<PAGE> 1
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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-30673
-----------------------------------------------------------
NTL INCORPORATED
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-4105887
-------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
</TABLE>
110 East 59th Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 906-8440
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(Registrant's telephone number, including area code)
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, 2000 was 271,753,801.
<PAGE> 2
NTL Incorporated and Subsidiaries
Index
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
------------------------------ ----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
September 30, 2000 and December 31, 1999 ............................................................ 2
Condensed Consolidated Statements of Operations-
Three and nine months ended September 30, 2000 and 1999 ............................................. 4
Condensed Consolidated Statement of Shareholders' Equity-
Nine months ended September 30, 2000 ....................................................................5
Condensed Consolidated Statements of Cash Flows-
Nine months ended September 30, 2000 and 1999 .......................................................... 7
Notes to Condensed Consolidated Financial Statements ................................................... 8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition .................................................................... 17
Item 3. Quantitative and Qualitative Disclosures
about Market Risk .................................................................................... 29
PART II. OTHER INFORMATION
--------------------------
Item 6. Exhibits and Reports on Form 8-K ...................................................................... 31
SIGNATURES ........................................................................................................... 32
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NTL Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
--------------------------------------------------
(unaudited) (see note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $414.0 $2,597.2
Marketable securities 112.7 344.5
Accounts receivable - trade, less allowance for doubtful
accounts of $143.2 (2000) and $85.6 (1999) 471.7 294.2
Other 443.3 82.7
--------------------------------------------------
Total current assets 1,441.7 3,318.6
Fixed assets, net 11,904.2 5,597.7
Intangible assets, net 13,571.1 2,927.8
Other assets, net of accumulated amortization
of $77.4 (2000) and $49.4 (1999) 878.2 367.5
--------------------------------------------------
Total assets $27,795.2 $12,211.6
==================================================
</TABLE>
2
<PAGE> 4
NTL Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets - continued
(in millions)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
---------------------------------------------------
(unaudited) (see note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $444.4 $224.7
Accrued expenses and other 1,131.7 438.2
Accrued construction costs 221.2 79.8
Interest payable 110.7 71.1
Deferred revenue 273.5 160.8
Current portion of long-term debt 14.4 82.6
---------------------------------------------------
Total current liabilities 2,195.9 1,057.2
Long-term debt 13,753.2 8,798.0
Commitments and contingent liabilities
Deferred income taxes 208.9 77.7
Minority interests 30.5 -
Redeemable preferred stock - $.01 par value, plus accreted dividends;
liquidation preference $2,056.8; less unamortized discount of
$2.6 (2000) and $2.8 (1999); issued and outstanding 2.0 (2000)
and 0.1 (1999) shares 2,054.2 141.8
Shareholders' equity:
Series preferred stock - $.01 par value;
authorized 10.0 shares; liquidation preference $2,824.5; issued
and outstanding 2.8 (2000) and 1.3 (1999) shares - -
Common stock - $.01 par value; authorized 800.0 shares; issued
and outstanding 271.8 (2000) and 132.4 (1999) shares 2.7 1.3
Additional paid-in capital 13,794.6 4,125.1
Accumulated other comprehensive (loss) (472.9) (2.1)
(Deficit) (3,771.9) (1,987.4)
---------------------------------------------------
9,552.5 2,136.9
---------------------------------------------------
Total liabilities and shareholders' equity $27,795.2 $ 12,211.6
===================================================
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date.
See accompanying notes.
3
<PAGE> 5
NTL Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Residential telecommunications and television $566.0 $220.3 $1,238.8 $585.6
National and international telecommunications 210.4 141.6 584.2 360.2
Broadcast transmission and other 54.3 55.2 164.9 144.9
----------------------------------------------------------------------------
830.7 417.1 1,987.9 1,090.7
COSTS AND EXPENSES
Operating expenses 394.1 206.8 967.8 536.2
Selling, general and administrative expenses 344.7 144.9 769.3 419.2
Franchise fees - 7.7 - 22.3
Non-cash compensation 2.2 - 2.2 -
Other charges 6.0 - 19.7 -
Corporate expenses 9.5 7.4 30.7 21.1
Depreciation and amortization 600.0 201.9 1,245.5 533.6
----------------------------------------------------------------------------
1,356.5 568.7 3,035.2 1,532.4
----------------------------------------------------------------------------
Operating (loss) (525.8) (151.6) (1,047.3) (441.7)
OTHER INCOME (EXPENSE)
Interest income and other, net (1.2) 13.4 48.1 34.1
Interest expense (280.9) (186.6) (729.1) (485.2)
Foreign currency transaction gains (losses) 23.1 46.7 (89.3) 35.8
----------------------------------------------------------------------------
(Loss) before income tax benefit (784.8) (278.1) (1,817.6) (857.0)
Income tax benefit 14.5 - 33.1 -
----------------------------------------------------------------------------
Net (loss) (770.3) (278.1) (1,784.5) (857.0)
Preferred stock dividends (63.3) (20.6) (129.5) (49.0)
----------------------------------------------------------------------------
Net (loss) available to common shareholders $(833.6) $(298.7) $(1,914.0) $(906.0)
============================================================================
Basic and diluted net (loss) per common share $(3.08) $(2.31) $(9.63) $(7.86)
============================================================================
Weighted average shares 270.8 129.4 198.8 115.2
============================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 6
NTL Incorporated and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
(in millions)
<TABLE>
<CAPTION>
SERIES PREFERRED STOCK COMMON STOCK
$.01 PAR VALUE $.01 PAR VALUE
SHARES PAR SHARES PAR
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 1.3 $- 132.4 $1.3
Exercise of stock options 2.0 -
Exercise of warrants 1.1 -
Non-cash compensation
Common stock issued for cash 42.2 .4
Preferred stock issued for cash 2.0 -
Common stock issued for an acquisition 84.9 .9
Conversion of series preferred stock (.5) - 9.2 .1
Preferred stock issued for dividends
Accreted dividends on preferred stock
Accretion of discount on preferred stock
Comprehensive loss:
Net loss for the nine months ended September 30, 2000
Currency translation adjustment
Total
--------------------------------------------------------------------
Balance, September 30, 2000 2.8 $- 271.8 $2.7
====================================================================
</TABLE>
See accompanying notes.
5
<PAGE> 7
NTL Incorporated and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited) - continued
(in millions)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN COMPREHENSIVE
CAPITAL LOSS
----------------------------------------------
<S> <C> <C>
Balance, December 31, 1999 $4,125.1
Exercise of stock options 35.7
Exercise of warrants 8.4
Non-cash compensation 2.2
Common stock issued for cash 2,327.2
Preferred stock issued for cash 1,862.0
Common stock issued for an acquisition 5,484.5
Conversion of series preferred stock 7.5
Preferred stock issued for dividends 9.4
Accreted dividends on preferred stock (67.2)
Accretion of discount on preferred stock (.2)
Comprehensive loss:
Net loss for the nine months ended September 30, 2000 $(1,784.5)
Currency translation adjustment (470.8)
------------------
Total $(2,255.3)
----------------------------------------------
Balance, September 30, 2000 $13,794.6
==============================================
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS DEFICIT
--------------------------------------
<S> <C> <C>
Balance, December 31, 1999 $(2.1) $(1,987.4)
Exercise of stock options
Exercise of warrants
Non-cash compensation
Common stock issued for cash
Preferred stock issued for cash
Common stock issued for an acquisition
Conversion of series preferred stock
Preferred stock issued for dividends
Accreted dividends on preferred stock
Accretion of discount on preferred stock
Comprehensive loss:
Net loss for the nine months ended September 30, 2000 (1,784.5)
Currency translation adjustment (470.8)
Total
--------------------------------------
Balance, September 30, 2000 $(472.9) $(3,771.9)
======================================
</TABLE>
See accompanying notes.
6
<PAGE> 8
NTL Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------------------------
2000 1999
-------------------------------------------------
<S> <C> <C>
Net cash (used in) provided by operating activities $(199.1) $41.8
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (10,954.6) (1,103.1)
Purchase of fixed assets (1,541.9) (858.1)
Payment of deferred purchase price (3.0) -
Purchase of marketable securities (150.5) (573.8)
Proceeds from sales of marketable securities 390.9 539.8
Cash deposited into escrow for an acquisition - (120.7)
Increase in other assets (527.1) (28.8)
-------------------------------------------------
Net cash (used in) investing activities (12,786.2) (2,144.7)
FINANCING ACTIVITIES
Proceeds from borrowings, net of financing costs 5,784.6 1,125.5
Proceeds from issuance of preferred stock and warrants 1,862.0 1,250.0
Proceeds from issuance of common stock 2,327.6 250.0
Cash released from escrow 77.5 -
Principal payments (1,114.6) (25.9)
Proceeds from issuance of redeemable preferred stock 1,850.0 -
Proceeds from exercise of stock options and warrants 44.1 29.9
-------------------------------------------------
Net cash provided by financing activities 10,831.2 2,629.5
Effect of exchange rate changes on cash (29.1) 2.7
-------------------------------------------------
(Decrease) increase in cash and cash equivalents (2,183.2) 529.3
Cash and cash equivalents at beginning of period 2,597.2 736.3
-------------------------------------------------
Cash and cash equivalents at end of period $414.0 $1,265.6
=================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest exclusive of
amounts capitalized $330.4 $140.3
Income taxes paid 1.4 -
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on preferred stock $67.4 $26.5
Conversion of Convertible Notes, net of unamortized deferred financing costs
- 269.3
Common stock and stock options issued for an acquisition 5,485.4 978.0
Conversion of series preferred stock 7.6 -
</TABLE>
See accompanying notes.
7
<PAGE> 9
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. 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 three and nine months ended September
30, 2000 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the NTL
(Delaware), Inc. (formerly NTL Incorporated) Annual Report on Form 10-K for the
year ended December 31, 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted by the
Company effective January 1, 2001. The Company is evaluating the impact that the
adoption of SFAS No. 133 will have on its results of operations and financial
position.
Stock options, warrants and convertible securities are excluded from the
calculation of net loss per common share as their effect would be antidilutive.
In February 2000, the Company paid a 5-for-4 stock split by way of a stock
dividend with respect to its common stock. The condensed consolidated financial
statements and the notes thereto give retroactive effect to the stock split.
NOTE B - CORPORATE RESTRUCTURING
On May 18, 2000, NTL Incorporated completed a corporate restructuring to create
a holding company structure. The formation of the holding company was part of
NTL Incorporated's acquisition of certain assets of Cable & Wireless
Communications plc ("CWC"). The holding company restructuring was accomplished
through a merger so that all the stockholders of NTL Incorporated at the
effective time of the merger became stockholders of the new holding company, and
NTL Incorporated became a subsidiary of the new holding company. The new holding
company has taken the name NTL Incorporated (and together with its subsidiaries,
the "Company") and the holding company's subsidiary simultaneously changed its
name to NTL (Delaware), Inc. (and together with its subsidiaries, "NTL
Delaware").
8
<PAGE> 10
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE C - FIXED ASSETS
Fixed assets consist of:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------------------------------------
(unaudited)
(in millions)
<S> <C> <C>
Operating equipment $10,459.8 $5,111.3
Other equipment 1,029.7 715.2
Construction-in-progress 1,837.3 669.4
----------------------------------------------
13,326.8 6,495.9
Accumulated depreciation (1,422.6) (898.2)
----------------------------------------------
$11,904.2 $5,597.7
==============================================
</TABLE>
Depreciation expense for the nine months ended September 30, 2000 and 1999 was
$616.8 million and $337.6 million, respectively. Depreciation expense for the
three months ended September 30, 2000 and 1999 was $262.2 million and $125.6
million, respectively.
NOTE D - INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------------------------------------
(unaudited)
(in millions)
<S> <C> <C>
Goodwill, net of accumulated amortization of $681.8 (2000) and $197.0 (1999) $13,290.9 $2,543.5
License acquisition costs, net of accumulated amortization of $194.7 (2000) and 160.8 225.0
$141.7 (1999)
Customer lists, net of accumulated amortization of $54.7 (2000) and $30.9 (1999) 119.4 159.3
---------------------------------------------
$13,571.1 $2,927.8
=============================================
</TABLE>
On May 30, 2000, the Company acquired the consumer cable telephone, Internet and
television operations of CWC in the United Kingdom ("ConsumerCo"). The Company
paid cash of pound sterling 2,846.3 million ($4,258.9 million) and issued an
aggregate of 84.9 million shares of its common stock in exchange for all of the
shares of CWC. In addition, the Company paid pound sterling 2,214.0 million
($3,312.8 million) to repay a portion of ConsumerCo's debt. The Company's common
stock was valued at $5,485.4 million, the fair value at the time of the
announcement. This acquisition was funded by a new bank facility under which
pound sterling 2,376.0 million ($3,555.2 million) was borrowed and by an
additional investment by France Telecom in the Company, as described below.
9
<PAGE> 11
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE D - INTANGIBLE ASSETS (CONTINUED)
On March 28, 2000, the Company acquired the cable assets of the Cablecom Group
("Cablecom") in Switzerland for cash of CHF 5,800.0 million ($3,510.2 million),
a substantial portion of which was funded by a new bank facility of CHF 2,700.0
million ($1,630.5 million) and the Company's issuance of $1,850.0 million of
preferred stock to France Telecom and a group of commercial banks.
These acquisitions were accounted for as purchases, 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 of $16,602.4 million, including costs incurred of $35.1
million, exceeded the estimated fair value of net tangible assets acquired by
$11,480.7 million, which is included in goodwill. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on the estimated fair values at acquisition. Changes
to the allocation of the purchase price are expected as valuations or appraisals
of assets and liabilities are completed.
In 1999, the Company completed the acquisitions of Diamond Cable Communications
Limited, the Australian National Transmission Network, Cablelink Limited,
certain broadband cable franchises of British Telecommunications plc, the "1G
Networks" of France Telecom and Workplace Technologies plc.
The pro forma unaudited consolidated results of operations for the nine months
ended September 30, 2000 and 1999 assuming consummation of these transactions as
of January 1, 1999 is as follows. A significant component of the pro forma
results is associated with the acquisition of ConsumerCo. The historical results
of ConsumerCo reflect certain intercompany costs and expenses as they were prior
to the separation of ConsumerCo which was completed in the second quarter of
2000. These costs and expenses do not necessarily reflect the costs and expenses
that would have been incurred if DataCo and ConsumerCo were separate entities
for these periods. Therefore the historical results of ConsumerCo which are
included in the pro forma results below are not reflective of results on a going
forward basis.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------
2000 1999
-------------------------------------------------
(in millions, except per share data)
<S> <C> <C>
Total revenue $2,550.4 $2,407.0
Net (loss) (2,475.9) (2,281.1)
Basic and diluted net (loss) per common share (9.94) (9.90)
</TABLE>
Amortization of intangible and other assets charged to expense for the nine
months ended September 30, 2000 and 1999 was $628.7 million and $196.0 million,
respectively. Amortization of intangible and other assets charged to expense for
the three months ended September 30, 2000 and 1999 was $337.8 million and $76.3
million, respectively.
10
<PAGE> 12
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE E - SALES OF COMMON STOCK, PREFERRED STOCK AND REDEEMABLE PREFERRED STOCK
On May 30, 2000, in connection with the ConsumerCo acquisition, France Telecom
paid pound sterling 1,555.6 million ($2,327.6 million) for 42.2 million shares
of the Company's common stock and pound sterling 1,244.4 million ($1,862.0
million) for 2.0 million shares of the Company's series convertible preferred
stock with a 5% dividend and a conversion price of $80 per share. The preferred
stock has a stated value of $1,000 per share and is redeemable in May 2010, at
the Company's option, for cash, shares of common stock or a combination of both.
The preferred stock may be redeemed by the Company on the earlier of May 2007 or
the date that is both four years from the issue date and after the Company's
common stock has traded above $96 per share for over 25 consecutive trading
days. Dividends are payable quarterly at the Company's option in cash, common
stock or additional shares of preferred stock.
In March 2000, the Company received $1,850.0 million in cash from France Telecom
and a group of commercial banks in exchange for 1.9 million shares of new
redeemable 5% Cumulative Preferred Stock (the "New Preferred Stock"). The
holders of the New Preferred Stock other than any commercial banks or their
affiliates (a "Qualified Holder") may at any time after September 2000 elect,
subject to certain conditions, for the New Preferred Stock to be exchanged for
up to a 50% interest in a new company which will own certain or all of the
Company's broadband communications, broadcast and cable television interests in
Continental Europe outside of France. Under certain circumstances, at the
Company's option, any portion of the Company's obligation that may not be
satisfied by the exchange may be satisfied in a security convertible into the
Company's common stock or cash. Dividends on the New Preferred Stock are
cumulative on a quarterly basis and are payable in additional shares of New
Preferred Stock in March 2002. The New Preferred Stock has a liquidation right
of $1,000 per share plus accrued and unpaid dividends. The New Preferred Stock
is redeemable for cash in March 2002 at the option of a Qualified Holder.
Accrued and unpaid dividends on Redeemable Preferred Stock at September 30, 2000
was $50.1 million. The changes in the number of shares of Redeemable Preferred
Stock were as follows:
<TABLE>
<CAPTION>
13% 5%
----------------------------------------------
<S> <C> <C>
Balance, December 31, 1999 142,000 -
Issued for cash - 1,850,000
Issued for dividends 15,000 -
----------------------------------------------
Balance, September 30, 2000 157,000 1,850,000
==============================================
</TABLE>
The changes in the number of shares of Series Preferred Stock, excluding the
Redeemable Preferred Stock, were as follows:
<TABLE>
<CAPTION>
9.9%
Series B 5.25% 5%
---------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1999 52,000 525,000 755,000
Issued for cash - - 2,000,000
Issued for dividends - 3,000 70,000
Conversion into common stock (52,000) (528,000) -
---------------------------------------------------------------------------
Balance, September 30, 2000 - - 2,825,000
===========================================================================
</TABLE>
11
<PAGE> 13
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - LONG-TERM DEBT
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
Long-term debt consists of: 2000 1999
---------------------------------------------------
(unaudited)
(in millions)
<S> <C> <C>
NTL Delaware:
5-3/4% Convertible Subordinated Notes $1,200.0 $1,200.0
ConsumerCo:
Term loan facility and other 25.9 -
NTL Business:
Credit Agreement 2,813.0 -
Cablecom:
Term Loan Facility 1,563.8 -
Revolving Facility 214.3 -
Other 15.0 -
NTL Communications:
12-3/4% Senior Deferred Coupon Notes 277.8 268.1
11-1/2% Senior Deferred Coupon Notes 1,011.9 930.4
10% Senior Notes 400.0 400.0
9-1/2% Senior Sterling Notes, less unamortized discount 184.4 201.4
10-3/4% Senior Deferred Coupon Sterling Notes 340.4 343.7
9-3/4% Senior Deferred Coupon Notes 1,023.4 952.8
9-3/4% Senior Deferred Coupon Sterling Notes 348.3 354.4
11-1/2% Senior Notes 625.0 625.0
12-3/8% Senior Deferred Coupon Notes 313.9 287.0
7% Convertible Subordinated Notes 599.3 599.3
Variable Rate Redeemable Guaranteed Loan Notes - 76.8
9-1/4% Senior Euro Notes 220.9 252.3
9-7/8% Senior Euro Notes 309.3 353.2
11-1/2% Senior Deferred Coupon Euro Notes 117.0 123.1
NTL Communications Limited:
Credit Agreement 163.0 -
NTL Triangle:
11.2% Senior Discount Debentures 510.5 467.3
Other 5.5 8.0
Diamond:
13-1/4% Senior Discount Notes 285.1 285.1
11-3/4% Senior Discount Notes 518.7 476.2
10-3/4% Senior Discount Notes 364.2 336.9
10% Senior Sterling Notes 199.6 218.1
9-1/8% Senior Notes 110.0 110.0
Other 7.4 11.5
---------------------------------------------------
13,767.6 8,880.6
Less current portion 14.4 82.6
---------------------------------------------------
$13,753.2 $8,798.0
===================================================
</TABLE>
12
<PAGE> 14
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - LONG-TERM DEBT (CONTINUED)
In May 2000, NTL Business Limited ("NTL Business") and NTL Communications
Limited ("NTLCL"), wholly-owned indirect subsidiaries of the Company, entered
into a pound sterling 2,500.0 million ($3,696.8 million) credit agreement in
connection with the ConsumerCo acquisition. As of September 30, 2000, NTL
Business had pound sterling 1,902.3 million ($2,813.0 million) and NTLCL had
pound sterling 110.2 million ($163.0 million) outstanding under the credit
agreement. Interest is payable at least every six months at LIBOR plus a margin
rate of 2.25% per annum, which is subject to adjustment based on the ratio of
EBITDA to finance charges of the UK Group. The effective interest rate at
September 30, 2000 was 8.32%. The unused portion of the commitment is available
for refinancing ConsumerCo indebtedness and for working capital requirements of
the UK Group. For purposes of this credit agreement, Diamond Cable
Communications Limited and subsidiaries, NTL (Triangle) LLC and subsidiaries and
certain other entities are excluded from the UK Group. The unused portion of the
commitment is subject to a commitment fee of 0.75% payable quarterly, which is
reduced to 0.50% when over 50% of the commitment is utilized. Principal is due
in six quarterly installments beginning on June 30, 2004. The credit agreement
contains various financial and other covenants with respect to the UK Group, and
restrictions on dividends and distributions by the UK Group.
In March 2000, the Company borrowed CHF 2,700.0 million ($1,563.8 million) under
its term loan facility in connection with the acquisition of Cablecom. Interest
is payable at least every six months at Swiss LIBOR plus a margin rate of 2.5%
per annum, which is subject to adjustment after March 2001 based on Cablecom's
ratio of senior debt to EBITDA. The effective interest rate at September 30,
2000 was 5.98%. Principal is due over six years in quarterly installments
beginning on March 31, 2004. Cablecom has the option to draw on a revolving loan
facility up to an additional CHF 1,400.0 million ($810.9 million). The revolving
facility is intended to finance operating expenses, working capital and other
capital expenditures of Cablecom and subsidiaries and for their general
corporate financing requirements. As of September 30, 2000, Cablecom had
borrowed CHF 370.0 million ($214.3 million) under the revolving loan facility
with an effective interest rate of 5.89%. The revolving facility is available
until May 2003. The interest rate, interest payment requirements and principal
payments for the revolving facility are the same as for the term loan facility.
The revolving facility includes a commitment fee of 0.75% payable quarterly on
the unused portion of the revolving facility commitment, which is reduced to
0.50% when over 50% of the commitment is utilized. The term loan facility and
the revolving facility contain various financial and other covenants with
respect to Cablecom and subsidiaries, and restrictions on dividends and
distributions by Cablecom subsidiaries.
NTLCL entered into a pound sterling 1,300.0 million ($1,922.3 million) credit
agreement with a group of banks dated May 30, 2000. Pursuant to the credit
agreement, in connection with the issuance in October 2000 of $500.0 million
aggregate principal amount NTL Communications Corp. 11-7/8% notes, the
commitment has been reduced by pound sterling 161.8 million ($239.3 million). As
of September 30, 2000, there were no amounts borrowed under this agreement.
NTLCL and other members of the UK Group (as defined above) may utilize the
proceeds under this credit agreement to finance the working capital requirements
of the UK Group, provided that in no event shall the proceeds be used for a
purpose other than to finance the construction, capital expenditure and working
capital needs of a cable television or telephone or telecommunications business,
or a related business, in the United Kingdom or Ireland. Interest is payable at
least every six months at LIBOR plus a margin rate of 4.5% per annum. The margin
rate shall increase by 0.5% on the three month anniversary of the initial
advance and by an additional 0.5% on each subsequent three month anniversary, up
to a maximum total interest rate of 16% per annum. The unused portion of the
commitment is subject to a commitment fee of 0.75% payable quarterly. Principal
is due in full on March 31, 2006. The credit agreement contains various
financial and other covenants with respect to the UK Group, and restrictions on
dividends and distributions by the UK Group.
13
<PAGE> 15
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - LONG-TERM DEBT (CONTINUED)
In March 2000, the Company redeemed in full its Variable Rate Redeemable
Guaranteed Loan Notes, principal amount of IRpound sterling 60.0 million ($67.3
million), plus accrued and unpaid interest using cash held in escrow.
NOTE G - NON-CASH COMPENSATION
In September 2000, the Board of Directors approved modifications to certain
stock options granted to employees in November 1999 through May 2000. Options to
purchase an aggregate of approximately 16.5 million shares of the Company's
common stock with a weighted average exercise price of $64.39 per share were
modified such that the exercise price was reduced to $44.50 per share and the
vesting schedule was delayed and/or lengthened. This change did not affect the
exercise price of options granted to George Blumenthal, Chairman of the Board
and Treasurer, Barclay Knapp, President and Chief Executive Officer and the
Company's Directors. In accordance with APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations, the Company is
accounting for these options as a variable plan beginning in September 2000.
The Company will recognize non-cash compensation expense for the difference
between the quoted market price of the Company's common stock and the exercise
price of the vested options while the options remain outstanding. As of
September 30, 2000, the Company recognized non-cash compensation expense of
$2.2 million.
NOTE H - COMPREHENSIVE LOSS
The Company's comprehensive loss for the three months ended September 30, 2000
and 1999 was $(980.7) million and $(36.5) million, respectively. The Company's
comprehensive loss for the nine months ended September 30, 2000 and 1999 was
$(2,255.3) million and $(822.3) million, respectively.
NOTE I - SEGMENT DATA
<TABLE>
<CAPTION>
RESIDENTIAL
TELECOMS CORPORATE
AND NATIONAL AND
BROADCAST TELEVISION TELECOMS OTHER TOTAL
--------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C> <C> <C>
Nine months ended September 30, 2000
Revenues $164.9 $1,238.8 $584.2 $ - $ 1,987.9
EBITDA (1) 87.3 353.8 199.4 (389.7) 250.8
Nine months ended September 30, 1999
Revenues $144.9 $ 585.6 $360.2 $ - $ 1,090.7
EBITDA (1) 81.6 163.2 90.5 (200.0) 135.3
Total assets
September 30, 2000 $616.9 $21,766.9 $1,495.8 $ 3,915.6 $ 27,795.2
December 31, 1999 748.7 6,106.5 1,180.8 4,175.6 12,211.6
</TABLE>
(1) Represents earnings before interest, taxes, depreciation and amortization,
corporate expenses, franchise fees, non-cash compensation, other charges
and foreign currency transaction gains (losses).
14
<PAGE> 16
NTL Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE I - SEGMENT DATA (CONTINUED)
The reconciliation of segment combined EBITDA to loss before income tax benefit
is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------
2000 1999
------------------------------------------------------
(in millions)
<S> <C> <C>
Segment combined EBITDA $250.8 $ 135.3
(Add) deduct:
Franchise fees - 22.3
Non-cash compensation 2.2 -
Other charges 19.7 -
Corporate expenses 30.7 21.1
Depreciation and amortization 1,245.5 533.6
Interest income and other, net (48.1) (34.1)
Interest expense 729.1 485.2
Foreign currency transaction (gains) losses 89.3 (35.8)
----------------------------------------------------
2,068.4 992.3
----------------------------------------------------
(Loss) before income tax benefit $(1,817.6) $(857.0)
====================================================
</TABLE>
NOTE J- COMMITMENTS AND CONTINGENT LIABILITIES
At September 30, 2000, the Company was committed to pay approximately $1,300.0
million for equipment and services, which includes certain contracts for
services through 2008.
A wholly-owned indirect subsidiary of the Company, Premium TV Limited, has
entered into media partnerships with various United Kingdom football clubs
whereby Premium TV Limited will receive certain marketing and sponsorship
rights. Premium TV Limited will provide loan facilities to the clubs, repayable
through the issue of shares in the football clubs, as well as provide funding to
joint ventures with the clubs. At September 30, 2000, the aggregate commitment
was pound sterling 58.5 million ($86.5 million). In addition, Premium TV Limited
expects to pay fees of up to pound sterling 65.0 million ($96.1 million) over
five years for the right to enter into a joint venture with the Football League
to set-up an Internet portal for all 72 Football League clubs who wish to
participate.
In August 2000, the Company announced that it had signed an agreement in
partnership with Morgan Stanley Dean Witter Private Equity to buy France
Telecom's 49.9% stake in Noos, the leading broadband company in France offering
cable television, telephony and Internet services. The Company will acquire 27%
of Noos for approximately $627.0 million. The Company will issue 12-month
redeemable preferred stock to France Telecom for 80% of the $627.0 million
consideration and 6-year redeemable preferred stock for the remaining 20%.
The Company is involved in certain disputes and litigation arising in the
ordinary course of its business. None of these matters are expected to have a
material adverse effect on the Company's financial position, results of
operations or cash flows.
15
<PAGE> 17
NTL Incorporated and Subsidiaries
Notes to Consdensed Consolidated Financial Statements (unaudited) (continued)
NOTE K - SUBSEQUENT EVENT
In October 2000, NTL Communications Corp. issued $500.0 million principal amount
of 11-7/8% Senior Notes due 2010. The Notes were issued at a price of 97.872% of
the aggregate principal amount at maturity or $489.4 million. The underwriters'
discount and commissions were $11.3 million. Interest is payable semiannually in
cash at the rate of 11-7/8% per annum beginning on April 1, 2001. The Notes may
be redeemed at the Company's option, in whole or in part, at any time on or
after October 1, 2005. Also in October 2000, pound sterling 110.6 million
($163.5 million) of the principal amount outstanding under the NTL Business and
NTLCL credit agreement was repaid.
16
<PAGE> 18
NTL Incorporated and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The following table shows the cable television and telephony customer statistics
for NTL in the United Kingdom and Ireland:
<TABLE>
<CAPTION>
====================================================================================================================================
CABLE TELEVISION AND TELEPHONY CUSTOMERS AS OF SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
"Original" 1998 Cablelink and UK and Ireland
NTL(1) Acquisitions(2) ConsumerCo(3) BT Cable(4) Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Homes in Franchise (5) 2,090,000 3,037,600 6,049,600 640,500 11,817,700
------------------------------------------------------------------------------------------------------------------------------------
Homes passed 1,423,500 2,427,500 4,308,200 605,500 8,764,700
------------------------------------------------------------------------------------------------------------------------------------
Homes marketed (Tel.) 1,230,500 2,101,600 4,058,400 1,000 7,391,500
------------------------------------------------------------------------------------------------------------------------------------
Homes marketed (CATV) 1,230,500 2,161,900 4,058,400 560,600 8,011,400
------------------------------------------------------------------------------------------------------------------------------------
Total customers (6) 615,000 893,500 1,177,400 432,000 3,117,900
------------------------------------------------------------------------------------------------------------------------------------
Dual 566,800 518,600 812,600 200 1,898,200
------------------------------------------------------------------------------------------------------------------------------------
Telephone-only (6) 24,300 288,500 234,400 0 547,200
------------------------------------------------------------------------------------------------------------------------------------
Cable-only 23,900 86,400 130,400 431,800 672,500
------------------------------------------------------------------------------------------------------------------------------------
Total RGUs(7) 1,181,800 1,412,100 1,990,000 432,200 5,016,100
------------------------------------------------------------------------------------------------------------------------------------
Net Adds (Customers)(8) 18,800 32,300 3,600 7,900 62,600
------------------------------------------------------------------------------------------------------------------------------------
Net Adds (RGU)(8) 35,200 79,000 16,300 8,100 138,600
------------------------------------------------------------------------------------------------------------------------------------
Customer penetration 50.0% 41.3% 29.0% 77.1% 38.9%
------------------------------------------------------------------------------------------------------------------------------------
RGU penetration 96.0% 65.3% 49.0% 77.1% 62.6%
------------------------------------------------------------------------------------------------------------------------------------
Telephone penetration 48.0% 38.4% 25.8% 20.0% 33.1%
------------------------------------------------------------------------------------------------------------------------------------
Cable penetration 48.0% 28.0% 23.2% 77.1% 32.1%
====================================================================================================================================
</TABLE>
(1) Data for franchises which NTL has been developing since 1993
(2) Data for the following franchises: Triangle, ComTel and Diamond
Cable.
(3) Data for Cable & Wireless ConsumerCo franchises acquired in May 2000.
(4) Data for CableLink (Ireland) and BT Cable (Westminster/Milton
Keynes).
(5) Franchise home information from The Media Map Datafile 2000.
(6) Excludes approximately 454,000 off-net telephony customers and over
1.5 million Internet customers.
(7) An RGU is one cable television account or one telephone account; a
dual customer generates two RGUs.
(8) Total additional customers and RGU's, respectively, as compared to
June 30, 2000.
17
<PAGE> 19
NTL Incorporated and Subsidiaries
The following table illustrates NTL's broadband position in Western Europe
outside of the United Kingdom and Ireland:
<TABLE>
<CAPTION>
====================================================================================================================================
CABLE TELEVISION AND INTERNET CUSTOMERS AS OF SEPTEMBER 30, 2000 (IN 000S)
------------------------------------------------------------------------------------------------------------------------------------
(Switzerland) (France) (France) (Germany) (Sweden) NTL Europe
Cablecom(1) 1G(2) Noos(3) eKabel(4) B2(5) Gross (6)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ownership Interest 100% (1) 100% 27% 32.5% 25% n/a
------------------------------------------------------------------------------------------------------------------------------------
Homes in Franchise (7) 1,875 287 3,179 2,800 247 8,388
------------------------------------------------------------------------------------------------------------------------------------
Homes passed 1,875 265 2,563 1,828 45 6,576
------------------------------------------------------------------------------------------------------------------------------------
Homes marketed (CATV) 1,706 212 2,563 1,828 0 6,309
------------------------------------------------------------------------------------------------------------------------------------
Customers (CATV) 1,555 48 730 1,294 0 3,627
------------------------------------------------------------------------------------------------------------------------------------
Penetration (CATV) 91% 23% 28% 71% n/a 57%
------------------------------------------------------------------------------------------------------------------------------------
Internet - Dial-Up 154 0 0 0 0 154
------------------------------------------------------------------------------------------------------------------------------------
Internet - Cable/Ethernet 19 0 49 0 8 76
====================================================================================================================================
</TABLE>
(1) Cablecom (Switzerland) is 100% owned by NTL, however, Cablecom retains
various ownership interests in several smaller Swiss cable systems.
Historically, Cablecom has reported customer data reflecting the equity
interest applicable to each system and as of September 30, 2000 was as
follows: 1,690,500 franchise homes, 1,690,500 homes passed, 1,547,900
CATV homes marketed and 1,404,300 CATV customers (includes an ongoing
audit adjustment at Cablecom of an additional 95,900 equity homes passed
and 92,100 equity homes marketed). During the third quarter Cablecom
acquired 15,100 equity cable subscribers and 6,700 equity Internet
customers via the acquisition of several cable systems. Data in the above
table consolidates all of the systems in which Cablecom has an ownership
interest.
(2) The "1G Networks" (France) were acquired by NTL in 1999.
(3) Proforma for the closing of Noos (France). NTL recently agreed to acquire
a 27% interest in Noos.
(4) NTL acquired a 32.5% interest in eKabel (Germany) in September 2000.
(5) NTL purchased a 25% equity interest in Bredbandsbolaget (B2)(Sweden) in
March 2000.
(6) Gross subscriber information assumes NTL owns 100% of B2, Noos, eKabel
and each of the cable systems in which Cablecom retains an ownership
interest.
(7) Franchise home information is from Company records.
The following table shows the Internet statistics for operations wholly-owned by
NTL:
<TABLE>
<CAPTION>
================================================================================================================
INTERNET CUSTOMERS AS OF SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------------------
NTLWORLD & UK
NTL DIRECT WHOLESALE SWITZERLAND TOTAL NTL
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Internet Customers 665,100 853,500 172,500 1,691,100
================================================================================================================
</TABLE>
18
<PAGE> 20
NTL Incorporated and Subsidiaries
On May 18, 2000, NTL Incorporated completed a corporate restructuring to create
a holding company structure. The holding company restructuring was accomplished
through a merger so that all the stockholders of NTL Incorporated at the
effective time of the merger became stockholders of the new holding company, and
NTL Incorporated became a subsidiary of the new holding company. The new holding
company has taken the name NTL Incorporated (and together with its subsidiaries,
the "Company") and the holding company's subsidiary simultaneously changed its
name to NTL (Delaware), Inc. (and together with its subsidiaries, "NTL
Delaware").
RESULTS OF OPERATIONS
As a result of the completion of the acquisitions of Diamond Cable
Communications Limited ("Diamond") in March 1999, the Australian National
Transmission Network ("NTL Australia") in April 1999, Cablelink Limited
("Cablelink") in July 1999, the "1G Networks" of France Telecom in August and
December 1999, NTL Business Limited (formerly Workplace Technologies plc) ("NTL
Business") in September 1999, the cable assets of the Cablecom Group
("Cablecom") in March 2000 and the consumer cable telephone, Internet and
television operations of Cable & Wireless Communications plc ("CWC") (the
operations acquired from CWC are called "ConsumerCo") in May 2000, the Company
consolidated the results of operations of these businesses from the dates of
acquisition.
A significant component of the results since May 2000 is associated with the
acquisition of ConsumerCo. Prior to the acquisition, ConsumerCo had been losing
customers on a quarterly basis. In the first full quarter after the acquisition,
ConsumerCo added 3,600 dual customers and 16,300 RGUs, as well as materially
reduced monthly churn. The Company's immediate focus is on the following
priorities: reducing the fault rate, improving the installation experience,
continuing the digital rollout and improving the value proposition for the
service bundle. These are all factors that will reduce churn and increase
penetration. However, they will increase costs through the second quarter of
2001.
On November 2, 2000, the Company announced the completion of a consolidation
review. Based on a comprehensive review of the combined company following the
acquisition of ConsumerCo and the integration of several other acquired
businesses over the last 18 months, the Company identified significant
efficiency improvements and cost savings. These include the elimination of
duplicate technologies and processes, consolidation of support functions and
reductions in levels of management. Approximately 1,300 roles will become
redundant over the next 15 months as part of the cost savings. The Company
expects to realize the cost savings beginning in the latter half of 2001. The
Company expects to incur a restructuring charge in fiscal 2000 as a result of
this review, although to date the Company is still in the process of finalizing
this charge.
Three Months Ended September 30, 2000 and 1999
Residential telecommunications and television revenues increased to $566.0
million from $220.3 million as a result of acquisitions and from customer growth
that increased the Company's current revenue stream. The 2000 and 1999 revenue
includes $380.6 million and $53.9 million, respectively, from acquired
companies. The Company expects its customer base to continue to increase, which
will drive further revenue growth as the Company continues to connect customers
to its broadband network. The Company also expects revenue growth from the
continuing rollout of its cable modem and digital cable television services.
19
<PAGE> 21
NTL Incorporated and Subsidiaries
National and international telecommunications revenues increased to $210.4
million from $141.6 million as a result of acquisitions and from increases in
business telecommunications revenues, Internet services revenues and carrier
services revenues. The 2000 and 1999 revenue includes $67.0 million and $21.0
million, respectively, from acquired companies. Business telecommunications and
Internet services revenues increased primarily as a result of customer growth.
The Company expects its business telecommunications and Internet services
customer base to continue to increase, which will drive further revenue growth.
The Company continues to focus specific sales and marketing effort on business
customers and for Internet services in its completed network. Carrier services
revenues increased due to growth in voice, video and data services provided by
the Company's wholesale operation to broadcasters and telephone companies,
respectively. Revenue growth in carrier services is primarily dependent upon the
Company's ability to continue to attract new customers and expand services to
existing customers.
Broadcast transmission and other revenues decreased to $54.3 million from $55.2
million. Included in these amounts are revenues of $13.6 million and $14.9
million from NTL Australia in 2000 and 1999, respectively. These decreases are
entirely due to exchange rate fluctuations since these revenues increased pound
sterling 2.4 million and A$0.8 million in the United Kingdom and NTL Australia,
respectively. The United Kingdom increase reflects increases in broadcast
television and FM radio customers and accounts, which exceeded price cap
reductions in the Company's regulated services. The Company expects its digital
broadcasting services to increase in the future.
Operating expenses increased to $394.1 million from $206.8 million primarily as
a result of costs from acquired businesses. The 2000 and 1999 expense includes
$233.4 million and $47.5 million, respectively, from acquired companies.
Selling, general and administrative expenses increased to $344.7 million from
$144.9 million as a result of increases in telecommunications and CATV sales and
marketing costs and increases in additional personnel and overhead to service
the increasing customer base. The 2000 and 1999 expense includes $151.7 million
and $19.0 million, respectively, from acquired companies.
Pursuant to the terms of various United Kingdom licenses, the Company incurred
license fees paid to the Independent Television Commission ("ITC") to operate as
the exclusive service provider in certain of its franchise areas. Upon a request
by the Company in 1999, the ITC converted all of the Company's fee bearing
exclusive licenses to non-exclusive licenses at the end of 1999, and the
Company's liability for license payments ceased upon the conversion. Franchise
fees were $7.7 million in 1999.
In September 2000, the Board of Directors approved modifications to certain
stock options granted to employees in November 1999 through May 2000. Options to
purchase an aggregate of approximately 16.5 million shares of the Company's
common stock with a weighted average exercise price of $64.39 per share were
modified such that the exercise price was reduced to $44.50 per share and the
vesting schedule was delayed and/or lengthened. This change did not affect the
exercise price of options granted to George Blumenthal, Chairman of the Board
and Treasurer, Barclay Knapp, President and Chief Executive Officer and the
Company's Directors. In accordance with APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations, the Company is
accounting for these options as a variable plan beginning in September 2000.
The Company will recognize non-cash compensation expense for the difference
between the quoted market price of the Company's common stock and the exercise
price of the vested options while the options remain outstanding. As of
September 30, 2000, the Company recognized non-cash compensation expense of
$2.2 million.
20
<PAGE> 22
NTL Incorporated and Subsidiaries
One of the Company's major costs has been for the integration of acquired
companies' information technology systems, while simultaneously upgrading them
for digital television, interactive services and video-on-demand. Other charges
of $6.0 million in 2000 were incurred for this integration effort.
Corporate expenses increased to $9.5 million from $7.4 million due to an
increase in various overhead costs.
Depreciation and amortization expense increased to $600.0 million from $201.9
million due to an increase in depreciation of telecommunications and CATV
equipment. The 2000 and 1999 expense includes $438.9 million and $71.3 million,
respectively, from acquired companies, including amortization of acquisition
related intangibles.
Interest income and other, net decreased to expense of $1.2 million from income
of $13.4 million as a result of increases in the net losses of affiliates
accounted for by the equity method and decreases in interest income.
Interest expense increased to $280.9 million from $186.6 million due to the
issuance of additional debt, and the increase in the accretion of original issue
discount on the deferred coupon notes. The 2000 and 1999 expense includes $124.0
million and $40.9 million, respectively, related to acquisitions. Interest of
$171.8 million and $79.9 million was paid in the three months ended September
30, 2000 and 1999, respectively.
Foreign currency transaction gains decreased to $23.1 million from $46.7 million
primarily due to the effect of unfavorable changes in exchange rates. The
Company's results of operations are impacted by changes in foreign currency
exchange rates as follows. NTL Incorporated and certain of its subsidiaries have
cash, cash equivalents and debt denominated in foreign currencies that are
effected by changes in exchange rates. In addition, foreign subsidiaries of the
Company whose functional currency is not the U.S. dollar hold cash, cash
equivalents and debt denominated in U.S. dollars which are effected by changes
in exchange rates.
Nine Months Ended September 30, 2000 and 1999
Residential telecommunications and television revenues increased to $1,238.8
million from $585.6 million as a result of acquisitions and from customer growth
that increased the Company's current revenue stream. The 2000 and 1999 revenue
includes $678.1 million and $103.2 million, respectively, from acquired
companies. The Company expects its customer base to continue to increase, which
will drive further revenue growth as the Company continues to connect customers
to its broadband network. The Company also expects revenue growth from the
continuing rollout of its cable modem and digital cable television services.
National and international telecommunications revenues increased to $584.2
million from $360.2 million as a result of acquisitions and from increases in
business telecommunications revenues, Internet services revenues and carrier
services revenues. The 2000 and 1999 revenue includes $163.9 million and $33.6
million, respectively, from acquired companies. Business telecommunications and
Internet services revenues increased primarily as a result of customer growth.
The Company expects its business telecommunications and Internet services
customer base to continue to increase, which will drive further revenue growth.
The Company continues to focus specific sales and marketing effort on business
customers and for Internet services in its completed network. Carrier services
revenues increased due to growth in voice, video and data services provided by
the Company's wholesale operation to broadcasters and telephone companies,
respectively. Revenue growth in carrier services is primarily dependent upon the
Company's ability to continue to attract new customers and expand services to
existing customers.
21
<PAGE> 23
NTL Incorporated and Subsidiaries
Broadcast transmission and other revenues increased to $164.9 million from
$144.9 million due to revenues of $42.0 million and $25.0 million from NTL
Australia in 2000 and in 1999, respectively, and from increases in broadcast
television and FM radio customers and accounts, which exceeded price cap
reductions in the Company's regulated services. The Company expects its digital
broadcasting services to increase in the future.
Operating expenses increased to $967.8 million from $536.2 million as a result
of increases in interconnection costs and programming costs due to customer
growth. The 2000 and 1999 expense includes $424.3 million and $76.1 million,
respectively, from acquired companies.
Selling, general and administrative expenses increased to $769.3 million from
$419.2 million as a result of increases in telecommunications and CATV sales and
marketing costs and increases in additional personnel and overhead to service
the increasing customer base. The 2000 and 1999 expense includes $300.8 million
and $40.7 million, respectively, from acquired companies.
Pursuant to the terms of various United Kingdom licenses, the Company incurred
license fees paid to the ITC to operate as the exclusive service provider in
certain of its franchise areas. Upon a request by the Company in 1999, the ITC
converted all of the Company's fee bearing exclusive licenses to non-exclusive
licenses at the end of 1999, and the Company's liability for license payments
ceased upon the conversion. Franchise fees were $22.3 million in 1999.
In September 2000, the Board of Directors approved modifications to certain
stock options granted to employees in November 1999 through May 2000. Options to
purchase an aggregate of approximately 16.5 million shares of the Company's
common stock with a weighted average exercise price of $64.39 per share were
modified such that the exercise price was reduced to $44.50 per share and the
vesting schedule was delayed and/or lengthened. This change did not affect the
exercise price of options granted to George Blumenthal, Chairman of the Board
and Treasurer, Barclay Knapp, President and Chief Executive Officer and the
Company's Directors. In accordance with APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations, the Company is
accounting for these options as a variable plan beginning in September 2000.
The Company will recognize non-cash compensation expense for the difference
between the quoted market price of the Company's common stock and the exercise
price of the vested options while the options remain outstanding. As of
September 30, 2000, the Company recognized non-cash compensation expense of
$2.2 million.
One of the Company's major costs has been for the integration of acquired
companies' information technology systems, while simultaneously upgrading them
for digital television, interactive services and video-on-demand. Other charges
of $19.7 million in 2000 were incurred for this integration effort.
Corporate expenses increased to $30.7 million from $21.1 million due to an
increase in various overhead costs.
Depreciation and amortization expense increased to $1,245.5 million from $533.6
million due to an increase in depreciation of telecommunications and CATV
equipment. The 2000 and 1999 expense includes $755.3 million and $151.4 million,
respectively, from acquired companies, including amortization of acquisition
related intangibles.
Interest expense increased to $729.1 million from $485.2 million due to the
issuance of additional debt, and the increase in the accretion of original issue
discount on the deferred coupon notes. The 2000 and 1999 expense includes $252.8
million and $93.2 million, respectively, related to acquisitions. Interest of
$395.8 million and $172.1 million was paid in the nine months ended September
30, 2000 and 1999, respectively.
22
<PAGE> 24
NTL Incorporated and Subsidiaries
Foreign currency transaction gains (losses) decreased to a loss of $89.3 million
from a gain of $35.8 million primarily due to the effect of unfavorable changes
in exchange rates. The Company's results of operations are impacted by changes
in foreign currency exchange rates as follows. NTL Incorporated and certain of
its subsidiaries have cash, cash equivalents and debt denominated in foreign
currencies that are effected by changes in exchange rates. In addition, foreign
subsidiaries of the Company whose functional currency is not the U.S. dollar
hold cash, cash equivalents and debt denominated in U.S. dollars which are
effected by changes in exchange rates.
LIQUIDITY AND CAPITAL RESOURCES
The Company will continue to require significant amounts of capital to finance
construction of its local and national networks, for connection of telephone,
telecommunications, Internet and CATV customers to the networks, for other
capital expenditures and for debt service. The Company estimates that these
requirements, net of cash from operations, will aggregate up to approximately
$1,800.0 million from October 1, 2000 to September 30, 2001. The Company's
commitments at September 30, 2000 for equipment and services through September
30, 2001 are included in the anticipated requirements. The Company had $526.7
million in cash and securities on hand at September 30, 2000. The Company
expects to utilize the proceeds from the issuance of notes in October 2000 and a
portion of its bank facilities to fund the balance of these requirements.
In October 2000, NTL Communications Corp. ("NTL Communications") issued $500.0
million principal amount of 11-7/8% Senior Notes due 2010. The Notes were issued
at a price of 97.872% of the aggregate principal amount at maturity or $489.4
million. The underwriter's discount and commissions were $11.3 million. Interest
is payable semiannually in cash at the rate of 11-7/8% per annum beginning on
April 1, 2001. The Notes may be redeemed at the Company's option, in whole or in
part, at any time on or after October 1, 2005. Also in October 2000, pound
sterling 110.6 million ($163.5 million) of the principal amount outstanding
under the NTL Business Limited ("NTL Business") and NTL Communications Limited
("NTLCL") credit agreement was repaid.
NTL Business and NTLCL, wholly-owned indirect subsidiaries of the Company, have
the option to draw on the unused portion of the pound sterling 2,500.0 million
($3,696.8 million) commitment amounting to pound sterling 586.7 million ($867.6
million) at October 31, 2000. The unused portion of the commitment is available
for refinancing ConsumerCo indebtedness and for working capital requirements of
the UK Group, as defined. For purposes of this credit agreement, Diamond Cable
Communications Limited and subsidiaries, NTL (Triangle) LLC ("NTL Triangle") and
subsidiaries and certain other entities are excluded from the UK Group.
NTLCL entered into a pound sterling 1,300.0 million ($1,922.3 million) credit
agreement with a group of banks dated May 30, 2000. Pursuant to the credit
agreement, in connection with NTL Communications' issuance in October 2000 of
$500.0 million aggregate principal amount of 11-7/8% notes, the commitment has
been reduced by pound sterling 161.8 million ($239.3 million). As of September
30, 2000, there were no amounts borrowed under this agreement. NTLCL and other
members of the UK Group (as defined above) may utilize the proceeds under this
credit agreement to finance the working capital requirements of the UK Group,
provided that in no event shall the proceeds be used for a purpose other than to
finance the construction, capital expenditure and working capital needs of a
cable television or telephone or telecommunications business, or a related
business, in the United Kingdom or Ireland. Interest is payable at least every
six months at LIBOR plus a margin rate of 4.5% per annum. The margin rate shall
increase by 0.5% on the three month anniversary of the initial advance and by an
additional 0.5% on each subsequent three month anniversary, up to a maximum
total interest rate of 16% per annum. The unused portion of the commitment is
subject to a commitment fee of 0.75% payable quarterly. Principal is due in full
on March 31, 2006.
23
<PAGE> 25
NTL Incorporated and Subsidiaries
Cablecom has the option to draw on a revolving loan facility of up to CHF
1,400.0 million ($810.9 million). The revolving facility is intended to finance
operating expenses, working capital and other capital expenditures of Cablecom
and subsidiaries and for their general corporate financing requirements. As of
September 30, 2000, Cablecom had borrowed CHF 370.0 million ($214.3 million)
under the revolving loan facility with an effective interest rate of 5.89%. The
revolving facility is available until May 2003. The interest rate, interest
payment requirements and principal payments for the revolving facility are the
same as for the term loan facility. The revolving facility includes a commitment
fee of 0.75% payable quarterly on the unused portion of the revolving facility
commitment, which is reduced to 0.50% when over 50% of the commitment is
utilized.
Regarding the Company's estimated cash requirements described above, there can
be no assurance that: (a) actual construction costs will not exceed the amounts
estimated or that additional funding substantially in excess of the amounts
estimated will not be required, (b) conditions precedent to advances under
credit facilities will be satisfied when funds are required, (c) the Company and
its subsidiaries will be able to generate sufficient cash from operations to
meet capital requirements, debt service and other obligations when required, (d)
the Company will be able to access such cash flow or (e) the Company will not
incur losses from its exposure to exchange rate fluctuations or be adversely
affected by interest rate fluctuations.
A wholly-owned indirect subsidiary of the Company, Premium TV Limited, has
entered into media partnerships with United Kingdom football clubs whereby
Premium TV Limited will receive certain marketing and sponsorship rights.
Premium TV Limited will provide loan facilities to the clubs, repayable through
the issue of shares in the football clubs, as well as provide funding to joint
ventures with the clubs. At September 30, 2000, the aggregate commitment was
pound sterling 58.5 million ($86.5 million). In addition, Premium TV Limited
expects to pay fees of up to pound sterling 65.0 million ($96.1 million) over
five years for the right to enter into a joint venture with the Football League
to set-up an Internet portal for all 72 Football League clubs who wish to
participate.
In August 2000, the Company announced that it had signed an agreement in
partnership with Morgan Stanley Dean Witter Private Equity to buy France
Telecom's 49.9% stake in Noos, the leading broadband company in France offering
cable television, telephony and Internet services. The Company will acquire 27%
of Noos for approximately $627.0 million. The Company will issue 12-month
redeemable preferred stock to France Telecom for 80% of the $627.0 million
consideration and 6-year redeemable preferred stock for the remaining 20%.
The accreted value at September 30, 2000 of the Company's consolidated long-term
indebtedness, including the redeemable preferred stock, is $15,807.4 million,
representing approximately 62.3% of total capitalization. The following
summarizes the terms of the significant notes and redeemable preferred stock
issued by the Company and its subsidiaries.
NTL Incorporated:
(1) Senior Redeemable Exchangeable Preferred Stock due February 15, 2009,
stated value of $100.0 million, dividends accrue at 13% per annum
payable quarterly in arrears, at the Company's option until February 15,
2004, dividends may be paid in cash, by the issuance of additional
shares or in any combination of the foregoing, redeemable at the
Company's option on or after February 15, 2002, and on any dividend
payment date the Company may exchange all of the outstanding shares for
13% debentures due 2009;
24
<PAGE> 26
NTL Incorporated and Subsidiaries
(2) Cumulative Preferred Stock, stated value $1,850.0 million, dividends
accrue at 5% per annum and are cumulative on a quarterly basis,
dividends are payable in additional shares of Cumulative Preferred Stock
in March 2002, holders other than any commercial banks or their
affiliates (a "Qualified Holder") may at any time after September 2000
elect, subject to certain conditions, for the Cumulative Preferred Stock
to be exchanged for up to a 50% interest in a new company which will own
certain or all of the Company's broadband communications, broadcast and
cable television interests in Continental Europe outside of France,
redeemable for cash in March 2002 at the option of a Qualified Holder;
NTL Delaware:
(3) 5-3/4% Convertible Subordinated Notes due December 15, 2009, principal
amount at maturity of $1,200.0 million, interest payable semiannually
from June 15, 2000, redeemable at the Company's option on or after
December 18, 2002, convertible after March 21, 2000 into shares of the
Company's common stock at a conversion price of $108.18 per share;
NTL Business and NTLCL:
(4) Credit Agreement of pound sterling 2,500.0 million ($3,696.8 million),
of which pound sterling 2,012.5 million ($2,976.0 million) was
outstanding at September 30, 2000, interest payable at least every six
months at LIBOR plus a margin rate of 2.25% per annum, which is subject
to adjustment, effective interest rate at September 30, 2000 was 8.32%,
the unused portion of the commitment is subject to a commitment fee of
0.75% payable quarterly, which is reduced to 0.50% when over 50% of the
commitment is utilized, principal is due in six quarterly installments
beginning on June 30, 2004;
Cablecom:
(5) Term Loan Facility of CHF 2,700.0 million ($1,563.8 million), interest
payable at least every six months at Swiss LIBOR plus a margin rate of
2.5% per annum, which is subject to adjustment after March 2001,
effective interest rate of 5.98% at September 30, 2000, principal is due
over six years in quarterly installments beginning on March 31, 2004;
NTL Communications:
(6) 12-3/4% Senior Deferred Coupon Notes due April 15, 2005, principal
amount at maturity of $277.8 million, interest payable semiannually
beginning on October 15, 2000, redeemable at the Company's option on or
after April 15, 2000;
(7) 11-1/2% Senior Deferred Coupon Notes due February 1, 2006, principal
amount at maturity of $1,050.0 million, interest payable semiannually
beginning on August 1, 2001, redeemable at the Company's option on or
after February 1, 2001;
(8) 10% Senior Notes due February 15, 2007, principal amount at maturity of
$400.0 million, interest payable semiannually from August 15, 1997,
redeemable at the Company's option on or after February 15, 2002;
(9) 9-1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of pound sterling 125.0 million ($184.8 million), interest
payable semiannually from October 1, 1998, redeemable at the Company's
option on or after April 1, 2003;
25
<PAGE> 27
NTL Incorporated and Subsidiaries
(10) 10-3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008,
principal amount at maturity of pound sterling 300.0 million ($443.6
million), interest payable semiannually beginning on October 1, 2003,
redeemable at the Company's option on or after April 1, 2003;
(11) 9-3/4% Senior Deferred Coupon Notes due April 1, 2008, principal amount
at maturity of $1,300.0 million, interest payable semiannually beginning
on October 1, 2003, redeemable at the Company's option on or after April
1, 2003;
(12) 9-3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009,
principal amount at maturity of pound sterling 330.0 million ($488.0
million), interest payable semiannually beginning on October 15, 2004,
redeemable at the Company's option on or after April 15, 2004;
(13) 11-1/2% Senior Notes due October 1, 2008, principal amount at maturity
of $625.0 million, interest payable semiannually from April 1, 1999,
redeemable at the Company's option on or after October 1, 2003;
(14) 12-3/8% Senior Deferred Coupon Notes due October 1, 2008, principal
amount at maturity of $450.0 million, interest payable semiannually
beginning on April 1, 2004, redeemable at the Company's option on or
after October 1, 2003;
(15) 7% Convertible Subordinated Notes due December 15, 2008, principal
amount at maturity of $599.3 million, interest payable semiannually from
June 15, 1999, convertible into shares of the Company's common stock at
a conversion price of $39.20 per share, redeemable at the Company's
option on or after December 15, 2001;
(16) 9-1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of (Euro)250.0 million ($220.9 million), interest payable
semiannually from May 15, 2000;
(17) 9-7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of (Euro)350.0 million ($309.3 million), interest payable
semiannually from May 15, 2000, redeemable at the Company's option on or
after November 15, 2004;
(18) 11-1/2% Senior Deferred Coupon Euro Notes due November 15, 2009,
principal amount at maturity of (Euro)210.0 million ($185.6 million),
interest payable semiannually beginning on May 15, 2005, redeemable at
the Company's option on or after November 15, 2004;
NTL Triangle:
(19) 11.2% Senior Discount Debentures due November 15, 2007, principal amount
at maturity of $517.3 million, interest payable semiannually beginning
on May 15, 2001, redeemable at NTL Triangle's option after November 15,
2000;
Diamond:
(20) 13-1/4% Senior Discount Notes due September 30, 2004, principal amount
at maturity of $285.1 million, interest payable semiannually from June
30, 2000, redeemable at Diamond's option after September 30, 1999;
26
<PAGE> 28
NTL Incorporated and Subsidiaries
(21) 11-3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531.0 million, interest payable semiannually beginning on
June 15, 2001, redeemable at Diamond's option on or after December 15,
2000;
(22) 10-3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $420.5 million, interest payable semiannually beginning on
August 15, 2002, redeemable at Diamond's option on or after December 15,
2002;
(23) 10% Senior Sterling Notes due February 1, 2008, issued by Diamond
Holdings plc, a wholly-owned subsidiary of Diamond, principal amount at
maturity of pound sterling 135.0 million ($199.6 million), interest
payable semiannually from August 1, 1998, redeemable at Diamond's option
on or after February 1, 2003; and
(24) 9-1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings
plc, principal amount at maturity of $110.0 million, interest payable
semiannually from August 1, 1998, redeemable at Diamond's option on or
after February 1, 2003.
Management does not anticipate that the Company and its subsidiaries will
generate sufficient cash flow from operations to repay at maturity the entire
principal amount of the outstanding indebtedness of the Company and its
subsidiaries. Accordingly, the Company may be required to consider a number of
measures, including: (a) refinancing all or a portion of such indebtedness, (b)
seeking modifications to the terms of such indebtedness, (c) seeking additional
debt financing, which may be subject to obtaining necessary lender consents, (d)
seeking additional equity financing, or (e) a combination of the foregoing.
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries. As a holding company, the Company holds no
significant assets other than cash, securities and its investments in and
advances to its subsidiaries. The Company's ability to pay cash dividends to its
stockholders may be dependent upon the receipt of sufficient funds from its
subsidiaries. In addition, NTL Delaware and NTL Communications are also holding
companies that conduct their operations through their respective subsidiaries.
Accordingly, the ability of NTL Delaware or NTL Communications to make scheduled
interest and principal payments when due to holders of their indebtedness may be
dependent upon the receipt of sufficient funds from their subsidiaries.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Cash (used in) provided by operating activities was $(199.1) million and $41.8
million in the nine months ended September 30, 2000 and 1999, respectively. This
change is primarily due to the increase in the net loss and changes in working
capital as a result of the timing of receipts and disbursements.
Purchases of fixed assets were $1,541.9 million in 2000 and $858.1 million in
1999 as a result of the continuing fixed asset purchases and construction,
including purchases and construction by acquired companies.
Acquisitions, net of cash acquired of $10,954.6 million, proceeds from
borrowings, net of financing costs of $5,784.6 million, proceeds from issuance
of preferred stock of $1,862.0 million, proceeds from issuance of redeemable
preferred stock of $1,850.0 million and proceeds from issuance of common stock
of $2,327.6 million in 2000 were primarily for the acquisitions of Cablecom and
ConsumerCo including the term loan facility and the credit agreement entered
into with groups of banks, the common and preferred shares issued to France
Telecom and the preferred stock issued to France Telecom and certain commercial
banks. Included in proceeds from borrowings, net of financing costs, is $506.1
million of borrowings under credit facilities that was not related to
acquisitions. Included in principal payments is $1,015.7 million of repayments
of amounts borrowed under the NTL Business and NTLCL credit agreement.
27
<PAGE> 29
NTL Incorporated and Subsidiaries
The cash used for other assets of $527.1 million in 2000 was primarily for
investments in and loans to unconsolidated entities. Included in this amount is
a $37.9 million deposit that will be returned 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, the Company's ability to continue to
design networks, install facilities, obtain and maintain any required
governmental 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, and
availability, terms and deployment of capital.
28
<PAGE> 30
NTL Incorporated and Subsidiaries
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
In September 2000, Cablecom entered into zero cost collars to hedge its exposure
to existing floating interest rate indebtedness incurred under its CHF 2,700.0
million ($1,563.8 million) term loan facility and CHF 1,400.0 million ($810.9
million) revolving loan facility. In October 2000, NTL Communications entered
into cross currency swaps for an aggregate of $220.3 million to hedge its
exposure to movements in the U.K. pound to U.S. dollar exchange rate. Also, in
October 2000, the Company sold NTL Triangle's foreign exchange put option
contracts, receiving proceeds of pound sterling 21,000, and NTL Communications'
foreign exchange put option contract, receiving proceeds of pound sterling
618,500.
The following table provides information about the Company's long-term fixed and
variable interest rate debt and derivative financial instruments that are
sensitive to changes in interest rates and foreign currency exchange rates. The
table includes the cross currency swaps entered into in October 2000 and the
$500.0 million senior notes due 2010 issued in October 2000.
29
<PAGE> 31
<TABLE>
<CAPTION>
THREE
MONTHS YEAR YEAR YEAR YEAR YEAR
ENDING ENDING ENDING ENDING ENDING ENDING
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
-------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Long-term Debt Including Current Portion
U.S. dollars
Fixed Rate - - - - $285.1 $808.8
Average Interest Rate 13.25% 12.09%
U.K. pound
Fixed Rate - - - - - -
Average Interest Rate
Average Forward Exchange Rate
Euro
Fixed Rate - - - - - -
Average Interest Rate
Average Forward Exchange Rate
U.K. pound
Variable Rate (pound (pound (pound (pound (pound (pound
sterling)0.9 sterling)4.8 sterling)4.8 sterling)4.8 sterling)90.0 sterling)1,922.5
Average Interest Rate LIBOR LIBOR LIBOR LIBOR LIBOR LIBOR
plus 2.04% plus 2.04% plus 2.04% plus 2.04% plus 2.25% plus 2.25%
Average Forward Exchange Rate 1.4782 1.4832 1.4878 1.4913 1.4956 1.5004
CHF
Variable Rate - - - - CHF122.8 CHF214.9
Average Interest Rate Swiss LIBOR Swiss LIBOR
plus 2.5% plus 2.5%
Average Forward Exchange Rate .6241 .6325
Interest Rate Derivative Financial Instruments Related to Long-term Debt
Interest Rate Swaps
Notional CHF Amount - CHF1,200.0 CHF1,200.0 CHF1,200.0 CHF1,200.0 -
Average Floor Strike Rate 3.27% 3.27% 3.27% 3.27%
Average Cap Strike Rate 5.15% 5.15% 5.15% 5.15%
Currency Swap Agreements Related to Long-term Debt
Receipt of U.S. Dollars
Notional U.K. Pound Amount (pound (pound
sterling)14.3 sterling)135.0 - - - -
Average Contract Rate 1.4685 1.4763
Currency Options Related to Long-term Debt
Receipt of U.S. Dollars
Notional U.K. Pound Amount (pound (pound
sterling)292.4 sterling)47.0 - - - -
Average Contract Rate 1.3573 1.4000
<CAPTION>
FAIR
VALUE
THEREAFTER TOTAL 09/30/99
---------- ----- --------
(IN MILLIONS)
<S> <C> <C> <C>
Long-term Debt Including Current Portion
U.S. dollars
Fixed Rate $7,172.1 $8,266.0 $7,190.7
Average Interest Rate 9.74%
U.K. pound
Fixed Rate (pound sterling)890.0 (pound sterling)890.0 (pound sterling)573.3
Average Interest Rate 10.09%
Average Forward Exchange Rate 1.5348
Euro
Fixed Rate (Euro)810.0 (Euro)810.0 (Euro)635.7
Average Interest Rate 10.10%
Average Forward Exchange Rate .9378
U.K. pound
Variable Rate - (pound sterling)2,027.8 (pound sterling)2,027.8
Average Interest Rate
Average Forward Exchange Rate
CHF
Variable Rate CHF2,732.3 CHF3,070.0 CHF3,070.0
Average Interest Rate Swiss LIBOR
plus 2.5%
Average Forward Exchange Rate .6740
Interest Rate Derivative Financial Instruments Related to Long-term Debt
Interest Rate Swaps
Notional CHF Amount - CHF1,200.0 CHF(1.6)
Average Floor Strike Rate
Average Cap Strike Rate
Currency Swap Agreements Related to Long-term Debt
Receipt of U.S. Dollars
Notional U.K. Pound Amount - (pound sterling)149.3 (pound sterling)0.0
Average Contract Rate
Currency Options Related to Long-term Debt
Receipt of U.S. Dollars
Notional U.K. Pound Amount - (pound sterling)339.4 (pound sterling)0.6
Average Contract Rate
</TABLE>
<PAGE> 32
NTL Incorporated 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.
During the quarter ended September 30, 2000, the Company filed
the following current reports on Form 8-K:
(i) Report dated May 17, 2000 (filed July 13, 2000)
reporting under Item 2, Acquisition or Disposition of
Assets, that the Company amended its Current Report on
Form 8-K, dated May 30, 2000 by filing certain pro forma
financial information of the Company under Item 7,
Financial Statements, Pro Forma Financial Information
and Exhibits.
(ii) Report dated August 3, 2000 (filed August 7, 2000)
reporting under Item 2, Acquisition or Disposition of
Assets, that the Company announced its preliminary
operating statistics for its residential services for
the quarter ended June 30, 2000.
(iii) Report dated August 4, 2000 (filed August 10, 2000)
reporting under Item 2, Acquisition or Disposition of
Assets, that the Company announced that it had signed an
agreement in partnership with Morgan Stanley Dean Witter
Private Equity to buy France Telecom's 49.9% stake in
Noos, France's leading broadband company and under Item
5, Other Events, that the Company announced that it will
build a carrier-grade telecommunications network on the
east cost of Australia in partnership with WIN
Television and Southern Cross Broadcasting.
(iv) Report dated May 17, 2000 (filed August 25, 2000)
reporting under Item 2, Acquisition or Disposition of
Assets, that the Company amended its Current Report on
Form 8-K, dated May 30, 2000, as amended July 13, 2000,
by filing certain pro forma financial information of the
Company under Item 7, Financial Statements, Pro Forma
Financial Information and Exhibits.
(v) Report dated May 17, 2000 (filed August 30, 2000)
reporting under Item 2, Acquisition or Disposition of
Assets, that the Company amended its Current Report on
Form 8-K, dated May 30, 2000, as amended July 13, 2000
and August 25, 2000, to correct a currency exchange rate
error in the translation of certain historical results
of operations included in the pro forma condensed
combined statement of operations of the Company under
Item 7, Financials Statements, Pro Forma Financial
Information and Exhibits.
31
<PAGE> 33
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.
NTL INCORPORATED
Date: November 13, 2000 By: /s/ Barclay Knapp
-------------------------
Barclay Knapp
President and Chief Executive Officer
Date: November 13, 2000 By: /s/ Gregg N. Gorelick
--------------------------
Gregg N. Gorelick
Vice President-Controller
(Principal Accounting Officer)
32
