- 944 411 -- 1,355
Selling, general and
administrative
expenses........... 574 12 104 -- 690 421 -- 1,111
Franchise fees....... 17 -- -- -- 17 -- -- 17
Corporate
expenses........... 29 -- -- -- 29 29 -- 58
Non-recurring
charges............ 16 14 -- (14) 16 -- -- 16
Depreciation and
amortization....... 791 15 103 301(B) 1,210 381 592(B) 2,183
------ ---- ---- ----- ------- ----- ----- -------
2,227 51 341 287 2,906 1,242 592 4,740
------ ---- ---- ----- ------- ----- ----- -------
Operating income
(loss)............. (643) (22) 39 (287) (913) (116) (592) (1,621)
Other income
(expense)
Interest and other
income............. 556 (39) 3 (5)(D) 515 27 (9) 533
Interest expense..... (681) (26) (22) (65)(C) (794) (321) 118(C) (997)
------ ---- ---- ----- ------- ----- ----- -------
Income (loss) before
income taxes....... (768) (87) 20 (357) (1,192) (410) (483) (2,085)
Income tax benefit
(provision)........ 35 -- (12) -- 23 -- -- 23
------ ---- ---- ----- ------- ----- ----- -------
Loss before extra-
ordinary item...... (733) (87) 8 (357) (1,169) (410) (483) (2,062)
Loss from early
extinguishment of
debt............... (3) -- -- -- (3) -- -- (3)
------ ---- ---- ----- ------- ----- ----- -------
Net income (loss)... (736) (87) 8 (357) (1,172) (410) (483) (2,065)
Preferred stock
dividends.......... (74) -- -- (93)(F) (167) -- (102)(F) (269)
------ ---- ---- ----- ------- ----- ----- -------
Net income (loss)
available to common
stock.............. $ (810) $(87) $ 8 $(450) $(1,339) $(410) $(585) $(2,334)
====== ==== ==== ===== ======= ===== ===== =======
Net (loss) per common
stock -- basic and
fully diluted....... $(6.81) $ (8.89)
====== =======
Weighted average
shares
outstanding........ 119 15 85(A) 43(G) 262
====== ==== ===== ===== =======
</TABLE>
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NTL INCORPORATED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
December 31, 1999
<TABLE>
<CAPTION>
NTL Cablecom Completed CWC ConsumerCo
(Historical) (Historical) Adjustments Acquisitions (Historical) Adjustments Pro Forma
------------ ------------- ----------- ------------ -------------- ----------- ---------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash, cash equivalents and
securities............. $ 2,942 $ 9 $ (106)(A) $ 2,845 $ 189 $ (192)(A) $ 2,842
Other current assets...... 377 190 -- 567 123 -- 690
------- ------ ------ ------- ------- ------- -------
Total current assets........ 3,319 199 (106) 3,412 312 (192) 3,532
Fixed assets, net........... 5,598 1,013 365(A) 6,976 5,046 375(A) 12,397
Intangible assets, net...... 2,928 143 2,414(A) 5,485 2,916 5,673(A) 14,074
Other assets, net........... 367 18 -- 385 112 -- 497
------- ------ ------ ------- ------- ------- -------
Total assets................ $12,212 $1,373 $2,673 $16,258 $ 8,386 $ 5,856 $30,500
======= ====== ====== ======= ======= ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities:
Other current
liabilities............ $ 974 $ 251 $ -- $ 1,225 $ 556 $ -- $ 1,781
Current portion of
long-term debt and
capital leases......... 83 825 (825)(A) 83 110 -- 193
Due to affiliates......... -- -- -- -- 130 -- 130
------- ------ ------ ------- ------- ------- -------
Total current liabilities... 1,057 1,076 (825) 1,308 796 -- 2,104
Long-term debt.............. 8,798 21 1,674(A) 10,493 5,242 (1,713)(A) 14,022
Other....................... -- 61 -- 61 18 -- 79
Deferred income taxes....... 78 109 80(A) 267 -- -- 267
Redeemable preferred stock.. 142 -- 1,850(A) 1,992 -- -- 1,992
Shareholders' equity:
Preferred stock, Common
stock and additional
paid-in capital........ 4,126 -- -- 4,126 -- 9,899 (A)(E) 14,025
Acquired company equity... -- 106 (106) -- 2,330 (2,330) --
Other comprehensive
(loss)................. (2) -- -- (2) -- -- (2)
Deficit................... (1,987) -- -- (1,987) -- -- (1,987)
------- ------ ------ ------- ------- ------- -------
2,137 106 (106) 2,137 2,330 7,569 12,036
------- ------ ------ ------- ------- ------- -------
Total liabilities and
shareholders' equity...... $12,212 $1,373 $2,673 $16,258 $ 8,386 $ 5,856 $30,500
======= ====== ====== ======= ======= ======= =======
</TABLE>
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NTL INCORPORATED
NOTES TO THE PRO FORMA FINANCIAL DATA
(in millions, except per share data)
<TABLE>
<S> <C>
A. Purchase Price and Allocation of Purchase Price:
CWC ConsumerCo
Shares of NTL common stock to be issued.................. 85
NTL common stock price (at the time of announcement of
acquisition of CWC ConsumerCo)......................... $ 63.52
-------
Subtotal................................................. 5,399
Cash consideration (L2.85 billion at September 30, 1999
exchange rate)......................................... 4,692
-------
Purchase price........................................... 10,091
Less: Net assets at September 30, 1999................... (2,330)
Less: Estimate of debt not assumed at September 30, 1999. (1,713)
-------
Excess of purchase price over net assets acquired........ $ 6,048
=======
Preliminary allocation to:
Fixed assets............................................. $ 375
Intangible assets........................................ 5,673
-------
$ 6,048
=======
Cablecom
Proceeds from the issuance of redeemable preferred stock. $ 1,850
Bridge financing (CHF2.7 billion)........................ 1,695
Cash on hand............................................. 97
-------
Purchase price (CHF5.8 billion).......................... 3,642
Net assets at December 31, 1999.......................... 106
Less: cash on hand....................................... (9)
Less: intangible assets.................................. (143)
Plus: current and long-term debt......................... 846
-------
800
-------
Excess of purchase price over net tangible assets acquired $ 2,842
=======
Preliminary allocation to:
Fixed assets............................................. $ 365
Deferred tax liability................................... (80)
Intangible assets........................................ 2,557
-------
$ 2,842
=======
</TABLE>
The intangible assets arising from the acquisitions of CWC ConsumerCo and
Cablecom may include customer lists, license acquisition costs and goodwill. The
amount of each individual intangible is not currently determinable. The amounts
of each intangible will be determined based on appraisals and other analyses.
The amortization period for each may vary, although it is assumed in Pro Forma
Adjustment B below, that 10 years is a representative blended amortization
period.
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<TABLE>
<CAPTION>
Completed Acquisitions
-------------------------- CWC
Diamond Cablecom ConsumerCo
------------ ---------- -----------
<S> <C> <C> <C>
B. Depreciation and Amortization
For the year ended December 31, 1999:
Depreciation of fixed asset allocation (over 15
years)............................................. $ 1 $ 24 $ 25
Amortization of intangibles (over 2-15 years)........ 26 256 567
Historical amortization of intangibles............... (2) (4) --
------- ------ ------
$ 25 $ 276 $ 592
======= ====== ======
C. Interest Expense
For the year ended December 31, 1999:
Reduction of interest on CWC ConsumerCo and Cablecom
debt not assumed(1)................................ $ (22) $ (118)
Interest expense on the bridge financing............. 87 --
------ ------
Net statement of operations impact................... $ 65 $ (118)
====== ======
D. Interest Income
For the year ended December 31, 1999:
Reduction of interest income on cash on hand used for
acquisition........................................ $ (5) $ (9)
====== ======
E. Common and Preferred Stock to be issued to France
Telecom
Common Stock (42.3 million shares)................... $2,500
5% preferred stock(2.0 million shares)............... 2,000
------
Total cash to be received.................. $4,500
======
F. Preferred Stock Dividend
Dividends at 5% on the preferred stock issued to
France Telecom
For the year ended December 31, 1999................. $ -- $ 102
====== ======
Dividends at 5% on the redeemable preferred stock
For the year ended December 31, 1999............... $ 93 $ --
====== ======
</TABLE>
- ---------------
(1) Under the terms of the transaction agreement, NTL will assume approximately
$3,529 of CWC ConsumerCo net debt at the closing of the transaction, which
is a reduction of approximately $1,713 from the historical financial
statements of CWC ConsumerCo. The reduction of interest expense was
estimated using CWC ConsumerCo's effective borrowing rate of 6.9%. A 1/8%
change in this rate would equate to an approximate $22 change in annual
interest expense. Such debt may be refinanced or repaid prior to the closing
of the CWC ConsumerCo acquisition. The related impact on interest expense
will not be determined until the closing of the CWC ConsumerCo acquisition.
