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:
SEPTEMBER 30, 1999
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
NTL (BERMUDA) LLC
(Exact name of registrant as specified in its charter)
(On November 12, 1999, the Registrant converted to a Delaware limited
liability company and thereby changed its name to NTL (Bermuda) LLC)
Delaware Applied For
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 East 59th Street
New York, NY 10022
(212) 906-8440
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
NTL (Bermuda) Limited
41 Cedar Avenue
Hamilton, HM 12, Bermuda
- --------------------------------------------------------------------------------
(Former name and former address of the Registrant)
--------------------------
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 September 30, 1999, there were 800,000 shares of the Registrant's common
stock outstanding. The Registrant is an indirect, wholly owned subsidiary of NTL
Incorporated and there is no market for the Registrant's Common Stock.
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) and December 31, 1998......2
Condensed Consolidated Statements of Operations and
Accumulated Deficit for the Nine and Three Months
Ended September 30, 1999 and 1998 (Unaudited).............3
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1999 and 1998
(Unaudited)...............................................4
Notes to Condensed Consolidated
Financial Statements (Unaudited)......................5 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........8 - 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk..............................................12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.........................12
SIGNATURE....................................................................13
-----------------------------------
This Quarterly Report on Form 10-Q contains forward looking statements made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that such forward looking statements
involve risks and uncertainties which could significantly affect expected
results in the future from those expressed in any such forward looking
statements made by, or on behalf of, the Company. Certain factors that could
cause actual results to differ materially include, without limitation, the
effects of legislative and regulatory changes; the potential for increased
competition; technological changes; the need to generate substantial growth in
the subscriber base by successfully marketing and providing services in
identified markets; pricing pressures which could affect demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, programming, equipment and capital costs; the Company's continued ability
to create or acquire programming and products that customers will find
attractive; Year 2000 readiness; future acquisitions; strategic partnerships and
divestitures; general business and economic conditions in the United Kingdom;
and other risks detailed from time to time in the Company's periodic reports
filed with the Securities and Exchange Commission.
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited) (See Note)
(in (UK Pound)000's, except share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................... (UK Pound)19,135 (UK Pound)103,451
Accounts receivable, less allowance for doubtful accounts of
(UK Pound)3,762 (1999) and (UK Pound)2,840 (1998)........ 5,520 5,603
Other current assets............................................ 5,044 5,404
----------------- -----------------
Total current assets............................................ 29,699 114,458
----------------- -----------------
INVESTMENT IN CABLE LONDON PLC......................................... 24,171 28,080
----------------- -----------------
PROPERTY AND EQUIPMENT................................................. 420,396 379,446
Accumulated depreciation ....................................... (79,766) (57,624)
----------------- -----------------
Property and equipment, net..................................... 340,630 321,822
----------------- -----------------
DEFERRED CHARGES....................................................... 58,325 58,269
Accumulated amortization........................................ (19,749) (15,493)
----------------- -----------------
Deferred charges, net........................................... 38,576 42,776
----------------- -----------------
OTHER ASSETS........................................................... 50,567 5,188
----------------- -----------------
(UK Pound)483,643 (UK Pound)512,324
================= =================
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses........................... (UK Pound)23,605 (UK Pound)25,162
Current portion of long-term debt............................... 1,150 1,966
Note payable to Comcast U.K. Holdings, Inc...................... -- 12,310
----------------- -----------------
Total current liabilities................................ 24,755 39,438
----------------- -----------------
LONG-TERM DEBT, less current portion................................... 282,321 259,104
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock, (UK Pound).01 par value -
authorized and issued 800,000 shares........................... 8 8
Additional capital............................................... 359,049 359,049
Accumulated deficit.............................................. (182,490) (145,275)
----------------- -----------------
Total shareholder's equity................................ 176,567 213,782
----------------- -----------------
(UK Pound)483,643 (UK Pound)512,324
================= =================
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
2
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
------------------ ------------------ ------------------ ------------------
(in (UK Pound)000's)
<S> <C> <C> <C> <C>
REVENUES
Service income ....................... (UK Pound)72,240 (UK Pound)55,692 (UK Pound)24,760 (UK Pound)19,665
Consulting fee income ................ -- 840 -- 279
------------------ ------------------ ------------------ ------------------
72,240 56,532 24,760 19,944
------------------ ------------------ ------------------ ------------------
COSTS AND EXPENSES
Operating ............................ 24,301 18,147 8,335 6,385
Selling, general and administrative... 29,349 26,089 9,283 8,893
Management fees ...................... -- 2,174 -- 704
Depreciation and amortization ........ 26,547 22,952 9,020 8,268
------------------ ------------------ ------------------ ------------------
80,197 69,362 26,638 24,250
------------------ ------------------ ------------------ ------------------
OPERATING LOSS ......................... (7,957) (12,830) (1,878) (4,306)
OTHER (INCOME) EXPENSE
Interest expense ..................... 23,650 26,751 8,114 9,344
Investment income .................... (3,565) (6,752) (885) (2,263)
Equity in net losses of affiliates.... 5,573 15,916 1,601 4,731
Amalgamation costs ................... 145 -- -- --
Exchange losses (gains) and other .... 3,455 (4,238) (10,266) (3,388)
------------------ ------------------ ------------------ ------------------
29,258 31,677 (1,436) 8,424
------------------ ------------------ ------------------ ------------------
NET LOSS ............................... (37,215) (44,507) (442) (12,730)
ACCUMULATED DEFICIT
Beginning of period .................. (145,275) (187,373) (182,048) (219,150)
------------------ ------------------ ------------------ ------------------
End of period ........................ ((UK Pound)182,490) ((UK Pound)231,880) ((UK Pound)182,490) ((UK Pound)231,880)
================== ================== ================== ==================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
----------------- -----------------
(in (UK Pound)000's)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ....................................................... ((UK Pound)37,215) ((UK Pound)44,507)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization .............................. 26,547 22,952
Amortization on foreign exchange contracts ................. 2,072 2,072
Non-cash interest expense .................................. 23,077 20,168
Non-cash investment income ................................. (1,561) (2,181)
Exchange losses (gains) .................................... 1,587 (7,211)
Equity in net losses of affiliates ......................... 5,573 15,916
Changes in operating assets and liabilities:
Accounts receivable and other current assets .......... 443 (333)
Accounts payable and accrued expenses ................. (1,569) 2,449
----------------- -----------------
Net cash provided by operating activities ......... 18,954 9,325
----------------- -----------------
FINANCING ACTIVITIES
Repayments of debt ............................................. (14,711) (1,567)
Proceeds from borrowing ........................................ -- 93,000
Deferred financing costs ....................................... -- (1,634)
Net transactions with affiliates ............................... (91) (1,020)
----------------- -----------------
Net cash (used in) provided by financing activities (14,802) 88,779
----------------- -----------------
INVESTING ACTIVITIES
Capital contributions and loans to affiliates .................. -- (1,768)
Fixed asset deposit with affiliate ............................. (51,915) --
Capital expenditures ........................................... (36,499) (47,012)
Additions to deferred charges .................................. (54) (333)
----------------- -----------------
Net cash (used in) investing activities ........... (88,468) (49,113)
----------------- -----------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .................... (84,316) 48,991
CASH AND CASH EQUIVALENTS, beginning of period ...................... 103,451 37,372
----------------- -----------------
CASH AND CASH EQUIVALENTS, end of period ............................ (UK Pound)19,135 (UK Pound)86,363
================ =================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1998 has been
condensed from the audited consolidated balance sheet as of that date. The
condensed consolidated balance sheet as of September 30, 1999 and the
condensed consolidated statements of operations and accumulated deficit for
the nine and three months ended September 30, 1999 and 1998 and the
condensed consolidated statement of cash flows for the nine months ended
September 30, 1999 and 1998 have been prepared by NTL (Bermuda) LLC
(formerly 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 September 30, 1999 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, 1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the period ended September 30,
1999 are not necessarily indicative of operating results for the full year.
Conversion to a Delaware Limited Liability Company
On November 12, 1999, the Company converted to a Delaware limited liability
company and thereby changed its name to NTL (Bermuda) LLC. Under the
Delaware Limited Liability Company Act, the Company is deemed to be the
same entity as it was prior to the conversion.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement, which establishes
accounting and reporting standards for derivatives and hedging activities,
is required to be adopted in fiscal years beginning after June 15, 2000.
Management does not anticipate that the adoption of this standard will have
a significant effect on the financial position or results of operations of
the Company.
2. AMALGAMATION WITH NTL
On October 29, 1998, NTL Incorporated ("NTL"), NTL (Bermuda) Limited, a
wholly owned subsidiary of NTL, and Comcast UK Cable Partners Limited
("Partners") consummated a transaction (the "Amalgamation"), whereby NTL
(Bermuda) Limited merged with Partners.
Pursuant to then existing arrangements between Partners and Telewest
Communications plc ("Telewest"), a co-owner of interests in Cable London
PLC ("Cable London") and Birmingham Cable Corporation Limited ("Birmingham
Cable"), Telewest had certain rights to acquire either or both of Partner's
interests in these systems as a result of the Amalgamation. On August 14,
1998, Partners and NTL entered into an agreement (the "Telewest Agreement")
with Telewest relating to Partner's ownership interests in Birmingham
Cable, Partner's and Telewest's respective ownership interests in Cable
London and certain other related matters. Pursuant to the Telewest
Agreement, in October 1998, Partners sold its 27.5% ownership interest in
Birmingham Cable to Telewest for (UK Pound)125 million, plus (UK Pound)5
million for certain subordinated debt and fees. Partners and Telewest also
agreed to rationalize their joint ownership of Cable London pursuant to an
agreed procedure (see following).
5
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
3. INVESTMENTS IN AFFILIATES
Summarized financial information for affiliates accounted for under the
equity method is as follows:
<TABLE>
<CAPTION>
Birmingham Cable
Cable (1) London Combined
--------- ------ --------
(UK Pound)000 (UK Pound)000 (UK Pound)000
<S> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1999
Results of operations
Service income ........................................ (UK Pound)58,702
Operating, selling, general and administrative expenses (40,844)
Depreciation and amortization ......................... (17,844)
Operating gain ........................................ 14
Net loss .............................................. (10,854)
Company's equity in net loss .......................... (5,573)
THREE MONTHS ENDED SEPTEMBER 30, 1999
Results of operations
Service income ........................................ 20,128
Operating, selling, general and administrative expenses (13,579)
Depreciation and amortization ......................... (5,923)
Operating gain ........................................ 626
Net loss .............................................. (3,103)
Company's equity in net loss .......................... (1,601)
AT SEPTEMBER 30, 1999
Financial position
Current assets ........................................ 9,716
Noncurrent assets ..................................... 192,720
Current liabilities ................................... 37,631
Noncurrent liabilities ................................ 199,232
NINE MONTHS ENDED SEPTEMBER 30, 1998
Results of operations
Service income ........................................ (UK Pound)57,385 (UK Pound)48,926 (UK Pound)106,311
Operating, selling, general and administrative expenses (43,690) (38,244) (81,934)
Depreciation and amortization ......................... (20,717) (16,611) (37,328)
Operating loss ........................................ (7,022) (5,929) (12,951)
Net loss .............................................. (25,067) (17,523) (42,590)
Company's equity in net loss .......................... (7,010) (8,906) (15,916)
THREE MONTHS ENDED SEPTEMBER 30, 1998
Results of operations
Service income ........................................ 19,410 16,748 36,158
Operating, selling, general and administrative expenses (14,414) (13,037) (27,451)
Depreciation and amortization ......................... (6,975) (5,635) (12,610)
Operating loss ........................................ (1,979) (1,924) (3,903)
Net loss .............................................. (5,989) (5,993) (11,982)
Company's equity in net loss .......................... (1,686) (3,045) (4,731)
</TABLE>
(1) The Company sold its 27.5% interest in Birmingham Cable in October 1998.
6
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
3. INVESTMENTS IN AFFILIATES - Continued
Pursuant to the Telewest Agreement, in August 1999, Telewest exercised its
right to purchase all of the Company's shares of Cable London and all of
the Company's related rights and interests for approximately (UK Pound)428
million in cash. The closing of the sale is expected to take place in
November 1999. Included in Investment in Cable London PLC as of September
30, 1999 and December 31, 1998 are loans of (UK Pound)28.5 million and
accrued interest of (UK Pound)10.2 million and (UK Pound)8.6 million,
respectively. The loans accrue interest at a rate of 2% above the published
base lending rate of Barclays Bank plc (7.25% effective rate as of
September 30, 1999) and are subordinate to Cable London's credit facility.
Of these loans, (UK Pound)21.0 million as of September 30, 1999 and
December 31, 1998 are convertible into ordinary shares of Cable London at a
per share conversion price of (UK Pound)2.00. The sales price includes the
repayment of these loans and accrued interest. The sale of the Cable London
interest is an "Asset Sale" under the Company's 11.2% Senior Discount
Debentures. The Company will need to use an amount equal to the proceeds
from the sale to repay subsidiary debt or invest in "Replacement Assets"
within 365 days after the sale, otherwise the Company is required to make
an offer to redeem the Debentures at 100% of their accreted value up to an
amount equal to the proceeds.
4. JOINT PURCHASING ALLIANCE AGREEMENT
Other assets includes a deposit of (UK Pound)47.5 million which will be
utilized under a Joint Purchasing Alliance Agreement entered into between
subsidiaries of the Company and Diamond Cable Communications plc
("Diamond"), a subsidiary of NTL, for combined fixed asset purchases. The
Company's original deposit was (UK Pound)51.9 million in March 1999.
5. NOTE PAYABLE TO COMCAST U.K. HOLDINGS, INC.
In September 1999, the Company repaid at maturity the (UK Pound)13.1
million due under its note payable to Comcast U.K. Holdings, Inc.
6. CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially
affect the financial position, results of operations or liquidity of the
Company.
7. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of (UK Pound)573,000 and (UK
Pound)6.3 million during the nine months ended September 30, 1999 and 1998,
respectively.
The Company's wholly owned subsidiaries incurred capital lease obligations
of (UK Pound)138,000 and (UK Pound)2.2 million during the nine months ended
September 30, 1999 and 1998, respectively.
7
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
NTL (Bermuda) LLC (the "Company") and its subsidiaries are principally engaged
in the development, construction, management and operation of companies in the
cable television and telecommunications industry in England. The Company owns
the companies that have franchises for Darlington and Teesside ("Teesside") and
Cambridge Holding Company Limited ("Cambridge"). The Company also has a 50%
interest in Cable London PLC ("Cable London") which it has agreed to sell to
Telewest Communications PLC ("Telewest"). The Company owned a 27.5% interest in
Birmingham Cable Corporation Limited ("Birmingham Cable") which it sold to
Telewest in October 1998.
On November 12, 1999, the Company converted to a Delaware limited liability
company and thereby changed its name to NTL (Bermuda) LLC. Under the Delaware
Limited Liability Company Act, the Company is deemed to be the same entity as it
was prior to the conversion.
Liquidity and Capital Resources
Historically, the Company financed its cash requirements through capital
contributions from its former shareholders and the issuance of common stock,
debentures and other debt. In November 1995, the Company issued $517.3 million
principal amount at maturity 11.20% Senior Discount Debentures due 2007 (the
"2007 Discount Debentures"). 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 Company will require approximately (UK Pound)30.1 million from October 1,
1999 through December 31, 2000 for capital expenditures net of cash from
operations. Management believes that the entire (UK Pound)30.1 million required
will be funded through the Joint Purchasing Alliance Agreement deposit of (UK
Pound)47.5 million or cash on hand. The Company's ability to meet its long-term
liquidity and capital requirements is contingent upon Teesside and Cambridge's
ability to generate positive operating cash flow, or, if necessary, to obtain
external financing, although there can be no assurance that any such financing
will be obtained on acceptable terms and conditions.
In August 1998, the Company and NTL Incorporated ("NTL") entered into an
agreement with Telewest relating to the Company's and Telewest's respective 50%
ownership interests in Cable London and certain other related matters (the
"Telewest Agreement"). Pursuant to the Telewest Agreement, in August 1999,
Telewest exercised its right to purchase all of the Company's shares of Cable
London and all of the Company's related rights and interests for approximately
(UK Pound)428 million in cash. The closing of the sale is expected to take place
in November 1999. The sale of the Cable London interest is an "Asset Sale" under
the 2007 Discount Debentures. The Company will need to use an amount equal to
the proceeds from the sale to repay subsidiary debt or invest in "Replacement
Assets" within 365 days after the sale, otherwise the Company is required to
make an offer to redeem the 2007 Discount Debentures at 100% of their accreted
value up to an amount equal to the proceeds.
Year 2000 Issue
Strategy
The Company's operations are conducted through Teesside and Cambridge, each of
which has different configurations of hardware and software. The Company itself
is a holding company with very limited activities. The Company uses personal
computers and software that are Year 2000 ready. The Cambridge and Teesside Year
2000 programs have been integrated into the NTL Incorporated program.
8
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
Status to Date
Teesside and Cambridge utilize hardware and software from vendors for
substantially all of their activities, including billing, customer service and
the operation of the network. Teesside and Cambridge, therefore, are working
with these third-party vendors to ensure Year 2000 readiness. Teesside and
Cambridge have received Year 2000 ready upgrades from vendors of its main
service platforms, including vendors of its telephony switches, cable TV
subsystems, and customer management systems ("CMS") that they expect to be Year
2000 ready. The only significant effort remaining is for the Cambridge CMS,
which has been tested and modified on a development system. Full installation on
the operational systems will be completed by December 1999.
Costs
There are few major costs directly attributable to the Year 2000 issues, as
suppliers will include any remedial software in their normal upgrade process.
For the smaller systems, such as PCs, there has been some acceleration of
routine replacement and upgrades to ensure all systems are Year 2000 ready. The
Company estimates that this will cost approximately (UK Pound)600,000 in 1999.
Risks and Contingency Plans
The Company currently believes that the most reasonably likely worst case
scenario with respect to the Year 2000 is the failure of public electricity
supplies during the millennium period. A number of critical sites have permanent
automatic standby generators and uninterruptible power supplies. Where critical
sites do not have permanent standby power, the Company intends to deploy its
mobile generators. In addition, other telephone operators have suggested that
the telephone network may overload due to excessive traffic. The Company is
reviewing its "cold start" scenarios and alternative interconnection routes in
the event of interruptions in the service of other telephone companies. Either
or both of the above mentioned scenarios could have a material adverse effect on
operations, although it is not possible at this time to quantify the amount of
revenues and gross profit that might be lost, or the costs that could be
incurred.
During the remainder of 1999, the Company may discover additional problems and
may not be able to develop, implement or test remediation or contingency plans,
or may find that the costs of these activities exceed current expectations. In
many cases, the Company is relying on assurances from suppliers that new and
upgraded information systems and other products will be Year 2000 ready. The
Company has tested these third-party products, but because the Company uses a
variety of information systems and has additional systems embedded in its
operations and infrastructure, the Company cannot be sure that all of its
systems will work together in a Year 2000-ready fashion. Furthermore, the
Company cannot be sure that it will not suffer business interruptions, either
because of its own Year 2000 problems or those of third-parties upon whom the
Company is reliant for services. The Company is continuing to evaluate its Year
2000-related risks and corrective actions. However, the risks associated with
the Year 2000 problem are pervasive and complex; they can be difficult to
identify and address, and can result in material adverse consequences to the
Company. Even if the Company, in a timely manner, completes all of the upgrades
that are believed to be adequate, and develops contingency plans that are
believed to be adequate, some problems may not be identified or corrected in
time to prevent material adverse consequences to the Company.
Condensed Consolidated Statements of Cash Flows
Net cash provided by operating activities amounted to (UK Pound)19.0 million and
(UK Pound)9.3 million for the nine months ended September 30, 1999 and 1998,
respectively. The increase in net cash provided by operating activities is due
to the increase in the Company's operating income before depreciation and
amortization and from the effect of favorable changes in the exchange rate on
the Company's dollar denominated 2007 Discount Debentures.
Net cash (used in) provided by financing activities amounted to ((UK Pound)14.8)
million and (UK Pound)88.8 million for the nine months ended September 30, 1999
and 1998, respectively. During the nine months ended September 30, 1999, net
cash used
9
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
in financing activities includes the repayment at maturity of the (UK Pound)13.1
million due under the note payable to Comcast U.K. Holdings, Inc. During the
nine months ended September 30, 1998, net cash provided by financing activities
includes (UK Pound)93.0 million of borrowings under a credit facility from a
consortium of banks that was repaid in October 1998, offset by financing costs
of (UK Pound)1.6 million.
Net cash used in investing activities amounted to (UK Pound)88.5 million and (UK
Pound)49.1 million for the nine months ended September 30, 1999 and 1998,
respectively. During the nine months ended September 30, 1999, net cash used in
investing activities includes the Joint Purchasing Alliance Agreement deposit of
(UK Pound)51.9 million for combined purchases of fixed assets by NTL affiliates
and capital expenditures of (UK Pound)36.5 million. During the nine months ended
September 30, 1998, net cash used in investing activities includes capital
expenditures of (UK Pound)47.0 million and capital contributions and loans to
affiliates of (UK Pound)1.8 million.
Results of Operations
Summarized consolidated financial information for the Company for the nine and
three months ended September 30, 1999 and 1998 is as follows (in thousands, "NM"
denotes percentage is not meaningful):
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Increase/(Decrease)
1999 1998 (UK Pound) %
---------------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Revenues (UK Pound)72,240 (UK Pound)56,532 (UK Pound)15,708 27.8%
Operating, selling, general and
administrative expenses 53,650 44,236 9,414 21.3
Management fees -- 2,174 (2,174) NM
---------------- ----------------
Operating income before depreciation and
amortization 18,590 10,122 8,468 83.7
Depreciation and amortization 26,547 22,952 3,595 15.7
---------------- ----------------
Operating loss (7,957) (12,830) (4,873) (38.0)
---------------- ----------------
Interest expense 23,650 26,751 (3,101) (11.6)
Investment income (3,565) (6,752) (3,187) (47.2)
Equity in net losses of affiliates 5,573 15,916 (10,343) (65.0)
Amalgamation costs 145 -- 145 NM
Exchange losses (gains) and other 3,455 (4,238) 7,693 NM
---------------- ----------------
Net loss ((UK Pound)37,215) ((UK Pound)44,507) ((UK Pound)7,292) (16.4%)
================ ================
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
September 30, Increase/(Decrease)
1999 1998 (UK Pound) %
---------------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Revenues (UK Pound)24,760 (UK Pound)19,944 (UK Pound)4,816 24.1%
Operating, selling, general and
administrative expenses 17,618 15,278 2,340 15.3
Management fees -- 704 (704) NM
---------------- ----------------
Operating income before depreciation and
amortization 7,142 3,962 3,180 80.3
Depreciation and amortization 9,020 8,268 752 9.1
---------------- ----------------
Operating loss (1,878) (4,306) (2,428) (56.4)
---------------- ----------------
Interest expense 8,114 9,344 (1,230) (13.2)
Investment income (885) (2,263) (1,378) (60.9)
Equity in net losses of affiliates 1,601 4,731 (3,130) (66.2)
Exchange gains and other (10,266) (3,388) (6,878) NM
---------------- ----------------
Net loss ((UK Pound)442) ((UK Pound)12,730) ((UK Pound)12,288) NM
================ ================
</TABLE>
10
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
Substantially all of the increases in revenues, operating, selling, general and
administrative expenses and depreciation and amortization expense for the nine
and three months ended September 30, 1999, as compared to the same period in
1998, are attributable to the effects of the continued development of operations
and increased business activity resulting from the growth in the number of
subscribers in Teesside and Cambridge. These trends are expected to continue for
the foreseeable future.
The Company's former parent and one of its former affiliates provided management
services to the Company. The management agreement was terminated upon the
Amalgamation with NTL.
Interest expense for the nine and three months ended September 30, 1999 and 1998
was (UK Pound)23.7 million, (UK Pound)26.8 million, (UK Pound)8.1 million and
(UK Pound)9.3 million, respectively, representing decreases of (UK Pound)3.1
million and (UK Pound)1.2 million from 1998 as compared to the same periods in
1999. The decreases are primarily attributable to the repayment of the bank
credit facility in October 1998.
Investment income for the nine and three months ended September 30, 1999 and
1998 was (UK Pound)3.6 million, (UK Pound)6.8 million, (UK Pound)885,000 and (UK
Pound)2.3 million, respectively, representing decreases of (UK Pound)3.2 million
and (UK Pound)1.4 million from 1998 as compared to the same periods in 1999. The
decreases are primarily due to decreases in the average cash balances available
for investment in 1999 as compared to the same period in 1998.
Equity in net losses of affiliates for the nine and three months ended September
30, 1999 and 1998 was (UK Pound)5.6 million, (UK Pound)15.9 million, (UK
Pound)1.6 million and (UK Pound)4.7 million, respectively, representing
decreases of (UK Pound)10.3 million and (UK Pound)3.1 million from 1998 as
compared to the same periods in 1999. The decreases are attributable to reduced
losses of Cable London in 1999 and the sale of Birmingham Cable in October 1998.
The Company incurred costs of (UK Pound)145,000 in 1999 related to the
Amalgamation with NTL.
Exchange losses (gains) and other for the nine and three months ended September
30, 1999 and 1998 were (UK Pound)3.5 million, ((UK Pound)4.2) million, ((UK
Pound)10.3) million and ((UK Pound)3.4) million, respectively, representing
changes of (UK Pound)7.7 million and (UK Pound)6.9 million from 1998 as compared
to the same periods in 1999. These changes primarily resulted from the impact of
fluctuations in the valuation of the UK Pound Sterling on the 2007 Discount
Debentures, which are denominated in United States dollars. The Company's
results of operations will continue to be affected by exchange rate
fluctuations.
11
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have not been any material changes in the reported market risks since the
end of the most recent fiscal year.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.0 Financial Data Schedule.
(b) Reports on Form 8-K:
During the quarter ended September 30, 1999, the Company filed a
Current Report on Form 8-K dated September 17, 1999 reporting
under Item 5, Other Events, that Telewest Communications PLC
exercised its right to purchase all of the Company's shares of
Cable London PLC and all of the Company's related rights and
interests for the purchase price of approximately 428 million
pounds sterling in cash. No financial statements were filed with
this report.
12
<PAGE>
NTL (BERMUDA) LLC AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
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.
NTL (BERMUDA) LLC
Date: November 12, 1999 By: /s/ J. Barclay Knapp
----------------------------------
J. Barclay Knapp
President and Chief Executive Officer
Date: November 12, 1999 By: /s/ Gregg Gorelick
----------------------------------
Gregg Gorelick
Vice President - Controller
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000919957
<NAME> NTL (BERMUDA) LLC
<CURRENCY> U.K. POUNDS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.6464
<CASH> 19,135
<SECURITIES> 0
<RECEIVABLES> 9,282
<ALLOWANCES> (3,762)
<INVENTORY> 0
<CURRENT-ASSETS> 29,699
<PP&E> 420,396
<DEPRECIATION> (79,766)
<TOTAL-ASSETS> 483,643
<CURRENT-LIABILITIES> 24,755
<BONDS> 282,321
0
0
<COMMON> 8
<OTHER-SE> 176,559
<TOTAL-LIABILITY-AND-EQUITY> 483,643
<SALES> 72,240
<TOTAL-REVENUES> 72,240
<CGS> 0
<TOTAL-COSTS> (80,197)
<OTHER-EXPENSES> (9,173)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (23,650)
<INCOME-PRETAX> (37,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37,215)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,215)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
