<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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-22616
NTL COMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 52-1822078
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
110 East 59th Street, New York, New York 10022
(Address of principal executive offices) (Zip Code)
</TABLE>
(212) 906-8440
(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,
2000 was 100. The Registrant is a wholly-owned subsidiary of NTL Incorporated
and there is no market for the Registrant's common stock. The Registrant meets
the conditions for the reduced disclosure format set forth in General
Instruction H(1) (a) and (b) of Form 10-Q.
<PAGE> 2
NTL Communications Corp. and Subsidiaries
Index
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 2000 and December 31, 1999 ................................................. 2
Condensed Consolidated Statements of Operations-
Three months ended March 31, 2000 and 1999 ........................................... 4
Condensed Consolidated Statement of Shareholder's Equity-
Three months ended March 31, 2000 .................................................... 5
Condensed Consolidated Statements of Cash Flows-
Three months ended March 31, 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 .................................................... 13
Item 3. Quantitative and Qualitative Disclosure about Market Risk ............................. 19
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ...................................................... 20
SIGNATURES.......................................................................................... 21
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ----------
(unaudited) (see note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 720,449 $1,070,076
Marketable securities 2,175 5,014
Accounts receivable - trade, less allowance for doubtful accounts of
$81,198 (2000) and $82,996 (1999) 246,860 249,905
Other 84,177 66,606
---------- ----------
Total current assets 1,053,661 1,391,601
Fixed assets, net 5,469,693 5,340,555
Intangible assets, net 2,368,296 2,474,057
Other assets, net of accumulated amortization
of $55,165 (2000) and $49,170 (1999) 217,922 296,060
---------- ----------
Total assets $9,109,572 $9,502,273
========== ==========
</TABLE>
2
<PAGE> 4
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Balance Sheets - continued
(dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
(unaudited) (see note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 217,063 $ 198,623
Accrued expenses and other 381,788 373,096
Accrued construction costs 70,855 79,302
Interest payable 42,713 69,024
Deferred revenue 156,959 147,952
Current portion of long-term debt 6,127 82,601
----------- -----------
Total current liabilities 875,505 950,598
Long-term debt 7,667,797 7,598,024
Commitments and contingent liabilities
Deferred income taxes 47,126 53,124
Shareholder's equity:
Common stock - $.01 par value; authorized
100 shares; issued and outstanding 100 (2000)
and 100 (1999) shares -- --
Additional paid-in capital 2,869,666 2,863,677
Accumulated other comprehensive (loss) income (58,416) 2,395
(Deficit) (2,292,106) (1,965,545)
----------- -----------
519,144 900,527
----------- -----------
Total liabilities and shareholder's equity $ 9,109,572 $ 9,502,273
=========== ===========
</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 Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
--------- ---------
<S> <C> <C>
REVENUES
Residential telecommunications and television $ 248,277 $ 168,827
National and international telecommunications 147,226 105,730
Broadcast transmission and other 41,113 38,824
--------- ---------
436,616 313,381
COSTS AND EXPENSES
Operating expenses 200,098 161,544
Selling, general and administrative expenses 164,739 119,270
Franchise fees -- 6,848
Corporate expenses 6,604 5,252
Depreciation and amortization 228,492 141,734
--------- ---------
599,933 434,648
--------- ---------
Operating (loss) (163,317) (121,267)
OTHER INCOME (EXPENSE)
Interest and other income 8,553 11,013
Interest expense (188,472) (130,823)
Foreign currency transaction gains 11,911 10,658
--------- ---------
(Loss) before income tax benefit (331,325) (230,419)
Income tax benefit 4,764 --
--------- ---------
Net (loss) $(326,561) $(230,419)
========= =========
</TABLE>
See accompanying notes.
4
<PAGE> 6
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholder's Equity
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
COMMON STOCK
$.01 PAR VALUE
SHARES PAR
------------------------
<S> <C> <C>
Balance, December 31, 1999 100 $ -
Contributions from NTL Incorporated
Comprehensive loss:
Net loss for the three months ended March 31, 2000
Currency translation adjustment
Total
------------------------
Balance, March 31, 2000 100 $ -
========================
</TABLE>
See accompanying notes.
5
<PAGE> 7
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholder's Equity
(Unaudited) - continued
(dollars in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
PAID-IN COMPREHENSIVE COMPREHENSIVE
CAPITAL LOSS INCOME (LOSS) DEFICIT
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 $2,863,677 $ 2,395 $(1,965,545)
Contributions from NTL Incorporated 5,989
Comprehensive loss:
Net loss for the three months ended March 31, 2000 $(326,561) (326,561)
Currency translation adjustment (60,811) (60,811)
---------------------
Total $(387,372)
---------------------------------------------------------------------------------
Balance, March 31, 2000 $2,869,666 $(58,416) $(2,292,106)
=================================================================================
</TABLE>
See accompanying notes.
6
<PAGE> 8
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net cash (used in) operating activities $ (4,059) $ (6,594)
INVESTING ACTIVITIES
Acquisition, net of cash acquired -- 233,852
Purchase of marketable securities (2,193) (204,914)
Proceeds from sales of marketable securities 4,976 101,352
Increase in other assets (948) (48,905)
Purchase of fixed assets (356,363) (276,126)
----------- -----------
Net cash (used in) investing activities (354,528) (194,741)
FINANCING ACTIVITIES
Cash released from escrow 83,342 --
Increase in deferred financing costs (664) (1,983)
Principal payments (75,348) --
Contribution from NTL Incorporated 5,989 --
Proceeds from exercise of stock options and warrants -- 12,161
Proceeds from issuance of preferred stock and warrants -- 500,000
----------- -----------
Net cash provided by financing activities 13,319 510,178
Effect of exchange rate changes on cash (4,359) (13,234)
----------- -----------
(Decrease) increase in cash and cash equivalents (349,627) 295,609
Cash and cash equivalents at beginning of period 1,070,076 736,265
----------- -----------
Cash and cash equivalents at end of period $ 720,449 $ 1,031,874
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for
interest exclusive of amounts capitalized $ 89,851 $ 49,788
Income taxes paid -- 376
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on preferred stock $ -- $ 8,722
Conversion of Convertible Notes -- 50
Common stock and stock options issued for an acquisition -- 978,036
</TABLE>
See accompanying notes.
7
<PAGE> 9
NTL Communications Corp. 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 months ended March 31, 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 NTL Communications
Corp.'s 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.
NOTE B - FIXED ASSETS
Fixed assets consist of:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
(unaudited)
(in thousands)
<S> <C> <C>
Operating equipment $ 4,896,541 $ 4,858,950
Other equipment 742,978 694,712
Construction-in-progress 856,552 668,741
----------- -----------
6,496,071 6,222,403
Accumulated depreciation (1,026,378) (881,848)
----------- -----------
$ 5,469,693 $ 5,340,555
=========== ===========
</TABLE>
8
<PAGE> 10
NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE C - INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ----------
(unaudited)
(in thousands)
<S> <C> <C>
Goodwill, net of accumulated amortization
of $228,555 (2000) and $183,612 (1999) $2,016,602 $2,089,723
License acquisition costs, net of accumulated amortization of
$161,709 (2000) and $141,682 (1999) 203,946 224,998
Customer lists, net of accumulated amortization
of $39,821 (2000) and $30,870 (1999) 147,748 159,336
---------- ----------
$2,368,296 $2,474,057
========== ==========
</TABLE>
In 1999, the Company completed the acquisitions of Diamond Cable Communications
plc, Cablelink Limited and certain broadband cable franchises of British
Telecommunications plc.
The pro forma unaudited consolidated results of operations for the three months
ended March 31, 1999 assuming consummation of these transactions as of January
1, 1999 is as follows, (in thousands, except per share data):
Total revenue $ 360,984
Net (loss) (338,932)
9
<PAGE> 11
NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE D - LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ----------
(in thousands)
<S> <C> <C>
NTL Communications:
12-3/4% Senior Deferred Coupon Notes $ 276,433 $ 268,108
11-1/2% Senior Deferred Coupon Notes 956,909 930,404
10% Senior Notes 400,000 400,000
9-1/2% Senior Sterling Notes, less unamortized
discount of $545 (2000) and $567 (1999) 198,630 201,408
10-3/4% Senior Deferred Coupon Sterling Notes 347,899 343,691
9-3/4% Senior Deferred Coupon Notes 975,613 952,825
9-3/4% Senior Deferred Coupon Sterling Notes 357,835 354,394
11-1/2% Senior Notes 625,000 625,000
12-3/8% Senior Deferred Coupon Notes 295,579 286,967
7% Convertible Subordinated Notes 599,300 599,300
Variable Rate Redeemable Guaranteed Loan Notes -- 76,794
9-1/4% Senior Euro Notes 238,975 252,300
9-7/8% Senior Euro Notes 334,565 353,220
11-1/2% Senior Deferred Coupon Euro Notes 119,772 123,080
NTL Triangle:
11.2% Senior Discount Debentures 483,392 467,317
Other 7,118 7,969
Diamond:
13-1/4% Senior Discount Notes 285,101 285,101
11-3/4% Senior Discount Notes 490,262 476,215
10-3/4% Senior Discount Notes 345,918 336,891
10% Senior Sterling Notes 215,109 218,133
9-1/8% Senior Notes 110,000 110,000
Other 10,514 11,508
---------- ----------
7,673,924 7,680,625
Less current portion 6,127 82,601
---------- ----------
$7,667,797 $7,598,024
========== ==========
</TABLE>
10
<PAGE> 12
NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE D - LONG-TERM DEBT (CONTINUED)
In March 2000, the Company redeemed in full its Variable Rate Redeemable
Guaranteed Loan Notes, principal amount of IR pound sterling 60 million ($73.2
million), plus accrued and unpaid interest using cash held in escrow.
NOTE E - COMPREHENSIVE LOSS
The Company's comprehensive loss for the three months ended March 31, 2000 and
1999 was $(387,372,000) and $(344,538,000), respectively.
NOTE F - SEGMENT DATA
<TABLE>
<CAPTION>
RESIDENTIAL
TELECOMS CORPORATE
AND NATIONAL AND
BROADCAST TELEVISION TELECOMS OTHER TOTAL
----------- ----------- ----------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Three months ended March 31, 2000
Revenues $ 41,113 $ 248,277 $ 147,226 $ -- $ 436,616
EBITDA (1) 24,184 72,213 49,768 (74,386) 71,779
Three months ended March 31, 1999
Revenues $ 38,824 $ 168,827 $ 105,730 $ -- $ 313,381
EBITDA (1) 25,081 45,070 11,970 (49,554) 32,567
Total assets
March 31, 2000 $ 272,923 $ 5,783,770 $ 1,135,689 $ 1,917,190 $ 9,109,572
December 31, 1999 281,687 5,978,509 1,078,474 2,163,603 9,502,273
</TABLE>
(1) Represents earnings before interest, taxes, depreciation and amortization,
corporate expenses, franchise fees, and foreign currency transaction gains.
11
<PAGE> 13
NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - SEGMENT DATA (CONTINUED)
The reconciliation of segment combined EBITDA to loss before income tax benefit
is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
2000 1999
-------------------------------------------
<S> <C> <C>
Segment Combined EBITDA $71,779 $32,567
(Add) Deduct:
Franchise fees - 6,848
Corporate expenses 6,604 5,252
Depreciation and amortization 228,492 141,734
Interest and other income (8,553) (11,013)
Interest expense 188,472 130,823
Foreign currency transaction gains (11,911) (10,658)
-------------------------------------------
403,104 262,986
-------------------------------------------
(Loss) before income tax benefit $(331,325) $(230,419)
===========================================
</TABLE>
NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2000, the Company was committed to pay approximately $129.6 million
for equipment and services.
The Company is considering an offer to convert its 7% Convertible Notes with a
principal amount of $599.3 million into common stock. The terms of the offer
will be disclosed when and if made.
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.
12
<PAGE> 14
NTL Communications Corp. 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 the Company:
<TABLE>
<CAPTION>
CABLE TELEVISION AND TELEPHONY CUSTOMERS
AS OF MARCH 31, 2000
--------------------
"Original" Cablelink/ BT Total UK/
NTL (1) UK Acq. (2) Cable (3) Ireland (4)
---------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C>
Homes passed 1,366,400 2,376,500 605,500 4,348,400
Homes marketed (Tel.) 1,171,300 2,033,800 0 3,205,100
Homes marketed (CATV) 1,171,300 2,147,300 553,600 3,872,200
Total customers 572,200 826,200 422,100 1,820,500
Dual 529,300 443,900 0 973,200
Telephone-only 18,000 283,200 0 301,200
Cable-only 24,900 99,100 422,100 546,100
Total RGUs (5) 1,101,500 1,270,100 422,100 2,793,700
Customer penetration 48.9% 38.5% 76.2% 47.0%
RGU penetration 94.0% 59.1% 76.2% 72.1%
Telephone penetration 46.7% 35.8% N/A 39.8%
Cable penetration 47.3% 25.3% 76.2% 39.2%
</TABLE>
(1) Data for franchises which NTL has been developing since 1993.
(2) Data for franchises acquired by NTL in 1998/1999: Comcast UK, Diamond
Cable and ComTel.
(3) Data for Cablelink (Ireland) and the BT cable franchises acquired in
1999.
(4) Includes total subscribers for UK and Ireland.
(5) An RGU (revenue generating unit) is one cable television account or one
telephone account; a dual customer generates two RGUs.
Monthly RGU churn was approximately 1.1% in the first quarter.
The following table shows the Internet operating statistics for the Company:
<TABLE>
<CAPTION>
INTERNET CUSTOMERS AS OF MARCH 31, 2000
---------------------------------------
NTL
NTL Direct UK Wholesale Combined
---------- ------------ --------
<S> <C> <C> <C>
Total customers 128,700 712,000 840,700
</TABLE>
13
<PAGE> 15
NTL Communications Corp. and Subsidiaries
RESULTS OF OPERATIONS
As a result of the completion of the acquisitions of Diamond Cable
Communications plc ("Diamond") in March 1999 and Cablelink Limited ("Cablelink")
in July 1999, the Company consolidated the results of operations of these
businesses from the dates of acquisition. The results of these businesses are
not included in the 1999 results except for the results of operations of Diamond
from the date of acquisition.
Three Months Ended March 31, 2000 and 1999
- ------------------------------------------
Residential telecommunications and television revenues increased to $248,277,000
from $168,827,000 as a result of acquisitions and from customer growth that
increased the Company's current revenue stream. The 2000 and 1999 revenue
includes $60,626,000 and $12,283,000, respectively, from acquired companies. The
Company expects its customer base to continue to increase as the Company
completes the construction of its broadband network past the remaining homes in
its franchise areas.
National and international telecommunications revenues increased to $147,226,000
from $105,730,000 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 $12,287,000 and $3,503,000,
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. The Company is expanding its sales and marketing
effort to business customers and for Internet services in its completed network.
Carrier services revenues increased due to growth in satellite services and
telephone 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 increased to $41,113,000 from
$38,824,000 due to 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 $200,098,000 from $161,544,000 as a result of
increases in interconnection costs and programming costs due to customer growth.
The 2000 and 1999 expense includes $25,580,000 and $5,488,000, respectively,
from acquired companies.
Selling, general and administrative expenses increased to $164,739,000 from
$119,270,000 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 $25,956,000 and
$5,558,000, 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 $6,848,000 in 1999.
14
<PAGE> 16
NTL Communications Corp. and Subsidiaries
Corporate expenses increased to $6,604,000 from $5,252,000 due to an increase in
various overhead costs.
Depreciation and amortization expense increased to $228,492,000 from
$141,734,000 due to an increase in depreciation of telecommunications and CATV
equipment. The 2000 and 1999 expense includes $65,421,000 and $18,463,000,
respectively, from acquired companies, including amortization of acquisition
related intangibles.
Interest expense increased to $188,472,000 from $130,823,000 due to the issuance
of additional debt in 1999, and the increase in the accretion of original issue
discount on the deferred coupon notes. The 2000 and 1999 expense includes
$41,868,000 and $12,722,000, respectively, from Diamond. Interest of
$103,433,000 and $60,152,000 was paid in the three months ended March 31, 2000
and 1999, respectively.
Foreign currency transaction gains increased to $11,911,000 from $10,658,000
primarily due to the effect of favorable changes in the exchange rate. The
Company's results of operations are impacted by changes in foreign currency
exchange rates as follows. The Company has 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
$784 million from April 1, 2000 to December 31, 2000. The Company's commitments
at March 31, 2000 for equipment and services through 2000 are included in the
anticipated requirements. The Company had approximately $723 million in cash and
securities on hand at March 31, 2000.
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.
NTL Triangle, an indirect wholly-owned subsidiary of the Company, sold its 50%
ownership interest in Cable London PLC in November 1999 for approximately pound
sterling 428 million (approximately $682 million) in cash. The sale of the Cable
London PLC interest is an "Asset Sale" for purposes of the Company's Indentures
for certain of its notes. The Company will need to use an amount equal to the
proceeds from the sale to repay subsidiary debt, invest in "Replacement Assets"
or make an offer to redeem certain of its notes by November 2000.
15
<PAGE> 17
NTL Communications Corp. and Subsidiaries
The Company is highly leveraged. The accreted value at March 31, 2000 of the
Company's consolidated long-term indebtedness is approximately $7.7 billion,
representing approximately 94% of total capitalization. The following summarizes
the terms of those notes issued by the Company and its subsidiaries.
NTL Communications:
(1) 12-3/4% Senior Deferred Coupon Notes due April 15, 2005, principal amount
at maturity of $278 million, interest payable semiannually beginning on
October 15, 2000, redeemable at the Company's option on or after April
15, 2000;
(2) 11-1/2% Senior Deferred Coupon Notes due February 1, 2006, principal
amount at maturity of $1.05 billion, interest payable semiannually
beginning on August 1, 2001, redeemable at the Company's option on or
after February 1, 2001;
(3) 10% Senior Notes due February 15, 2007, principal amount at maturity of
$400 million, interest payable semiannually from August 15, 1997,
redeemable at the Company's option on or after February 15, 2002;
(4) 9-1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of pound sterling 125 million ($199 million), interest payable
semiannually from October 1, 1998, redeemable at the Company's option on
or after April 1, 2003;
(5) 10-3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008,
principal amount at maturity of pound sterling 300 million ($478
million), interest payable semiannually beginning on October 1, 2003,
redeemable at the Company's option on or after April 1, 2003;
(6) 9-3/4% Senior Deferred Coupon Notes due April 1, 2008, principal amount
at maturity of $1.3 billion, interest payable semiannually beginning on
October 1, 2003, redeemable at the Company's option on or after April 1,
2003;
(7) 9-3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009,
principal amount at maturity of pound sterling 330 million ($526
million), interest payable semiannually beginning on October 15, 2004,
redeemable at the Company's option on or after April 15, 2004;
(8) 11-1/2% Senior Notes due October 1, 2008, principal amount at maturity of
$625 million, interest payable semiannually from April 1, 1999,
redeemable at the Company's option on or after October 1, 2003;
(9) 12-3/8% Senior Deferred Coupon Notes due October 1, 2008, principal
amount at maturity of $450 million, interest payable semiannually
beginning on April 1, 2004, redeemable at the Company's option on or
after October 1, 2003;
(10) 7% Convertible Subordinated Notes due December 15, 2008, principal amount
at maturity of $599 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
<PAGE> 18
NTL Communications Corp. and Subsidiaries
(11) 9-1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of (euro)250 million ($239 million), interest payable
semiannually beginning on May 15, 2000;
(12) 9-7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of (euro)350 million ($335 million), interest payable
semiannually beginning on May 15, 2000, redeemable at the Company's
option on or after November 15, 2004;
(13) 11-1/2% Senior Deferred Coupon Euro Notes due November 15, 2009,
principal amount at maturity of (euro)210 million ($201 million),
interest payable semiannually beginning on May 15, 2005, redeemable at
the Company's option on or after November 15, 2004;
NTL Triangle:
(14) 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:
(15) 13-1/4% Senior Discount Notes due September 30, 2004, principal amount at
maturity of $285 million, interest payable semiannually beginning on
March 31, 2000, redeemable at Diamond's option after September 30, 1999;
(16) 11-3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531 million, interest payable semiannually beginning on June
15, 2001, redeemable at Diamond's option on or after December 15, 2000;
(17) 10-3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $421 million, interest payable semiannually beginning on
August 15, 2002, redeemable at Diamond's option on or after December 15,
2002;
(18) 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 million ($215 million), interest payable
semiannually from August 1, 1998, redeemable at Diamond's option on or
after February 1, 2003;
(19) 9-1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount at maturity of $110 million, interest payable
semiannually from August 1, 1998, redeemable at Diamond's option on or
after February 1, 2003; and
(20) mortgage of pound sterling 2.5 million ($4 million) to fund the
construction of an office building, repayable over 20 years as of July
31, 1995, interest at LIBOR plus 1-1/2%.
The Company is considering an offer to convert its 7% Convertible Notes with a
principal amount of $599 million into common stock. The terms of the offer will
be disclosed when and if made.
17
<PAGE> 19
NTL Communications Corp. and Subsidiaries
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. Accordingly, the Company's ability to make
scheduled interest and principal payments when due to holders of its
indebtedness may be dependent upon the receipt of sufficient funds from its
subsidiaries.
From time to time NTL Incorporated may fund its capital requirements outside the
United Kingdom and Ireland from dividends from the Company subject to certain
conditions under the Indentures. The Company distributed $500 million to NTL
Incorporated in April 1999. The Company may use cash from equity proceeds in
excess of cumulative EBITDA (as defined in the Indentures) minus 1.5 times
cumulative interest expense plus capital stock proceeds, for dividend payments
to the extent such funds are not used for other Restricted Payments (as defined
in the Indentures). NTL Incorporated intends to repay certain amounts to the
Company when funds become available.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Cash used in operating activities was $4,059,000 and $6,594,000 in the three
months ended March 31, 2000 and 1999, respectively. Although net loss increased
to $326,561,000 from $230,419,000 in the three months ended March 31, 2000 and
1999, respectively, results of operations items not requiring cash outlays
increased by a greater amount to $344,640,000 from $233,399,000. In addition,
changes in operating assets and liabilities used cash of $22,138,000 in 2000
compared to $9,574,000 in 1999. Cash used in operating activities plus cash paid
for interest exclusive of amounts capitalized was $85,792,000 and $43,194,000 in
2000 and 1999, respectively.
Purchases of fixed assets were $356,363,000 in 2000 and $276,126,000 in 1999 as
a result of the continuing fixed asset purchases and construction, including
purchases and construction by acquired companies.
18
<PAGE> 20
NTL Communications Corp. and Subsidiaries
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
There have been no material changes in the reported market risks since the end
of the most recent fiscal year.
19
<PAGE> 21
NTL Communications Corp. 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, 2000, the Company filed the
following reports on Form 8-K:
(i) Report dated January 25, 2000 (filed January 25, 2000)
reporting under Item 5, Other Events, that Premium TV
Limited and Aston Villa entered into a Media Partnership.
(ii) Report dated February 4, 2000 (filed February 10, 2000)
reporting under Item 5, Other Events, an agreement to take
televised racing into the digital age, that Microsoft
Corporation exercised its right to convert its shares of
Preferred Stock into Common Stock and that NTL commented
on an announcement by the ITC and OFTEL.
(iii) Report dated February 15, 2000 (filed February 15, 2000)
reporting under Item 5, Other Events, the public posting
of CWC transaction documentation.
No financial statements were filed with these reports.
20
<PAGE> 22
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 COMMUNICATIONS CORP.
Date: May 12, 2000 By: /s/ Barclay Knapp
-------------------------
Barclay Knapp
President and Chief Executive Officer
Date: May 12, 2000 By: /s/ Gregg N. Gorelick
--------------------------
Gregg N. Gorelick
Vice President-Controller
(Principal Accounting Officer)
21
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