<PAGE>
FORM 10-Q/A-1
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
SIGNATURES 11
- ----------
<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) $(.45)
============ ============
Weighted average number of common shares
used in computation of net
loss per share 30,211,000 30,181,000
============ ============
</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>
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 24, 1996 By: /s/ George S. Blumenthal
-----------------------------
George S. Blumenthal
Chairman and Chief
Executive Officer
11
