UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
for the Quarterly Period Ended:
JUNE 30, 1996
OR
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the Transition Period from ________ to ________.
Commission File Number 0-24792
COMCAST UK CABLE PARTNERS LIMITED
(Exact name of registrant as specified in its charter)
Bermuda Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House Comcast Corporation
2 Church Street West 1500 Market Street, 35th Floor
Hamilton, HM 11, Bermuda Philadelphia, PA 19102-2148
(809) 295-5950 (215) 665-1700
(Address, including zip code, and (Name, address, including zip code,
telephone number, and telephone number,
including area code, including area code,
of Registrant's principal executive offices) of agent for service)
--------------------------
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 twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes __X__ No _____
--------------------------
As of June 30, 1996, there were 37,231,997 Class A Common Shares and 12,872,605
Class B Common Shares outstanding.
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance
Sheet as of June 30, 1996 and December 31,
1995 (Unaudited).........................................2
Condensed Consolidated Statement of
Operations and Accumulated Deficit for
the Six and Three Months Ended June 30,
1996 and 1995 (Unaudited)................................3
Condensed Consolidated Statement of Cash
Flows for the Six Months Ended June 30,
1996 and 1995 (Unaudited)................................4
Notes to Condensed Consolidated
Financial Statements (Unaudited).....................5 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations..........................................9 - 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................14
Item 4. Submission of Matters to a Vote of
Security Holders...................................14 - 15
Item 6. Exhibits and Reports on Form 8-K........................15
-----------------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this Quarterly
Report is forward-looking, such as information relating to future capital
expenditures and future contributions and advances to the Operating Companies.
Such forward-looking information involves important risks and uncertainties that
could significantly affect expected results in the future from those expressed
in any forward-looking statements made by, or on behalf of, the Company. These
risks and uncertainties include, but are not limited to, uncertainties relating
to economic conditions, acquisitions and divestitures, government and regulatory
policies, the pricing and availability of equipment, materials, inventories and
programming, technological developments and changes in the competitive
environment in which the Company operates.
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(UK Pound)000 (UK Pound)000
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................. (UK Pound)130,370 (UK Pound)162,231
Short-term investments, at cost which approximates
fair value .............................................. 39,023 57,240
Accounts receivable, less allowance for doubtful
accounts of (UK Pound)976 and (UK Pound)40 .............. 1,101 56
Prepaid charges and other ................................. 6,580 4,664
----------------- -----------------
Total current assets ................................... 177,074 224,191
----------------- -----------------
INVESTMENTS IN AFFILIATES ..................................... 73,982 127,858
----------------- -----------------
PROPERTY AND EQUIPMENT ........................................ 191,427 47,750
Accumulated depreciation .................................. (5,488) (1,271)
----------------- -----------------
Property and equipment, net ............................... 185,939 46,479
----------------- -----------------
DEFERRED CHARGES .............................................. 60,574 23,162
Accumulated amortization .................................. (5,559) (3,600)
----------------- -----------------
Deferred charges, net ..................................... 55,015 19,562
----------------- -----------------
FOREIGN EXCHANGE PUT OPTIONS AND OTHER, net ................... 12,398 13,799
----------------- -----------------
(UK Pound)504,408 (UK Pound)431,889
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses ..................... (UK Pound)22,866 (UK Pound)12,174
Current portion of long-term debt ......................... 629
Foreign exchange call options ............................. 40 1,577
Due to affiliates ......................................... 684 2,224
----------------- -----------------
Total current liabilities .............................. 24,219 15,975
----------------- -----------------
LONG-TERM DEBT, less current portion .......................... 211,817 195,909
----------------- -----------------
FOREIGN EXCHANGE CALL OPTIONS AND OTHER ....................... 2,101 2,184
----------------- -----------------
LONG-TERM DEBT, due to shareholder ............................ 9,876 9,453
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Class A common shares,(UK Pound).01 par value - authorized,
50,000,000 shares; issued, 37,231,997 and 28,372,334 ... 372 284
Class B common shares,(UK Pound).01 par value - authorized,
50,000,000 shares; issued, 12,872,605 .................. 129 129
Additional capital ........................................ 358,615 287,397
Accumulated deficit ....................................... (102,721) (79,442)
----------------- -----------------
Total shareholders' equity ........................... 256,395 208,368
----------------- -----------------
(UK Pound)504,408 (UK Pound)431,889
================= =================
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
(in (UK Pound)000's, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Service income ...................... (UK Pound)11,176 (UK Pound)17 (UK Pound)9,229 (UK Pound)17
Consulting fee income ............... 610 636 223 301
------------------ ----------------- ------------------ -----------------
11,786 653 9,452 318
------------------ ----------------- ------------------ -----------------
COSTS AND EXPENSES
Operating ........................... 4,405 8 3,612 8
Selling, general and administrative . 9,605 2,850 6,394 1,866
Management fees ..................... 1,332 1,388 726 711
Depreciation and amortization ....... 6,337 1,127 4,848 620
------------------ ----------------- ------------------ -----------------
21,679 5,373 15,580 3,205
------------------ ----------------- ------------------ -----------------
OPERATING LOSS ......................... (9,893) (4,720) (6,128) (2,887)
INVESTMENT (INCOME) EXPENSE
Interest expense .................... 11,645 386 5,952 198
Investment income ................... (7,602) (5,235) (2,882) (2,616)
Equity in net losses of affiliates .. 9,640 10,675 3,942 5,937
Exchange (gains) losses and other ... (297) 657 (1,848) 589
------------------ ----------------- ------------------ -----------------
13,386 6,483 5,164 4,108
------------------ ----------------- ------------------ -----------------
NET LOSS ............................... (23,279) (11,203) (11,292) (6,995)
ACCUMULATED DEFICIT
Beginning of period ................ (79,442) (50,480) (91,429) (54,688)
------------------ ----------------- ------------------ -----------------
End of period ...................... ((UK Pound)102,721) ((UK Pound)61,683) ((UK Pound)102,721) ((UK Pound)61,683)
================== ================= ================== =================
NET LOSS PER SHARE ..................... ((UK Pound).50) ((UK Pound).27) ((UK Pound).22) ((UK Pound).17)
================== ================= ================== =================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD 46,308 41,245 50,105 41,245
================== ================= ================== =================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
(UK Pound)000 (UK Pound)000
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ...................................................... ((UK Pound)23,279) ((UK Pound)11,203)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization .............................. 6,337 1,127
Amortization on foreign exchange contracts ................. 1,356 (261)
Non-cash interest expense .................................. 11,506 386
Non-cash investment income ................................. (2,020) (2,170)
Exchange gains ............................................. (1,605)
Equity in net losses of affiliates ......................... 9,640 10,675
Increase in foreign exchange contracts, net ................ 19 (848)
Loss on investment in affiliate ............................ 605
----------------- -----------------
1,954 (1,689)
Increase in accounts receivable and prepaid charges
and other ............................................... (392) (1,265)
(Decrease) increase in accounts payable and accrued expenses (31) 8,107
Decrease in due to affiliates .............................. (1,540) (3,466)
----------------- -----------------
Net cash (used in) provided by operating activities . (9) 1,687
----------------- -----------------
FINANCING ACTIVITIES
Issuance of shares, net ....................................... (53)
Proceeds from borrowings ...................................... 354
Repayment of debt ............................................. (833)
----------------- -----------------
Net cash used in financing activities ............... (479) (53)
----------------- -----------------
INVESTING ACTIVITIES
Acquisition, net of cash acquired ............................. (10,306)
Sales of short-term investments, net .......................... 18,217 1,088
Capital contributions and advances to affiliates .............. (7,513) (16,505)
Additions to property and equipment ........................... (31,541) (18,026)
Deferred charges and other .................................... (230) (75)
----------------- -----------------
Net cash used in investing activities ............... (31,373) (33,518)
----------------- -----------------
DECREASE IN CASH AND CASH EQUIVALENTS ............................. (31,861) (31,884)
CASH AND CASH EQUIVALENTS, beginning of period .................... 162,231 100,117
----------------- -----------------
CASH AND CASH EQUIVALENTS, end of period .......................... (UK Pound)130,370 (UK Pound)68,233
================= ================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1995 has been
condensed from the audited balance sheet as of that date. The condensed
consolidated balance sheet as of June 30, 1996, the condensed consolidated
statement of operations and accumulated deficit for the six and three
months ended June 30, 1996 and 1995 and the condensed consolidated
statement of cash flows for the six months ended June 30, 1996 and 1995
have been prepared by Comcast UK Cable Partners Limited (the "Company") and
have not been audited by the Company's independent auditors. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of June 30, 1996 and for all periods presented
have been made.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's December
31, 1995 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the periods ended June 30, 1996
are not necessarily indicative of operating results for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New Accounting Pronouncement
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The Company has elected to continue to measure such
compensation expense using the method prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," as
permitted by SFAS No. 123. Accordingly, there was no impact of the adoption
of SFAS No. 123 on the Company's financial position or results of
operations.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used
in 1996.
3. SINGTEL TRANSACTION
On March 19, 1996, the Company completed the acquisition (the "Singtel
Transaction") of Singapore Telecom International Pte. Limited's ("Singapore
Telecom") 50% interest in Cambridge Holding Company Limited ("Cambridge
Cable"), pursuant to the terms of a Share Exchange Agreement executed by
the parties in December 1995. In exchange for Singapore Telecom's 50%
interest in Cambridge Cable and certain loans made to Cambridge Cable, with
accrued interest thereon, the Company issued approximately 8.9 million of
its Class A Common Shares and paid approximately(UK Pound)11.8 million to
Singapore Telecom. The Company has accounted for the Singtel Transaction
under the purchase method. As a result of the Singtel Transaction, the
Company owns 100% of Cambridge Cable and has consolidated the financial
position and results of operations of Cambridge Cable beginning on March
31, 1996.
5
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
The following pro forma information has been presented as if the Singtel
Transaction had occurred at the beginning of each period. This pro forma
information is based on historical results of operations adjusted for
acquisition costs and, in the opinion of management, is not necessarily
indicative of what results would have been had the Company owned 100% of
Cambridge Cable since such dates.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1995
(in (UK Pound)000's, except per share data)
<S> <C> <C> <C>
Revenues ......... (UK Pound)18,009 (UK Pound)9,923 (UK Pound)5,086
Net loss ......... (25,004) (15,069) (9,138)
Net loss per share (.50) (.30) (.18)
</TABLE>
4. INVESTMENTS IN AFFILIATES
The Company has historically invested in three affiliates (the "Equity
Investees," which term excludes Cambridge Cable as of March 31, 1996 - see
Note 3): Birmingham Cable Corporation Limited ("Birmingham Cable"), Cable
London PLC ("Cable London") and Cambridge Cable. The Equity Investees
operate integrated cable communications, residential telephony and business
telecommunications systems in their respective major metropolitan areas
under exclusive cable television licenses and non-exclusive
telecommunications licenses. As of June 30, 1996, the Company's ownership
interest in these affiliates is as follows:
Birmingham Cable................................27.5%
Cable London....................................49.0%
Cambridge Cable (1)............................100.0%
---------------
(1) Increased in March 1996 from 50.0% due to the acquisition of Singapore
Telecom's interest (see Note 3).
The Company also has a 16.7% interest in Cable Programme Partners-1 Limited
Partnership ("CPP-1") which previously developed and distributed cable
programming in the United Kingdom. During 1995, CPP-1 sold its only channel
and is in the process of winding down its operations. As a result, the
Company has recorded a one-time charge of(UK Pound)605,000, which is
included in exchange (gains) losses and other in the Company's condensed
consolidated statement of operations for the six and three months ended
June 30, 1995, relating to the recoverability of the Company's investment
in CPP-1. This one-time charge included a(UK Pound)560,000 reserve for the
Company's proportionate share of CPP-1's future funding commitments. To
date,(UK Pound)342,000 of these commitments have been funded by the
Company.
Included in investments in affiliates as of June 30, 1996 and December 31,
1995 are loans to Cable London of (UK Pound)21.0 million and accrued
interest of(UK Pound)2.8 million and(UK Pound)1.9 million, respectively.
The loans accrue interest at a rate of 2% above the published base lending
rate of Barclays Bank plc (7.75% effective rate as of June 30, 1996) and
are subordinate to Cable London's revolving bank credit facility. These
loans are convertible into ordinary shares of Cable London at a per share
conversion price of(UK Pound)2.00. Also included in investments in
affiliates as of December 31, 1995 are loans to Cambridge Cable of(UK
Pound)47.4 million and accrued interest of(UK Pound)5.1 million. The
Cambridge Cable loans and related accrued interest have been eliminated in
consolidation subsequent to the Singtel Transaction (see Note 3).
6
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Summarized financial information for affiliates accounted for under the
equity method is as follows:
<TABLE>
<CAPTION>
Birmingham Cable Cambridge
Cable London Cable (1) CPP-1 Combined
(UK Pound)000 (UK Pound)000 (UK Pound)000 (UK Pound)000 (UK Pound)000
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1996
Results of operations
Service income .............. 25,230 18,644 6,401 50,275
Depreciation and amortization (9,334) (6,893) (2,168) (18,395)
Operating loss .............. (5,545) (6,897) (2,133) (14,575)
Net loss .................... (9,161) (10,029) (4,419) (23,609)
Company's equity in net loss (2,516) (4,914) (2,210) (9,640)
THREE MONTHS ENDED JUNE 30, 1996
Results of operations
Service income .............. 12,918 9,523 22,441
Depreciation and amortization (4,780) (3,564) (8,344)
Operating loss .............. (2,751) (3,748) (6,499)
Net loss .................... (4,727) (5,396) (10,123)
Company's equity in net loss (1,298) (2,644) (3,942)
AS OF JUNE 30, 1996
Financial position
Current assets .............. 82,058 7,495 89,553
Noncurrent assets ........... 250,695 141,032 391,727
Current liabilities ......... 29,273 58,156 87,429
Noncurrent liabilities ...... 189,108 55,050 244,158
SIX MONTHS ENDED JUNE 30, 1995
Results of operations
Service income .............. 18,315 14,195 9,546 1,088 43,144
Depreciation and amortization (6,731) (4,740) (3,289) (34) (14,794)
Operating loss .............. (5,955) (5,863) (5,822) (4,619) (22,259)
Net loss .................... (6,825) (7,195) (8,758) (5,388) (28,166)
Company's equity in net loss (1,875) (3,523) (4,379) (898) (10,675)
THREE MONTHS ENDED JUNE 30, 1995
Results of operations
Service income .............. 9,316 7,278 4,929 487 22,010
Depreciation and amortization (3,604) (2,507) (1,737) (21) (7,869)
Operating loss .............. (3,249) (3,170) (3,287) (2,279) (11,985)
Net loss .................... (3,744) (3,974) (4,888) (3,098) (15,704)
Company's equity in net loss (1,029) (1,948) (2,444) (516) (5,937)
- -------
<FN>
(1) As a result of the Singtel Transaction, the Company owns 100% of Cambridge
Cable and has consolidated the financial position and results of operations
of Cambridge Cable beginning on March 31, 1996 (see Note 3).
</FN>
</TABLE>
5. LONG-TERM DEBT
In November 1995, the Company received net proceeds of approximately $291.1
million ((UK Pound)186.9 million) from the sale of approximately $517.3
million principal amount at maturity of its 11.20% Senior Discount
Debentures due 2007 (the "2007 Discount Debentures") in a public offering.
Interest accretes on the 2007 Discount
7
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
Debentures at 11.20% per annum compounded semi-annually from November 15,
1995 to November 15, 2000, after which date interest will be paid in cash
on each May 15 and November 15 through November 15, 2007. The 2007 Discount
Debentures contain restrictive covenants which limit the Company's ability
to pay dividends.
As of June 30, 1996, long-term debt includes(UK Pound)4.9 million of
Cambridge Cable's capitalized lease obligations, of which(UK Pound)610,000
is classified as current.
6. RELATED PARTY TRANSACTIONS
Comcast U.K. Consulting, Inc., a wholly owned subsidiary of the Company,
earns consulting fee income under consulting agreements with the Equity
Investees. The consulting fee income is generally based on a percentage of
gross revenues or a fixed amount per dwelling unit in the Equity Investees'
franchise areas.
The Company's right to receive certain consulting fee payments from
Birmingham Cable and Cable London has been subordinated to the banks under
their credit facilities. Accordingly, a portion of these fees have been
classified as long-term receivables and are included in investments in
affiliates in the Company's condensed consolidated balance sheet. In
addition, the Company's shares in Cable London have been pledged to secure
amounts outstanding under the Cable London credit facility.
Management fee expense is incurred under agreements between the Company on
the one hand, and Comcast Corporation ("Comcast"), the Company's
controlling shareholder, and Comcast UK Cable Partners Consulting, Inc.
("Comcast Consulting"), an indirect wholly owned subsidiary of Comcast, on
the other, whereby Comcast and Comcast Consulting provide consulting
services to the Equity Investees on behalf of the Company and management
services to the Company. Such management fees are based on Comcast's and
Comcast Consulting's cost of providing such services. As of June 30, 1996
and December 31, 1995, due to affiliates consists primarily of this
management fee and operating expenses paid by Comcast and its affiliates on
behalf of the Company.
For the six and three months ended June 30, 1996 and 1995, investment
income includes interest income of(UK Pound)2.0 million,(UK Pound)2.2
million,(UK Pound)415,000 and(UK Pound)1.2 million, respectively, relating
to the loans to affiliates described in Note 4.
Long-term debt due to shareholder consists of 9% Subordinated Notes payable
to Comcast UK Holdings, Inc. which are due in 1999. For the six and three
months ended June 30, 1996 and 1995, the Company recorded (UK
Pound)423,000,(UK Pound)386,000,(UK Pound)216,000 and(UK Pound)198,000,
respectively, of interest expense relating to such notes.
In management's opinion, the foregoing transactions were entered into on
terms no more favorable than those with nonaffiliated parties.
8
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Comcast UK Cable Partners Limited and its subsidiaries (the "Company"), an
indirect controlled subsidiary of Comcast Corporation ("Comcast"), was
incorporated in 1992 to develop, construct, manage and operate the interests of
Comcast in the United Kingdom ("UK") cable and telecommunications industry. As
of June 30, 1996, the Company has interests in four operations (the "Operating
Companies"): Birmingham Cable Corporation Limited ("Birmingham Cable"), in which
the Company owns a 27.5% interest, Cable London PLC ("Cable London"), in which
the Company owns a 49.0% interest, Cambridge Holding Company Limited ("Cambridge
Cable"), in which the Company owns a 100.0% interest (see below), and the
franchises for Darlington and Teesside, England ("Teesside"), in which the
Company owns a 100.0% interest. The Operating Companies hold exclusive cable
television licenses and non-exclusive telecommunications licenses in ten
franchise areas. Teesside commenced construction of a cable telecommunications
network to serve its franchises in the third quarter of 1994 and added its
initial cable and telephony subscribers in June 1995.
When build-out of the Operating Companies' systems is complete, these systems
will have the potential to serve approximately 1.6 million homes and the
businesses within their franchise areas. As of June 30, 1996, the Operating
Companies' systems passed more than 837,000 homes or approximately 52% of the
homes in their franchise areas and served more than 215,000 cable subscribers,
221,000 residential telephony subscribers and 6,800 business telephony
subscribers.
The Company accounts for its interests in Birmingham Cable and Cable London
under the equity method. Through March 31, 1996, the Company also accounted for
its interest in Cambridge Cable under the equity method (see below).
Collectively, Birmingham Cable, Cable London and Cambridge Cable are referred to
herein as the "Equity Investees" (which term excludes Cambridge Cable as of
March 31, 1996).
General Developments of Business
Singtel Transaction
On March 19, 1996, the Company completed the acquisition (the "Singtel
Transaction") of Singapore Telecom International Pte. Limited's ("Singapore
Telecom") 50% interest in Cambridge Cable, pursuant to the terms of a Share
Exchange Agreement executed by the parties in December 1995. In exchange for
Singapore Telecom's 50% interest in Cambridge Cable and certain loans made to
Cambridge Cable, with accrued interest thereon, the Company issued approximately
8.9 million of its Class A Common Shares and paid approximately(UK Pound)11.8
million to Singapore Telecom. The Company has accounted for the Singtel
Transaction under the purchase method. As a result of the Singtel Transaction,
the Company now owns 100% of Cambridge Cable and has consolidated the financial
position and results of operations of Cambridge Cable beginning on March 31,
1996.
Liquidity and Capital Resources
The Company
Historically, the Company has financed its cash requirements, including its
investments in the Equity Investees, through capital contributions from its
shareholders as well as proceeds from the Company's initial public offering of
15.0 million of its Class A Common Shares (net proceeds of $209.4 million or(UK
Pound)132.6 million) in September 1994 and from the Company's offering of its
$517.3 million principal amount at maturity 11.20% Senior Discount Debentures
due 2007 (the "2007 Discount Debentures") (net proceeds of $291.1 million or(UK
Pound)186.9 million) in
9
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
November 1995. Interest accretes on the 2007 Discount Debentures at 11.20% per
annum compounded semi-annually from November 15, 1995 to November 15, 2000,
after which date interest will be paid in cash on each May 15 and November 15
through November 15, 2007. The 2007 Discount Debentures contain restrictive
covenants which limit the Company's ability to pay dividends. The Equity
Investees have not paid any dividends to the Company and are not expected to pay
any dividends in the foreseeable future.
Except for its working capital requirements, the Company's cash needs will
depend on management's investment decisions. Investment considerations include
(i) whether further capital contributions will be made to the Equity Investees,
(ii) whether the Operating Companies can obtain debt financing, (iii) whether
the Operating Companies will be able to generate positive operating cash flow,
(iv) the timing of the build-out of the Operating Companies' systems, and (v)
whether there may be future acquisitions and trades funded in cash or Company
shares. There are no agreements or negotiations for specific material
acquisitions currently pending.
Historically, the Company has made investments in the Equity Investees in
conjunction with proportionate investments by its strategic and financial
partners. The Company made capital contributions and advances to the Operating
Companies in the aggregate of(UK Pound)45.8 million,(UK Pound)33.9 million,(UK
Pound)23.7 million and(UK Pound)23.0 million during the six and three months
ended June 30, 1996 and 1995, respectively. Although the Company is not
contractually committed to make any additional capital contributions or advances
to any of the Equity Investees, it currently intends to fund its share of the
amounts necessary for capital expenditures and to finance operating deficits.
Failure to do so could dilute the Company's ownership interest in the Equity
Investees.
The Company estimates that the Operating Companies will require an aggregate of
approximately(UK Pound)500 million to (UK Pound)600 million after June 30, 1996
to complete the build-out of their systems. Although the Company expects that
its strategic and financial partners in the Equity Investees will provide their
share of such funds, they are not contractually obligated to do so, and thus no
assurance of such funding can be given. If the Company's strategic and financial
partners fail to provide such financing, the Equity Investees will be required
to seek additional funds elsewhere. Such additional funds may come from the
Company, from new strategic and financial partners, from borrowings under
existing or new credit facilities or from other sources, although there can be
no assurance that any such financing would be available on acceptable terms and
conditions. The Company and its strategic and financial partners generally have
veto rights over the Equity Investees' debt financing decisions. Failure of any
Operating Company to obtain financing necessary to complete the build-out of its
system could result in loss of its cable franchises and licenses.
The Company has entered into foreign exchange forward contracts and foreign
exchange option contracts as a normal part of its risk management efforts.
During 1995, the Company entered into foreign exchange put option contracts
which may be settled only on November 16, 2000. These put option contracts are
used to limit the Company's exposure to the risk that the eventual cash outflows
related to net monetary liabilities denominated in currencies other than its
functional currency (the UK Pound Sterling or "UK Pound") (principally the 2007
Discount Debentures) are adversely affected by changes in exchange rates. As of
June 30, 1996, the Company has(UK Pound)250.0 million notional amount of foreign
exchange put option contracts to purchase United States ("US") dollars at an
exchange rate of $1.35 per(UK Pound)1.00 (the "Ratio"). Foreign exchange put
option contracts provide a hedge, to the extent the exchange rate falls below
the Ratio, against the Company's net monetary liabilities denominated in US
dollars since gains and losses realized on the put option contracts are offset
against gains or losses realized on the underlying net liabilities. Premiums
paid for such put option contracts of(UK Pound)13.9 million are included in
foreign exchange put options and other in the Company's condensed consolidated
balance sheet, net of related amortization. These premiums are being amortized
over the terms of the related contracts of five years.
10
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
In order to reduce hedging costs, the Company has sold(UK Pound)250.0 million
notional amount of foreign exchange call option contracts. These call option
contracts may only be settled on their expiration dates. Of these call option
contracts,(UK Pound)200.0 million notional amount settle on November 16, 1996 at
an exchange rate of $1.70 per(UK Pound)1.00 and (UK Pound)50.0 million notional
amount settle on November 16, 2000 at an exchange rate of $1.62 per(UK
Pound)1.00. Changes in fair value between measurement dates relating to these
call option contracts resulted in the recording of exchange (gains) losses of
((UK Pound)1.6 million) and(UK Pound)205,000 in the Company's condensed
consolidated statement of operations for the six and three months ended June 30,
1996, respectively.
The credit risks associated with the Company's derivative financial instruments
are controlled through the evaluation and monitoring of the creditworthiness of
the counterparties. Although the Company may be exposed to losses in the event
of nonperformance by the counterparties, the Company does not expect such
losses, if any, to be significant.
The Company's ability to meet its long-term liquidity and capital requirements
is contingent upon the Operating Companies' ability to obtain external financing
and generate positive operating cash flow. The Company believes that the net
proceeds from the sale of the 2007 Discount Debentures will be sufficient to
fund the Company's expected capital contributions and advances to Birmingham
Cable and Cable London and to fund development and construction costs for
Cambridge Cable and Teesside through the end of 1997.
The Operating Companies
The following is a discussion of the liquidity and capital resources of each of
the Operating Companies. Such financial information has not been adjusted for
the Company's proportionate ownership percentages in the Operating Companies.
Birmingham Cable. Historically, Birmingham Cable's primary sources of funding
have been capital contributions and loans from the Company and the Company's
strategic and financial partners and cash from the issuance of its preference
shares. Birmingham Cable estimates that approximately(UK Pound)34.0 million will
be required between July 1, 1996 and December 31, 1996 to continue development
and construction of its cable/telephony network. An additional (UK Pound)50.0
million to(UK Pound)70.0 million is expected to be required to complete the
build-out after 1996. The Company expects that the majority of such funds will
be provided by cash from the issuance of its preference shares. Any additional
funding may come from the Company or its strategic and financial partners,
borrowings under new credit facilities or from other sources, although there can
be no assurance that any such financing will be available on acceptable terms
and conditions.
Cable London. Historically, Cable London's primary sources of funding have been
capital contributions and loans from the Company and the Company's strategic and
financial partner and borrowings under its existing credit facility. Cable
London estimates that approximately(UK Pound)32.0 million will be required
between July 1, 1996 and December 31, 1996 to continue development and
construction of its cable/telephony network. An additional(UK Pound)90.0 million
to(UK Pound)110.0 million is expected to be required to complete the build-out
after 1996. The Company expects that a portion of such funds will be provided by
borrowings under Cable London's existing credit facility. Any additional funding
may come from the Company or its strategic and financial partner, borrowings
under new credit facilities or from other sources, although there can be no
assurance that any such financing will be available on acceptable terms and
conditions.
Cambridge Cable. Historically, Cambridge Cable's primary source of funding has
been capital contributions and loans from the Company and Singapore Telecom. The
Company estimates that approximately(UK Pound)21.0 million will be required
between July 1, 1996 and December 31, 1996 to continue development and
construction of its cable/telephony network. An additional(UK Pound)150.0
million to(UK Pound)180.0 million is expected to be required to complete the
build-out after 1996. The Company expects that a portion of such funds will be
provided by the Company,
11
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
borrowings under credit facilities, or from other sources, although there can be
no assurance that any such financing will be available on acceptable terms and
conditions.
Teesside. Historically, Teesside's primary source of funding has been capital
contributions from the Company. The Company estimates that approximately(UK
Pound)29.0 million will be required between July 1, 1996 and December 31, 1996
to continue development and construction of its cable/telephony network. An
additional(UK Pound)100.0 million to(UK Pound)120.0 million is expected to be
required to complete the build-out after 1996. The Company expects that a
portion of such funds will be provided by the Company, borrowings under credit
facilities, or from other sources, although there can be no assurance that any
such financing will be available on acceptable terms and conditions.
Results of Operations
The Company
The Company recognized net losses of(UK Pound)23.3 million,(UK Pound)11.2
million,(UK Pound)11.3 million and(UK Pound)7.0 million for the six and three
months ended June 30, 1996 and 1995, respectively, representing increases of(UK
Pound)12.1 million or 108% and(UK Pound)4.3 million or 61% from 1995 as compared
to the same periods in 1996. The Company's losses are due to the Company
recognizing its proportionate share of the Equity Investees' net losses, the
effects of the continuing construction of Teesside's cable/telephony network and
the consolidation of Cambridge Cable's results of operations beginning on March
31, 1996.
Substantially all of the increases in service income, operating expenses,
selling, general and administrative expenses, and depreciation and amortization
expense for the six and three months ended June 30, 1996, as compared to the
same periods in 1995, are attributable to the effects of the continuing
construction of Teesside's cable/telephony network and the consolidation of the
results of operations of Cambridge Cable beginning on March 31, 1996. Cambridge
Cable's service income, operating expenses, selling, general and administrative
expenses and depreciation and amortization expense were(UK Pound)6.8 million,(UK
Pound)2.7 million,(UK Pound)3.8 million and(UK Pound)3.1 million, respectively,
for the three months ended June 30, 1996.
Comcast U.K. Consulting, Inc., a wholly owned subsidiary of the Company, earns
consulting fee income under consulting agreements with the Equity Investees. The
consulting fee income is generally based on a percentage of gross revenues or a
fixed amount per dwelling unit in the Equity Investees' franchise areas.
Management fee expense is incurred under agreements between the Company on the
one hand, and Comcast and Comcast UK Cable Partners Consulting, Inc. ("Comcast
Consulting"), an indirect wholly owned subsidiary of Comcast, on the other,
whereby Comcast and Comcast Consulting provide consulting services to the Equity
Investees on behalf of the Company and management services to the Company. Such
management fees are based on Comcast's and Comcast Consulting's cost of
providing such services.
Interest expense for the six and three months ended June 30, 1996 and 1995
was(UK Pound)11.6 million,(UK Pound)386,000,(UK Pound)6.0 million and(UK
Pound)198,000, respectively, representing increases of(UK Pound)11.2 million
and(UK Pound)5.8 million from 1995 as compared to the same periods in 1996. The
increases are primarily attributable to interest expense on the 2007 Discount
Debentures incurred during 1996.
Investment income for the six and three months ended June 30, 1996 and 1995
was(UK Pound)7.6 million,(UK Pound)5.2 million,(UK Pound)2.9 million and(UK
Pound)2.6 million, respectively, representing increases of(UK Pound)2.4 million
or 46% and(UK Pound)300,000 or 12% from 1995 as compared to the same periods in
1996. The increases are primarily attributable to the increase in the average
balance of cash, cash equivalents and short-term investments held by the Company
during 1996 over the same periods in 1995, primarily as a result of the proceeds
from the offering of the 2007 Discount Debentures in November 1995.
12
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
Equity in net losses of affiliates for the six and three months ended June 30,
1996 and 1995 was(UK Pound)9.6 million,(UK Pound)10.7 million,(UK Pound)3.9
million and(UK Pound)5.9 million, respectively, representing decreases of(UK
Pound)1.1 million or 10% and(UK Pound)2.0 million or 34% from 1995 as compared
to the same periods in 1996. The decreases are attributable to the consolidation
of the results of operations of Cambridge Cable beginning on March 31, 1996,
partially offset by the effects of increases in the net losses of Birmingham
Cable and Cable London.
Exchange (gains) losses and other for the six and three months ended June 30,
1996 and 1995 was ((UK Pound)297,000), (UK Pound)657,000, ((UK Pound)1.8
million) and(UK Pound)589,000, respectively, representing changes of(UK
Pound)954,000 and(UK Pound)2.4 million from 1995 as compared to the same periods
in 1996. These changes primarily result from the impact of fluctuations in the
valuation of the UK Pound on the 2007 Discount Debentures, which are denominated
in US Dollars, and on the Company's foreign exchange call option contracts. In
addition, exchange (gains) losses and other for the six and three months ended
June 30, 1995 includes a one-time charge of(UK Pound)605,000 relating to the
recoverability of the Company's investment in Cable Programme Partners-1 Limited
Partnership.
The Operating Companies
Due to the similar nature of their operations, the following discussion with
respect to the Operating Companies' results of operations for the six and three
months ended June 30, 1996 and 1995 is based on their proportionate combined
results of operations. Such proportionate combined results of operations have
been derived from the financial statements of the Company and the Equity
Investees, after giving effect to the Company's ownership interests in each of
the Operating Companies as of June 30, 1996. The Company believes that
presentation of proportionate combined financial data, although not in
accordance with generally accepted accounting principles, facilitates the
understanding and assessment of its operating performance since the Company
accounts for its interests in Birmingham Cable, Cable London and Cambridge Cable
(through March 31, 1996) under the equity method. The results of operations of
Teesside and Cambridge Cable (subsequent to March 31, 1996) are consolidated
with those of the Company.
The Operating Companies account for costs and expenses applicable to the
construction and operation of their cable telecommunications systems under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 51,
"Financial Reporting by Cable Television Companies." Under SFAS No. 51, during
the period while a system is partially under construction and partially in
service (the "Prematurity Period"), costs of telecommunications plant, including
materials, direct labor and construction overhead are capitalized.
Subscriber-related costs and general and administrative costs are expensed as
incurred. Costs incurred in anticipation of servicing a fully operating system
that will not vary regardless of the number of subscribers are partially
expensed and partially capitalized based upon the percentage of average actual
or estimated subscribers, whichever is greater, to the total number of
subscribers expected at the end of the Prematurity Period (the "Fraction").
During the Prematurity Period, depreciation and amortization of system assets is
determined by multiplying the depreciation and amortization of the total
capitalized system assets expected at the end of the Prematurity Period by the
Fraction. At the end of the Prematurity Period, depreciation and amortization of
system assets is based on the remaining undepreciated cost at that date.
Proportionate combined service income was(UK Pound)33.6 million,(UK Pound)21.6
million,(UK Pound)17.4 million and(UK Pound)11.1 million for the six and three
months ended June 30, 1996 and 1995, respectively, representing increases of(UK
Pound)12.0 million or 56% and(UK Pound)6.3 million or 57% from 1995 as compared
to the same periods in 1996. Substantially all of the revenue growth was due to
increases in the number of cable communications and telephony subscribers,
primarily as a result of additional homes passed. Approximately one-half of the
Operating Companies' service income for the six and three months ended June 30,
1996 and 1995 is derived from monthly subscription charges relating primarily to
cable communications services and approximately one-half of their service income
for these periods is derived primarily from usage charges relating to telephony
services.
13
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
Proportionate combined operating, selling, general and administrative expenses
were(UK Pound)34.9 million,(UK Pound)27.0 million, (UK Pound)17.8 million,
and(UK Pound)14.6 million for the six and three months ended June 30, 1996 and
1995, respectively, representing increases of(UK Pound)7.9 million or 29% and(UK
Pound)3.2 million or 22% from 1995 as compared to the same periods in 1996.
Substantially all of the increases were attributable to the continued
development of Teesside's operations and increased business activity resulting
from the growth in the number of subscribers and development of the Operating
Companies' franchise areas.
Proportionate combined depreciation and amortization expense was(UK Pound)13.9
million,(UK Pound)8.3 million,(UK Pound)7.6 million and(UK Pound)4.4 million for
the six and three months ended June 30, 1996 and 1995, respectively,
representing increases of(UK Pound)5.6 million or 67% and(UK Pound)3.2 million
or 73% from 1995 as compared to the same periods in 1996. These increases were
due to certain of the Operating Companies' discrete build areas ending their
Prematurity Periods as set out under SFAS No. 51, as well as an increase in the
percentage used to calculate depreciation expense as a result of an increased
number of subscribers in those discrete franchise areas remaining in their
Prematurity Period.
Proportionate combined interest expense was(UK Pound)8.6 million,(UK Pound)5.5
million,(UK Pound)4.3 million and(UK Pound)3.2 million for the six and three
months ended June 30, 1996 and 1995, respectively, representing increases of(UK
Pound)3.1 million or 56% and(UK Pound)1.1 million or 34% from 1995 as compared
to the same periods in 1996. The increases were primarily attributable to
additional loans from shareholders and borrowings under credit facilities.
Proportionate combined investment income was(UK Pound)1.6 million,(UK Pound)1.7
million,(UK Pound)756,000 and(UK Pound)1.1 million for the six and three months
ended June 30, 1996 and 1995, respectively, representing decreases of(UK
Pound)100,000 or 6% and(UK Pound)344,000 or 31% from 1995 as compared to the
same periods in 1996. The decreases were attributable to a decrease in the
average balance of cash, cash equivalents and restricted cash held by the
Operating Companies during the six and three months ended June 30, 1996 as
compared to the same periods in 1995.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Neither the Company nor the Operating Companies are party to any material
litigation.
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting on June 20, 1996, the shareholders approved the following
proposals:
1. To elect eleven directors to serve for the ensuing year and until their
respective successors shall have been duly elected and qualified.
<TABLE>
<CAPTION>
Director Class of Stock For Withheld
<S> <C> <C> <C>
Ralph J. Roberts Class A 31,717,687 108,825
Class B 128,726,050
Julian A. Brodsky Class A 31,718,687 107,825
Class B 128,726,050
Brian L. Roberts Class A 31,718,687 107,825
Class B 128,726,050
John R. Alchin Class A 31,718,687 107,825
Class B 128,726,050
</TABLE>
14
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Director Class of Stock For Withheld
<S> <C> <C> <C>
Robert B. Clasen Class A 31,718,687 107,825
Class B 128,726,050
Lawrence S. Smith Class A 31,718,687 107,825
Class B 128,726,050
Jonathan Perry Class A 31,781,487 45,025
Class B 128,726,050
Barry D. Romeril Class A 31,781,487 45,025
Class B 128,726,050
Howard H. Newman Class A 31,784,887 41,625
Class B 128,726,050
Jeffrey A. Harris Class A 31,781,487 45,025
Class B 128,726,050
H. Brian Thompson Class A 31,781,487 45,025
Class B 128,726,050
</TABLE>
2. To appoint Deloitte & Touche LLP as the Company's independent auditors for
the 1996 fiscal year.
Class of Stock For Against Abstain
Class A 31,813,608 1,403 11,501
Class B 128,726,050
3. To receive and adopt financial statements of the Company and the auditors'
report thereon for the 1995 fiscal year.
Class of Stock For Against Abstain
Class A 31,810,732 4,079 11,701
Class B 128,726,050
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
(b) Reports on Form 8-K - none.
15
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMCAST UK CABLE PARTNERS LIMITED
------------------------------------
/s/ LAWRENCE S. SMITH
------------------------------------
Lawrence S. Smith
Senior Vice President
Accounting and Administration
(Chief Accounting Officer)
Date: August 14, 1996
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of operations and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000919957
<NAME> COMCAST UK CABLE PARTNERS LTD
<MULTIPLIER> 1,000
<CURRENCY> U. K. POUNDS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.5520
<CASH> 130,370
<SECURITIES> 39,023
<RECEIVABLES> 2,077
<ALLOWANCES> (976)
<INVENTORY> 0
<CURRENT-ASSETS> 177,074
<PP&E> 191,427
<DEPRECIATION> (5,488)
<TOTAL-ASSETS> 504,408
<CURRENT-LIABILITIES> 24,219
<BONDS> 211,817
0
0
<COMMON> 501
<OTHER-SE> 255,894
<TOTAL-LIABILITY-AND-EQUITY> 504,408
<SALES> 11,176
<TOTAL-REVENUES> 11,786
<CGS> 0
<TOTAL-COSTS> (21,679)
<OTHER-EXPENSES> (9,640)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,645)
<INCOME-PRETAX> (23,279)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,279)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,279)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> (.50)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This restated schedule contains summary financial information extracted from the
consolidated statement of operations and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000919957
<NAME> COMCAST UK CABLE PARTNERS LTD
<MULTIPLIER> 1,000
<CURRENCY> U.K. POUNDS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1.5277
<CASH> 156,059
<SECURITIES> 37,028
<RECEIVABLES> 1,718
<ALLOWANCES> (790)
<INVENTORY> 0
<CURRENT-ASSETS> 198,658
<PP&E> 173,059
<DEPRECIATION> (2,191)
<TOTAL-ASSETS> 516,533
<CURRENT-LIABILITIES> 28,075
<BONDS> 209,337
0
0
<COMMON> 501
<OTHER-SE> 267,289
<TOTAL-LIABILITY-AND-EQUITY> 516,533
<SALES> 1,947
<TOTAL-REVENUES> 2,334
<CGS> 0
<TOTAL-COSTS> (6,099)
<OTHER-EXPENSES> (5,698)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,693)
<INCOME-PRETAX> (11,987)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,987)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,987)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
