<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22616
-------------------------------------------
INTERNATIONAL CABLETEL INCORPORATED
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1822078
--------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 East 59th Street, New York, New York 10022
---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(212) 371-3714
------------------------------------------------------------------
(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
March 31, 1996 was 30,294,255.
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page
- ------------------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets--
March 31, 1996 and December 31, 1995 2
Condensed Consolidated Statements of Operations--
Three months ended March 31, 1996 and 1995 4
Condensed Consolidated Statement of Shareholders' Equity--
Three months ended March 31, 1996 5
Condensed Consolidated Statements of Cash Flows--
Three months ended March 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 11
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 24
- ----------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- ---------------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 661,945,000 $ 175,283,000
Accounts receivable-trade,
less allowance for doubtful
accounts of $1,143,000 (1996)
and $767,000 (1995) 9,786,000 7,340,000
VAT receivable 10,268,000 17,464,000
Prepaid expenses and other 6,516,000 5,050,000
-------------- --------------
TOTAL CURRENT ASSETS 688,515,000 205,137,000
CASH HELD IN ESCROW 1,204,000 1,598,000
FIXED ASSETS, net 716,084,000 639,674,000
LICENSE ACQUISITION COSTS, net of
accumulated amortization of
$25,450,000 (1996) and $22,789,000
(1995) 134,917,000 137,578,000
DEFERRED FINANCING COSTS, net of
accumulated amortization of
$3,115,000 (1996) and $2,044,000
(1995) 42,002,000 18,510,000
OTHER ASSETS, net of accumulated
amortization of $8,321,000 (1996)
and $7,493,000 (1995) 9,971,000 8,172,000
-------------- --------------
$1,592,693,000 $1,010,669,000
============== ==============
</TABLE>
2
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS -- Continued
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- --------------
(Unaudited) (See Note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,063,000 $ 50,848,000
Accrued expenses and other 44,713,000 37,102,000
Accrued construction costs 23,669,000 14,543,000
Current portion of long-term debt 44,351,000 26,516,000
-------------- --------------
TOTAL CURRENT LIABILITIES 139,796,000 129,009,000
LONG-TERM DEBT 1,134,122,000 513,026,000
REGIONAL DEVELOPMENT GRANT, net 630,000 661,000
COMMITMENTS AND CONTINGENT LIABILITIES
MINORITY INTERESTS 25,768,000 28,716,000
SHAREHOLDERS' EQUITY
Series preferred stock - $.01
par value; authorized
2,500,000 shares;
none outstanding -- --
Common stock - $.01 par value;
authorized 50,000,000 shares;
issued and outstanding
30,294,000 (1996) and
30,202,000 (1995) shares 303,000 302,000
Additional paid-in capital 464,126,000 462,223,000
Cumulative translation adjustment 213,000 6,273,000
(Deficit) (172,265,000) (129,541,000)
-------------- --------------
292,377,000 339,257,000
-------------- --------------
$1,592,693,000 $1,010,669,000
============== ==============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from
the audited financial statements at that date.
See notes to condensed consolidated financial statements.
3
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
-------------- -------------
<S> <C> <C>
Revenues:
Cable television revenues $ 8,051,000 $ 1,830,000
Telephone and telecommunications
revenues 7,762,000 542,000
Toll revenues 1,309,000 951,000
Microwave transmission revenues
from the Joint Venture 1,312,000 1,310,000
------------ ------------
18,434,000 4,633,000
Costs and expenses:
Operating expenses 12,629,000 3,296,000
Selling, general and
administrative expenses 21,798,000 10,514,000
Depreciation and amortization 12,190,000 5,532,000
------------ ------------
46,617,000 19,342,000
------------ ------------
OPERATING LOSS (28,183,000) (14,709,000)
Other income (expense):
Interest and other income 7,763,000 3,714,000
Interest expense (24,711,000) (4,242,000)
Foreign currency transaction
gains (losses) (123,000) 196,000
------------ ------------
LOSS BEFORE INCOME TAXES AND
MINORITY INTERESTS (45,254,000) (15,041,000)
Income tax benefit (provision) (42,000) 448,000
------------ ------------
LOSS BEFORE MINORITY INTERESTS (45,296,000) (14,593,000)
Minority interests 2,572,000 1,127,000
------------ ------------
NET LOSS $(42,724,000) $(13,466,000)
============ ============
Net loss per common share $(1.41) $(.59)
============ ============
Weighted average number of common shares
used in computation of net
loss per share 30,211,000 22,636,000
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
$.01 Par Value Additional Cumulative
--------------------- Paid-In Translation
Shares Par Capital Adjustment (Deficit)
----------- -------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1995 30,202,000 $302,000 $462,223,000 $ 6,273,000 $(129,541,000)
Exercise of stock
options 84,000 1,000 211,000
Exercise of warrants 8,000 51,000
Issuance of warrants in
connection with consent
solicitations 1,641,000
Net loss for the
three months ended
March 31, 1996 (42,724,000)
Currency translation
adjustment (6,060,000)
----------- -------- ------------ ----------- -------------
Balance,
March 31, 1996 30,294,000 $303,000 $464,126,000 $ 213,000 $(172,265,000)
=========== ======== ============ =========== =============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1996 1995
------------- -------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 1,541,000 $ 5,434,000
INVESTING ACTIVITIES
Purchase of fixed assets (112,210,000) (83,908,000)
Proceeds from sale of fixed assets -- 16,000
Increase in other assets (231,000) (205,000)
------------- ------------
NET CASH (USED IN) INVESTING ACTIVITIES (112,441,000) (84,097,000)
FINANCING ACTIVITIES
Proceeds from borrowings, net of
financing costs 577,484,000 --
Cash held in escrow 367,000 --
Capital contribution from minority partner -- 6,329,000
Proceeds from borrowings from minority
partner 18,367,000 --
Proceeds from exercise of stock options
and warrants 263,000 6,000
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 596,481,000 6,335,000
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,081,000 4,720,000
------------- ------------
INCREASE (DECREASE)IN CASH AND CASH
EQUIVALENTS 486,662,000 (67,608,000)
Cash and cash equivalents at beginning of
period 175,283,000 294,602,000
------------- ------------
Cash and cash equivalents at end of period $ 661,945,000 $226,994,000
============= ============
Supplemental disclosure of cash flow
information
Cash paid during the period for interest
exclusive of amounts capitalized $ 307,000 $ 359,000
Income taxes paid -- 153,000
Supplemental schedule of noncash
financing activities
Warrants issued in connection with
consent solicitations 1,641,000 --
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 months
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
Net loss per share is computed based on the weighted average number
of common shares outstanding during the periods. Common stock equivalents are
excluded from the net loss per share computations because they are antidilutive.
NOTE B--ACCOUNTING CHANGE
In October 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation." SFAS No. 123 defines a fair value based method
of accounting for stock-based employee compensation plans (including stock
option plans). As permitted by SFAS No. 123, the Company expects to continue to
measure compensation costs for its plans as prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees."
NOTE C--FIXED ASSETS
Fixed assets consists of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Cable television, telephone
and telecommunications
equipment $453,580,000 $395,754,000
Microwave equipment 28,978,000 28,265,000
Other equipment 57,974,000 39,717,000
Construction-in-progress 225,736,000 218,044,000
------------ ------------
766,268,000 681,780,000
Allowance for depreciation (50,184,000) (42,106,000)
------------ ------------
$716,084,000 $639,674,000
============ ============
</TABLE>
7
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE D--LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- --------------
(Unaudited)
<S> <C> <C>
10-7/8% Senior Deferred Coupon Notes $ 161,941,000 $157,748,000
12-3/4% Series A Senior Deferred
Coupon Notes 168,606,000 163,528,000
11-1/2% Series A Senior Deferred
Coupon Notes 611,825,000 --
7-1/4% Convertible Subordinated Notes 191,750,000 191,750,000
Subsidiary bank loan 1,549,000 1,576,000
Subsidiary notes payable 42,802,000 24,940,000
-------------- ------------
1,178,473,000 539,542,000
Less current portion 44,351,000 26,516,000
-------------- ------------
$1,134,122,000 $513,026,000
============== ============
</TABLE>
In January 1996, the Company issued $1,050,000,000 aggregate principal
amount of 11-1/2% Series A Senior Deferred Coupon Notes due 2006. The 11-1/2%
Senior Deferred Coupon Notes were issued at a price to investors of 57.155% of
the aggregate principal amount at maturity or $600,127,500. The Company
received net proceeds of $582,000,000 after discounts and commissions from the
issuance of the 11-1/2% Senior Deferred Coupon Notes. The original issue
discount accretes at a rate of 11-1/2%, compounded semiannually, to an aggregate
principal amount of $1,050,000,000 by February 1, 2001. Interest will
thereafter accrue at 11-1/2% per annum, payable semiannually beginning on August
1, 2001. The 11-1/2% Senior Deferred Coupon Notes may be redeemed at the
Company's option, in whole or in part, at any time on or after February 1, 2001
at 105.75% the first year, 102.875% the second year and 100% thereafter, plus
accrued and unpaid interest to the date of redemption.
The 11-1/2% Senior Deferred Coupon Notes are effectively subordinated
to all existing and future indebtedness and other liabilities and commitments of
the Company's subsidiaries. The indenture governing the 11-1/2% Senior Deferred
Coupon Notes contains restrictions relating to, among other things: (i)
incurrence of additional indebtedness and issuance of preferred stock; (ii)
dividend and other payment restrictions; and (iii) mergers, consolidations and
sales of assets.
Pursuant to the terms of the consent solicitations to the holders of
the 10-7/8% Senior Deferred Coupon Notes and to the holders of the 12-3/4%
Series A Senior Deferred Coupon Notes to gain consent to modify certain
indenture provisions, the Company paid an aggregate of $3,592,000 in consent
payments and issued warrants to purchase 164,000 shares of common stock at an
exercise price of $23.78 per share in lieu of additional consent payments of
$1,641,000. The warrants expire in 2006.
8
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE E--SUBSEQUENT EVENT
In May 1996, an indirect wholly-owned subsidiary of the Company (the
"Purchaser") acquired NTL Group Limited ("NTL"), an English limited liability
company, for payments of approximately (Pounds)200 million at closing,
(Pounds)35 million, subject to adjustments, on the first anniversary of closing
and (Pounds)17.1 million (which corresponds to the tax credit expected by NTL by
October 1, 1996) in October 1996. NTL provides television and radio
transmission services and a range of other services in the broadcasting and
telecommunications industries.
To finance the acquisition of NTL, the Purchaser entered into an
agreement dated March 28, 1996 with a syndicate of lenders (the "Lenders")
pursuant to which the Lenders made available to the Purchaser senior secured
loan facilities (the "A Facilities") of a maximum principal amount of
(Pounds)165 million comprised of (i) a short term loan facility of (Pounds)50
million (the "Short Term Facility"), (ii) a long term loan facility of
(Pounds)90 million (the "Long Term Facility," and, together with the Short Term
Facility, the "Term Loan Facilities") and (iii) a revolving credit facility of
(Pounds)25 million (the "Revolving Facility"). One of the Lenders also agreed
to make available to the Purchaser a secured loan facility of (Pounds)60 million
(the "B Facility") to finance the remainder of the payment due at closing and
acquisition costs and expenses due at closing.
The Term Loan Facilities and the B Facility were used to finance the
acquisition of NTL including related acquisition expenses. The Revolving
Facility is available until December 31, 1997 for capital expenditure and
working capital purposes of NTL's group.
At the end of the availability period, any amount outstanding under
the Revolving Facility will be converted to term debt and be aggregated with the
Long Term Facility. The Short Term Facility is repayable in full on December
31, 1996 unless certain conditions are fulfilled on or prior to that date, in
which case the amounts outstanding under the Short Term Facility will
automatically be converted into, and shall be deemed to be, amounts outstanding
under the Long Term Facility. The Company anticipates that such conditions will
be met and that the amounts outstanding under the Short Term Facility will be so
converted. All amounts outstanding under the Long Term Facility are scheduled
to be repaid in quarterly installments from 1998 to 2002 inclusive. The amount
of the installments will be based upon an agreed percentage of the loan and will
increase year to year. Final repayment of the Long Term Facility is due on
December 31, 2002.
Loans under the A Facilities bear interest at an annual rate equal to
LIBOR plus a margin that varies from 0.75% per annum to 1.75% per annum, based
on certain financial ratios of the Purchaser and certain of its subsidiaries.
The A Facilities are secured by guarantees from NTL and each of its
subsidiaries and by first ranking fixed and floating charges over all the
present and future assets of the Purchaser, NTL and its subsidiaries. The A
Facilities do not, therefore, provide for the lenders to have recourse to assets
of the Company other than to the assets of the Purchaser and its subsidiaries.
The A Facilities contain various financial and other covenants,
including covenants with respect to the Purchaser and certain of its
subsidiaries relating to minimum total debt to operating cash flow (as defined
in the "A Facilities"),
9
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE E--SUBSEQUENT EVENT-Continued
fixed charge coverage, net worth and pro-forma debt service ratios. The A
Facilities also include restrictions on dividends and distributions by the
Purchaser to its shareholders.
The B Facility is secured by cash of (pounds) 62,500,000 on deposit
with the lender and guarantees from the Company, OCOM Corporation, OCOM Sub I
Inc., OCOM Sub III Inc., CableTel (UK) Group, Inc. and CableTel (UK) Limited and
by second ranking fixed and floating charges over all the present and future
assets of the Purchaser, NTL and its subsidiaries, subject to certain
subordination arrangements. The B Facility must be repaid in full by December
31, 1996.
Loans under the B Facility bear interest at an annual rate equal to
LIBOR plus a margin of 3%, which margin shall be increased by an additional
1.25% on each of the "Applicable Margin Step-Up Dates" falling three, four,
five, six and seven months after the advance of any loans under the B Facility.
The Purchaser may repay all, but not less than all, of the amount outstanding
under the B Facility at any time without penalty. The B Facility contains
covenants similar to those of the A Facilities.
NOTE F--COMMITMENTS AND CONTINGENT LIABILITIES
As of March 31, 1996, the Company was committed to pay approximately
$26,900,000 for equipment and services.
The Company has licenses issued by the United Kingdom Department of
Trade and Industry ("DTI") and the United Kingdom Independent Television
Commission ("ITC") for its cable television, telephone and telecommunications
business and the Federal Communications Commission ("FCC") for its microwave
transmission business. The initial terms of the Company's licenses was 23 years
for the DTI licenses, 15 years for the ITC licenses and 10 years for the FCC
licenses. The Company's licenses expire in 2008 to 2017 for the DTI licenses,
1999 to 2005 for the ITC licenses and 2001 for the FCC licenses. The DTI
requires a fixed annual renewal fee of (Pounds)2,500 ($4,000) per license. The
ITC requires an annual license fee ranging from (Pounds)1,300 ($2,000) to
(Pounds)7,900 ($12,000) per license based on the number of homes in the licensed
area, which is subject to adjustment annually. The FCC requires an annual
license fee of $140 per license, which is subject to adjustment annually. The
Company's license fees in 1996 were $ 19,000.
In addition, the Company was awarded certain newly issued licenses by
the ITC in 1995. Pursuant to the terms of the local delivery license ("LDL")
for Northern Ireland granted to a wholly-owned subsidiary of the Company, the
Company is required to make annual cash payments to the ITC for fifteen years,
commencing the earlier of the first full calendar year after the start of
operations or May 1997, in the amount of approximately (Pounds)14,400,000
($21,900,000) (subject to adjustments for inflation). Such payments are in
addition to the percentages of qualifying revenue already set by the ITC of 0%
for the first ten years and 2% for the last five years of the fifteen year
license.
Pursuant to the terms of the LDL for Glamorgan and Gwent, Wales granted to
one of the Company's joint ventures, the joint venture is required to make
annual cash payments to the ITC for fifteen years, commencing in the first full
calendar year after the start of operations, in the amount of (Pounds)104,188
($159,000). Such payments are in addition to the percentages of qualifying
revenue already set by the ITC of 0% for the first five years, 2% for the second
five years and 4% for the last five years of the fifteen-year license.
10
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
The following table illustrates the number of homes passed, the number of
homes released to marketing and the total number of customers as of March 31,
1996 and December 31, 1995, for the full-service dual network constructed by the
Company since 1993 and, as of March 31, 1996, for the network constructed as
cable-only and inherited by the Company through prior acquisitions:
Newly Constructed Dual Network and Inherited Cable-Only Network
<TABLE>
<CAPTION>
==================================================================================
Newly Constructed Newly Constructed Inherited Cable-
Dual Network Dual Network Only Network
March 31, 1996 December 31, 1995 March 31, 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Homes passed 516,000 463,000 263,200
Homes marketed* 249,500 176,200 263,200
Total customers 81,860 57,700 47,500
Dual 62,440 44,630 --
Cable-only 9,750 6,620 47,500
Telephone-only 9,670 6,450 --
Total RGU's** 144,300 102,330 47,500
RGU penetration 58% 58% 18%
Cable penetration 29% 29% 18%
Telephone penetration 29% 29% --
==================================================================================
</TABLE>
*At March 31, 1996, homes for which the sales process has begun. At
December 31, 1995, homes for which the initial sales process was completed.
**An RGU (revenue generating unit) is one cable television account or one
telephone account; thus, a dual customer counts as two RGU's.
11
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
RESULTS OF OPERATIONS
---------------------
Three Months Ended March 31, 1996 and 1995
- ------------------------------------------
Cable television revenues increased to $8,051,000 from $1,830,000 as a
result of customer growth that increased the Company's current revenue stream.
Telephone and telecommunications revenues increased to $7,762,000 from
$542,000 as a result of customer growth that increased the Company's current
revenue stream.
OCOM's toll revenues increased to $1,309,000 from $951,000 due to the
expansion of the long distance business into new markets in the second quarter
of 1995, which represents 65% of the 1996 toll revenue. Toll revenue in 1995
includes $331,000 from the CCI/AirTouch Joint Venture's resale of OCOM's long
distance service, which revenue is no longer generated due to the conversion of
the CCI/AirTouch Joint Venture's business to a new service provider in June and
July 1995.
Microwave transmission revenues increased to $1,312,000 from $1,310,000 as
a result of additional revenue from additional circuits installed in the
microwave network offset by reductions in amounts billed to the CCI/AirTouch
Joint Venture for circuits in the microwave network.
Operating expenses increased to $12,629,000 from $3,296,000 due to the
increase in the operating expenses of the cable television, telephone and
telecommunications business to $11,683,000 from $2,306,000. The cable
television, telephone and telecommunications business operating expenses
increased as a result of the increases in programming costs, interconnection
costs and costs of operating the network. OCOM's operating expenses decreased
due to a decrease in property taxes, offset by costs incurred in new markets
where OCOM has provided long distance service since the second quarter of 1995.
Selling, general and administrative expenses increased to $21,798,000 from
$10,514,000 principally because of the increase in costs of the cable
television, telephone and telecommunications business to $21,100,000 from
$9,646,000. The cable television, telephone and telecommunications business
costs increased as a result of increases in sales and marketing costs and
additional personnel and overhead to service the increasing customer base.
OCOM's costs decreased as a result of a reduction in marketing costs related to
OCOM's entrance into new markets in 1995 offset by increases in billing costs
from the additional long distance business in 1996. The 1996 and 1995 cable
television, telephone and telecommunications costs include $814,000 of non-cash
expense from the amortization of non-competition agreements in connection with
the acquisitions of certain United Kingdom subsidiaries.
Depreciation and amortization expense increased to $12,190,000 from
$5,532,000 primarily due to an increase in depreciation of cable television,
telephone and telecommunications equipment.
12
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
Interest and other income increased to $7,763,000 from $3,714,000 due to an
increase in funds available for short term investment and an increase in the
interest rate on the Company's short term investments.
Interest expense increased to $24,711,000 from $4,242,000 due to the
issuance of the 12-3/4% and the 11-1/2% Senior Deferred Coupon Notes and the
7-1/4% Convertible Subordinated Notes subsequent to March 1995.
Foreign currency transaction losses of $123,000 in 1996 and gains of
$196,000 in 1995 are the result of changes in the exchange rate.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." Although all entities are encouraged to adopt this method of
accounting for all stock-based employee compensation plans (including stock
option plans), SFAS No. 123 allows an entity to continue to measure compensation
costs for its plans as prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees." At this time, management expects to continue its
accounting in accordance with APB Opinion No. 25.
LIQUIDITY AND CAPITAL RESOURCES
The Company will require significant amounts of capital for construction of
its system network, connection of cable television, telephone and
telecommunications customers to the network and working capital. The Company
also requires capital for debt service. The Company believes that, after taking
into account its proportional ownership of its franchises, the aggregate cost of
network construction from March 31, 1996 through passing 2,090,000 of the total
2,292,000 homes in its franchises in accordance with its regulatory build
schedules (including the license payments in respect of the Northern Ireland LDL
and the Gwent and Glamorgan LDLs), will be approximately (Pounds)1.05 billion
(which includes the commitments for equipment and services at March 31, 1996 of
approximately $26,900,000). The exact amounts and timing of these expenditures
could vary significantly with the actual number of subscribers and are subject
to a variety of factors which may vary greatly by market and may be beyond the
control of the Company. In addition, this amount includes various estimated
inflation factors on certain components. The substantial costs will result in a
negative cash flow until an adequate customer base is established.
The Company expects that the capital required to build its networks and
connect residential and business subscribers will be approximately $950 per home
in its franchise areas, of which approximately $600 represents the cost of the
network itself and the remainder represents the capital cost of connecting
customers to its network. Certain locations may require more or less capital
depending upon household density, business density and penetration rates. In
addition, certain costs such as the establishment of telephone switches, cable
headends and facilities are incurred during the
13
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
initial phases of network construction, leading to average capital expenditures
per home which are higher in the initial years. The construction and
development of the systems will depend on, among other things, the Company's
ability to design network routes, 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.
Pursuant to the terms of the Northern Ireland LDL, CableTel Northern
Ireland Limited is required to make annual cash payments to the ITC for fifteen
years, commencing on the earlier of the end of the first full calendar year
after the start of operations or May 18, 1997, in the amount of approximately
(Pounds)14.4 million (subject to adjustments for inflation). Such payments are
in addition to the percentages of qualifying revenue already set by the ITC of
0% for the first ten years and 2% for the last five years of the fifteen-year
license. CableTel Northern Ireland Limited is committed to covering at least
428,000 out of the total 530,000 homes in the LDL area. Pursuant to the terms
of the Glamorgan and Gwent LDL, CableTel South Wales Limited is required to make
annual cash payments to the ITC for fifteen years, commencing in the first full
calendar year after the start of operations, in the amount of approximately
(Pounds)104,188 (subject to adjustment for inflation). Such payments are in
addition to the percentages of qualifying revenue already set by the ITC of 0%
for the first five years, 2% for the second five years and 4% for the last five
years of the fifteen-year license. CableTel South Wales Limited is committed to
covering at least 230,000 out of a total 330,000 homes in the LDL area.
OCOM requires capital in order to expand its private line microwave
transmission business. Historically, OCOM has used cash from operations to
expand this business. In addition, through its participation in the equal
access balloting process conducted by AT&T Wireless, OCOM provides long distance
service to AT&T Wireless customers who chose OCOM as their long distance service
provider. OCOM will need capital for a continuing marketing effort and for
interconnection costs in each market in which it provides service. OCOM's cash
on hand and cash from operations are expected to be sufficient to meet all of
its requirements.
Cash and cash equivalents as of March 31, 1996 are expected to be
sufficient to meet the capital requirements of the franchises and NTL to the
second quarter of 1997 in accordance with the build schedules contained in the
existing licenses. The Company is engaged in ongoing discussions with commercial
banks regarding the arrangement of the certain proposed credit facilities (the
"Proposed Credit Facilities") for an aggregate principal amount of between
(Pounds)250 million and (Pounds)300 million to further fund construction costs
and working capital requirements. Based on the information currently available
to the Company and taking into account the Company's proportional ownership of
its franchises, it is currently anticipated that expected sources of funds
(including, but not limited to, the Proposed Credit Facilities or other
financings, if obtained), cash on hand and cash flow from operations which is
expected by early 1997 will be sufficient to fund the estimated costs required
to complete planned construction in its existing franchises past 2,090,000 homes
in accordance with the construction milestones set forth in its licenses. To the
extent that either the Company is unable to obtain the Proposed Credit
Facilities or does not meet its
14
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
projections, the Company will require additional debt and/or equity financings.
There can be no assurance that (i) the Proposed Credit Facilities or any other
financings will be obtained (or be available on acceptable terms), (ii) any
other financings will be consummated or available on acceptable terms, (iii)
actual construction costs will not exceed the Company's expectations or that
additional funding substantially in excess of the amounts estimated above will
not be required, (iv) conditions precedent to advances under any such credit
facility will be satisfied when funds are required, (v) the Company will not
acquire additional franchises or businesses that would require additional
capital or (vi) the Company will be able to generate sufficient cash from
operations to meet any unfunded portion of its capital requirements when
required. The Company does not have any firm additional financing plans to
address any of the foregoing situations at this time.
The inability of the Company to obtain the Proposed Credit Facilities
or alternative financing could result in a failure to comply with the minimum
build milestones set forth in its licenses for certain of its franchises and
could ultimately lead to the revocation of such licenses, which would have a
material adverse effect on the Company.
The Company also incurs capital expenditures for the establishment of
its business facilities and fixtures, office and computer equipment, its billing
and subscriber management systems and vehicles. These costs also vary by
location and size of franchise, but are substantially less than the capital
costs of the network itself.
The exact amounts and timing of all of these expenditures are subject
to a variety of factors which may vary greatly by market and be beyond the
control of the Company. Accordingly, there can be no assurance that the amount
of the anticipated funding requirements will not exceed the estimated amounts
described above or that additional funding substantially in excess of the
amounts estimated above will not be required. Furthermore, if the Company were
to make additional investments or acquire additional franchises, funding would
be needed in addition to the anticipated funding requirements described above.
In addition to its capital expenditures, the Company incurs direct
operating costs for such items as salaries and office rent. As network
installation progresses, the Company will incur increased sales and marketing
expenses (including sales commissions). Since the Company does not intend
initially to produce its own programming, it purchases programming from
suppliers whose charges may reach 65% of cable television revenues in the early
years. The Company also incurs charges from other telecommunications systems in
order to interconnect with the worldwide telephone network. The Company's
ability to generate positive operating cash flow depends upon its ability to
increase penetration and revenues at a faster rate than the growth of these
costs.
NTL Acquisition
- ---------------
In May 1996, an indirect wholly-owned subsidiary of the Company
(the "Purchaser") acquired NTL, an English limited liability company, for
payments of approximately (Pounds)200 million at closing, (Pounds)35 million,
subject to adjustments, on the first anniversary of closing and
15
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
(Pounds)17.1 million (which corresponds to the tax credit expected by NTL by
October 1, 1996) in October 1996. NTL provides television and radio
transmission services and a range of other services in the broadcasting and
telecommunications industries.
To finance the acquisition of NTL, the Purchaser entered into an
agreement dated March 28, 1996 with a syndicate of lenders (the "Lenders")
pursuant to which the Lenders made available to the Purchaser senior secured
loan facilities (the "A Facilities") of a maximum principal amount of
(Pounds)165 million comprised of (i) a short term loan facility of (Pounds)50
million (the "Short Term Facility"), (ii) a long term loan facility of
(Pounds)90 million (the "Long Term Facility," and, together with the Short Term
Facility, the "Term Loan Facilities") and (iii) a revolving credit facility of
(Pounds)25 million (the "Revolving Facility"). One of the Lenders also agreed to
make available to the Purchaser a secured loan facility of (Pounds)60 million
(the "B Facility") to finance the remainder of the payment due at closing and
acquisition costs and expenses due at closing.
The Term Loan Facilities and the B Facility were used to finance the
acquisition of NTL including related acquisition expenses. The Revolving
Facility is available until December 31, 1997 for capital expenditure and
working capital purposes of NTL's group.
At the end of the availability period, any amount outstanding under
the Revolving Facility will be converted to term debt and be aggregated with the
Long Term Facility. The Short Term Facility is repayable in full on December
31, 1996 unless certain conditions are fulfilled on or prior to that date, in
which case the amounts outstanding under the Short Term Facility will
automatically be converted into, and shall be deemed to be, amounts outstanding
under the Long Term Facility. The Company anticipates that such conditions will
be met and that the amounts outstanding under the Short Term Facility will be so
converted. All amounts outstanding under the Long Term Facility are scheduled
to be repaid in quarterly installments from 1998 to 2002 inclusive. The amount
of the installments will be based upon an agreed percentage of the loan and will
increase year to year. Final repayment of the Long Term Facility is due on
December 31, 2002.
Loans under the A Facilities bear interest at an annual rate equal to
LIBOR plus a margin that varies from 0.75% per annum to 1.75% per annum, based
on certain financial ratios of the Purchaser and certain of its subsidiaries.
The A Facilities are be secured by guarantees from NTL and each of its
subsidiaries and by first ranking fixed and floating charges over all the
present and future assets of the Purchaser, NTL and its subsidiaries. The A
Facilities do not, therefore, provide for the lenders to have recourse to assets
of the Company other than to the assets of the Purchaser and its subsidiaries.
The A Facilities contain various financial and other covenants,
including covenants with respect to the Purchaser and certain of its
subsidiaries relating to minimum total debt to operating cash flow (as defined
in the "A Facilities"), fixed charge coverage, net worth and pro-forma debt
service ratios. The A Facilities also include restrictions on dividends and
distributions by the Purchaser to its shareholders.
16
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
The B Facility is secured by cash of (pounds) 62,500,000 on deposit
with the lender and guarantees from the Company, OCOM Corporation, OCOM Sub I
Inc., OCOM Sub III Inc., CableTel (UK) Group, Inc. and CableTel (UK) Limited and
by second ranking fixed and floating charges over all the present and future
assets of the Purchaser, NTL and its subsidiaries, subject to certain
subordination arrangements. The B Facility must be repaid in full by December
31, 1996.
Loans under the B Facility bear interest at an annual rate equal to
LIBOR plus a margin of 3%, which margin shall be increased by an additional
1.25% on each of the "Applicable Margin Step-Up Dates" falling three, four,
five, six and seven months after the advance of any loans under the B Facility.
The Purchaser may repay all, but not less than all, of the amount outstanding
under the B Facility at any time without penalty. The B Facility contains
covenants similar to those of the A Facilities.
The Company may be required to obtain up to approximately (Pounds)95
million in additional funding to repay the borrowings under the B Facility and
pay the (Pounds)35 million on the first anniversary of the date of closing of
the acquisition. In addition, the Company may be required to repay the
(Pounds)50 million Short Term Facility if certain conditions are not met. The
Company anticipates that such additional funding should be available from net
cash provided by operations, existing cash on hand of the Company available for
such purposes and sales of equity or equity related securities of the Company.
There is no assurance that such additional funding will be available to the
Company on acceptable terms or at all.
In addition, the Company anticipates that substantial amounts of
capital investment will be required in the future in order to fully develop
NTL's business. The Company estimates, based on information currently available
to it, that through December 31, 1997 NTL will require approximately up to
(Pounds)50 million in capital beyond that which NTL is capable of generating
from its current operations. Up to (Pounds)25 million is expected to be
available under the Revolving Facility, subject to a number of conditions, in
particular, the repayment of the B Facility. The Company believes that NTL's
other capital needs for the foreseeable future will be funded by cash on hand of
the Company.
The information in the preceding paragraphs includes projections; in
reviewing such information it should be kept in mind that actual results may
differ materially from those in such projections. These projections were based
on various factors and were derived utilizing numerous assumptions. Important
assumptions and factors that could cause actual results to differ materially
from those in these projections include the Company's ability to continue to
design network routes, 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. Other factors and assumptions not identified above were also involved
in the derivation of these projections, and the failure of such other
assumptions to be realized as well as other factors may also cause actual
results to differ materially from those projected. The Company assumes no
obligation to update these projections to reflect actual funding requirements,
capital expenditures and results, changes in assumptions or changes in other
factors affecting such projections.
17
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
Description of Certain Indebtedness
- -----------------------------------
In January 1996, the Company issued $1,050,000,000 aggregate principal
amount of its 11-1/2% Series A Senior Deferred Coupon Notes Due 2006 (the
"11-1/2% Notes"). The 11-1/2% Notes were issued at a price to investors of
57.155% of the aggregate principal amount at maturity, or $600,127,500. The
Company received net proceeds of approximately $582,000,000 from the issuance
of the 11-1/2% Notes. The original issue discount of the 11-1/2% Notes accretes
at a rate of 11-1/2%, compounded semiannually, to an aggregate principal
amount of $1,050,000,000 by February 1, 2001. Interest will thereafter accrue at
11-1/2% per annum, payable semiannually beginning on August 1, 2001. The 11-1/2%
Notes may be redeemed at the Company's option, in whole or in part, at any time
on or after February 1, 2001 at 105.75% the first year, 102.875% the second year
and 100% thereafter, plus accrued and unpaid interest to the date of redemption.
The Company has filed a registration statement on Form S-4 relating to its offer
to exchange an aggregate principal amount at maturity of up to $1,050,000,000 of
11-1/2% Series B Senior Deferred Coupon Notes Due 2006 (the "New Notes") of the
Company for a like principal amount at maturity of the issued and outstanding
11-1/2% Notes. The terms of the New Notes are identical in all material
respects to the 11-1/2% Notes, except (i) for certain transfer restrictions and
registration rights relating to the 11-1/2% Notes and (ii) that, if the
exchange offer is not consummated by May 29, 1996 or the Company fails to
comply with certain other registration obligations with respect to the 11-1/2%
Notes, interest will accrue (in addition to the accrual of the original issue
discount and stated interest on the 11-1/2% Notes) at a rate per annum of up
to 1.50% of the Accreted Value of the 11-1/2% Notes (the "Special Interest")
from and including May 30, 1996 until but not including the date of the
consummation of the exchange offer or, as the case may be, compliance by the
Company with such other registration obligations. Any Special Interest will be
payable in cash semiannually in arrears each February 1 and August 1,
commencing August 1, 1996.
In April 1995, the Company issued $175,000,000 aggregate principal amount
of its Convertible Subordinated Notes due 2005 and $277,803,500 aggregate
principal amount at maturity of its 12-3/4% Senior Deferred Coupon Notes Due
2005 (the "Old 12-3/4% Notes"). On August 18, 1995, the Company issued
$277,803,500 aggregate principal amount at maturity of the 12-3/4% Series A
Senior Deferred Coupon Notes Due 2005 (the "12-3/4% Notes") in exchange for the
Old 12-3/4% Notes pursuant to the Indenture. The terms of the 12-3/4% Notes are
identical in all material respects to the Old 12-3/4% Notes except for certain
transfer restrictions and registration rights applicable to the Old 12-3/4%
Notes. The Old 12-3/4% Notes were canceled on August 18, 1995 on consummation
of the exchange offer which was made pursuant to the Company's Prospectus dated
July 18, 1995 forming part of the Registration Statement on Form S-4 filed with
the SEC on May 26, 1995. The 12-3/4% Notes were issued at a price to investors
of 53.995% of the aggregate principal amount at maturity, or $150,000,000. The
Company received proceeds of $145,125,000 from the issuance of the 12-3/4% Notes
and $169,750,00 from the issuance of the Convertible Subordinated Notes. In
addition, in May 1995, the initial purchasers exercised their overallotment
option for an additional $16,750,000 principal amount of Convertible
Subordinated Notes, for which the Company received proceeds of $16,315,000.
18
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
The original issue discount of the 12-3/4% Notes accretes at a rate of
12-3/4%, compounded semiannually, to an aggregate principal amount of
$277,803,500 by April 15, 2000. Interest will thereafter accrue at 12-3/4% per
annum, payable semiannually beginning on October 15, 2000. The 12-3/4% Notes may
be redeemed at the Company's option, in whole or in part, at any time on or
after April 15, 2000 at 103.64% the first year, 101.82% the second year and 100%
thereafter, plus accrued and unpaid interest on the date of redemption.
Interest on the Convertible Subordinated Notes is payable semiannually
beginning on October 15, 1995. The Convertible Subordinated Notes are
convertible into shares of common stock prior to maturity at a conversion price
of $27.56 per share, (as adjusted for the four-for-three stock split by way of a
stock dividend paid in August 1995), subject to further adjustment in certain
events. The Convertible Subordinated Notes are redeemable, in whole or in part,
at the option of the Company at any time on or after April 15, 1998, at a
redemption price of 105.08% that declines annually to 100.73% in 2004, in each
case together with accrued and unpaid interest to the redemption date. On July
18, 1995, the SEC declared effective the Company's shelf registration statement
relating to the resale of the Convertible Subordinated Notes and the Common
Stock issuable upon conversion thereof by the holders thereof.
In October 1993, the Company issued $212,000,000 aggregate principal amount
of its 10-7/8% Senior Deferred Coupon Notes due 2003 ("the 10-7/8% Notes"). The
10-7/8% Notes were issued at a price to investors of 58.873% of the aggregate
principal amount at maturity, or $124,811,000. The Company received proceeds of
$119,797,000 from the issuance of the 10-7/8% Notes. The original issue
discount of the 10-7/8% Notes accretes at a rate of 10-7/8%, compounded
semiannually, to an aggregate principal amount of $212,000,000 by October 15,
1998. Interest will thereafter accrue at 10-7/8% per annum, payable
semiannually beginning on April 15, 1999. The 10-7/8% Notes may be redeemed at
the Company's option, in whole or in part, at any time on or after October 15,
1998 at 103.107% the first year, 101.554% the second year and 100% thereafter,
plus accrued and unpaid interest to the date of redemption.
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries and joint ventures. As a holding company, the Company
holds no significant assets other than its investments in and advances to its
subsidiaries and joint ventures and the Company is dependent upon the receipt of
sufficient funds from its subsidiaries and joint ventures to meet its own
obligations. The ability of the Company and its creditors, including holders
of the 11-1/2% Notes, the 12-3/4% Notes, the 10-7/8% Notes and the Convertible
Subordinated Notes, to benefit in the distribution of any assets of any of the
Company's subsidiaries and joint ventures upon any liquidation of any such
subsidiary will be subject to the prior claims of the subsidiary's creditors,
including trade creditors and, to the extent that such subsidiary is not
directly owned by the Company, to the prior claims of creditors of other
entities directly or indirectly owning such subsidiary. Accordingly, the
Company's ability to make scheduled interest and principal payments (or any
other payments that may become payable) when due to holders of indebtedness of
the Company is dependent upon the receipt of sufficient funds from its
subsidiaries, which may be restricted by the terms of future indebtedness of the
Company's subsidiaries.
19
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
Currently, there are no encumbrances or restrictions on the ability of any
subsidiary to pay dividends or make loans or advances to the Company, other than
restrictions on the Purchaser and its subsidiaries, and restrictions as
described in the following sentences. Each of the Company's subsidiaries which
are Delaware incorporated corporations may pay dividends, under the Delaware
General Corporation Law (the "DGCL") only out of its surplus or, in the
circumstances prescribed by the DGCL, out of its net profits for the fiscal year
in which the dividend is declared and/or the preceding fiscal year. Each of the
Company's subsidiaries which are United Kingdom companies are, under applicable
United Kingdom law, prohibited from paying dividends unless such payments are
made out of profits available for distribution (which consist of accumulated,
realized profits, so far as not previously utilized by distribution or
capitalization, less accumulated realized losses, so far as not previously
written off in a reduction or reorganization of capital). The Company's United
Kingdom subsidiaries (not including NTL and subsidiaries) do not currently have
such profits and are not expected to have any such profits for the foreseeable
future. In addition, the United Kingdom may impose a withholding tax on
distributions (of interest, dividends or otherwise) by United Kingdom
subsidiaries of the Company. In light of the Company's strategy of continued
growth, in part through acquisitions, the Company and its subsidiaries may incur
substantial indebtedness in the future. A substantial portion of such future
indebtedness and, in particular, indebtedness incurred by the Company's
subsidiaries under the Proposed Credit Facilities, is expected to be secured
and, consequently, will have priority to the extent of such security over
unsecured indebtedness. In addition, the lenders under the Proposed Credit
Facilities may impose restrictions on the rights of the Company to receive from
its subsidiaries repayment of or interest in respect of intercompany loans or
restrictions on the ability of the Company's subsidiaries to pay dividends or
make other distributions. Therefore, for the reasons referred to in this
paragraph, there can be no assurance that the Company will be able to receive
any cash flow from its subsidiaries in a timely manner or at all.
In addition, the Company will encounter currency exchange rate risks which
could be material relative to funding United Kingdom operations and to revenues.
To the extent that the Company obtains financing in United States dollars and
incurs costs in the construction and operation of the Company's regional systems
in the United Kingdom in British pounds sterling, it will encounter currency
exchange rate risks. Furthermore, the Company's revenue will be generated
primarily in British pounds sterling while its interest and principal
obligations with respect to most of the Company's existing indebtedness is, and
will be, payable in United States dollars. At March 31, 1996, the Company had
invested approximately $607,000,000 in British pounds sterling money market
instruments and cash accounts to reduce this risk. While the Company may
consider entering into transactions to hedge the risk of exchange rate
fluctuations, there can be no assurances that the Company will engage in such
transactions, and, if the Company decides to engage in such transactions, that
they will successfully prevent shifts in the currency exchange rates from having
a material adverse effect on the Company.
20
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
Continued
Condensed Consolidated Statement of Cash Flows
- ----------------------------------------------
Cash provided by operating activities was $1,541,000 in 1996 and $5,434,000
in 1995. The change is primarily due to the significant increase in the net
loss, which was partially offset by non-cash charges.
Purchases of fixed assets, net of proceeds from sales, were $112,210,000 in
1996 and $83,892,000 in 1995 as a result of increased cable television,
telephone and telecommunications fixed asset purchases in 1996.
Cash provided by financing activities was $596,481,000 in 1996 primarily
due to the proceeds from the 11-1/2% Notes of $600,128,000, net of financing
costs incurred of $22,339,000. Additional financing costs of $305,000 were
incurred in connection with the Proposed Credit Facilities. Pursuant to the
subsidiary bank loan, $367,000 was released from cash held in escrow. In 1996,
one of the Company's joint ventures borrowed (Pounds)18,000,000 from the Company
and (Pounds)12,000,000 from the minority interest holder in the joint venture.
The proceeds from borrowings from minority partner of $18,367,000 are the result
of the cash received from the minority interest holder for the loan.
21
<PAGE>
INTERNATIONAL CABLETEL 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 March 31, 1996, the Company filed the
following current reports on Form 8-K:
(i) Report dated January 8, 1996 reporting under Item 5, Other Events,
that the Company amended its solicitation of the consent of the
holders of its 10-7/8% Senior Deferred Coupon Notes to amend the
indenture governing the 10-7/8% Notes, and also seeking the consent of
the holders of its 12-3/4% Senior Deferred Coupon Notes to amend the
indenture governing the 12-3/4% Notes.
(ii) Report dated January 16, 1995 reporting under Item 5, Other
Events, and attaching as an exhibit under Item 7, information
contained in an offering memorandum prepared in connection with a
then-proposed issuance by the Company of certain Notes in compliance
with Rule 144A.
(iii) Report dated January 17, 1996 reporting under Item 5, Other
Events, that the Company extended its solicitation of the consent of
the holders of its 10-7/8% Senior Deferred Coupon Notes and its
12-3/4% Senior Deferred Coupon Notes. The expiration date for the
solicitation was extended to January 19, 1996.
(iv) Report dated January 23, 1996 reporting under Item 5, Other
Events, that the Company had received the necessary consents from the
holders of its 10-7/8% Senior Deferred Coupon Notes and its 12-3/4%
Senior Deferred Coupon Notes to amend the indentures governing those
Notes.
(v) Report dated January 30, 1996 reporting under Item 5, Other
Events, that the Company has raised net proceeds of approximately $582
million from an offering that it had completed of its 11-1/2% Series A
Deferred Coupon Notes Due 2006.
(vi) Report dated February 5, 1996, reporting under item 5, Other
Events and attaching as an exhibit under Item 7, information contained
in a registration statement on Form S-4 prepared in connection with a
then-proposed offer by the Company of certain Notes.
22
<PAGE>
INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES
(b) Reports on Form 8-K - Continued
(vii) Report dated March 19, 1996 reporting under Item 5 Other Events,
and attaching as an exhibit under Item 7, certain licenses issued to,
or acquired by, the Company's U.K. subsidiaries and affiliated Joint
Ventures (and their predecessors).
(viii) Report dated March 28, 1996 reporting under Item 5, Other
Events, the Company's agreement to acquire NTL Group Ltd.
No financial statements were filed with these reports.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL CABLETEL
INCORPORATED
Date: May 13, 1996 By: /s/ J. Barclay Knapp
-----------------------------
J. Barclay Knapp
President
Date: May 13, 1996 By: /s/ Gregg Gorelick
------------------------------
Gregg Gorelick
Vice President-Controller
(Principal Accounting Officer)
24
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 661,945,000
<SECURITIES> 0
<RECEIVABLES> 10,929,000
<ALLOWANCES> (1,143,000)
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<CURRENT-ASSETS> 16,784,000
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<COMMON> 303,000
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