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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MAY 12, 2005
Date of Report (Date of Earliest Event Reported)
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TELEWEST GLOBAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-50886 59-3778247
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
160 GREAT PORTLAND STREET
LONDON W1W 5QA, UNITED KINGDOM
(Address of principal executive offices)
+44-20-7299-5000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
1. Press Release
On May 12, 2005 Telewest Global, Inc. ("Telewest") issued a press
release announcing US GAAP results for the three months ended March 31,
2005.
Telewest's quarterly results, including a discussion of how the
presentation of the results differs from the presentation of the historical
results of Telewest Communications plc and its subsidiaries are included in
its Form 10-Q, also filed with the U.S. Securities and Exchange Commission
today.
A copy of the press release is attached hereto as Exhibit 99.1.
2. Reconciliation of Non-GAAP Financial Measures in May 12, 2005 Conference
Call
On May 12, 2005, Telewest will host a conference call to discuss its
results for the three months ended March 31, 2005. On the conference call
certain non-GAAP financial measures are expected to be discussed. A
reconciliation of these measures to the nearest comparable GAAP measure and
discussion of that measure can be found below. Reconcilations and
discussion of other non-GAAP financial measures that appear in Telewest's
earnings release are reconciled in that release which is attached as
Exhibit 99.1 hereto.
CONTENT SEGMENT SHARE OF ADJUSTED EBITDA:
YEAR ENDED DECEMBER 31, 2004
CONTENT
SEGMENT SHARE
CONTENT UKTV SIT-UP OF ADJUSTED
SEGMENT(1) AFFILIATES AFFILIATE TOTAL AFFILIATES EBITDA
-------------------- -------------- -------------- -------------------- ---------------
(pound)m (pound)m (pound)m (pound)m (pound)m
Share of net income/(loss)
of affiliates N/A 14 2 16
Add:
Share of affiliates tax N/A 3 1 4
Share of affiliates interest N/A 9 -- 9
Share of affiliates
depreciation and
amortization N/A 2 1 3
-------------------- --------------- --------------- -------------------- ---------------
Adjusted EBITDA(2) 19 28 4 32 51
-------------------- --------------- --------------- -------------------- ---------------
<FN>
(1) Shown before elimination of inter-segment revenue from Cable.
(2) The Content Segment Share of Adjusted EBITDA is only indicative and
not reported as such within our financial statements.
</FN>
YEAR ENDED DECEMBER 31, 2003
CONTENT
SEGMENT SHARE
CONTENT UKTV SIT-UP OF ADJUSTED
SEGMENT(1) AFFILIATES AFFILIATE TOTAL AFFILIATES EBITDA
----------------- -------------- -------------- -------------------- ---------------
(pound)m pound)m (pound)m (pound)m (pound)m
SHARE OF NET INCOME/(LOSS) OF
AFFILIATES N/A 2 (1) 1
Add:
Share of affiliates tax N/A 4 -- 4
Share of affiliates interest N/A 9 -- 9
Share of affiliates depreciation
and amortization N/A 3 1 4
---------------- --------------- --------------- -------------------- ---------------
ADJUSTED EBITDA(2) 15 18 0 18 33
---------------- --------------- --------------- -------------------- ---------------
<FN>
(1) Shown before elimination of inter-segment revenue from Cable.
(2) The Content Segment Share of Adjusted EBITDA is only indicative and
not reported as such within our financial statements.
</FN>
Telewest's primary measure of income or loss for each of its segments
is Adjusted EBITDA. However, the portion of the business of Telewest's
content segment attributable to non-consolidated entities is not reflected
in content segment Adjusted EBITDA. Telewest's share of the results of UKTV
(a group of joint ventures with the BBC, of which Telewest indirectly owns
50% of the equity and to which Telewest has provided a (pound)184 million
loan), sit-up Limited (sit-up), a private company in which Telewest owned
approximately 30% of the equity in the periods indicated above, and other
smaller and less significant affiliates are excluded from the Adjusted
EBITDA calculation, and are presented as Share of Net Income/(Losses) of
Affiliates in accordance with GAAP. Management for some purposes views and
assesses the performance of the content segment, including UKTV and sit-up,
as a whole. Accordingly, management believes that the use of Content
Segment Share of Adjusted EBITDA provides useful supplemental information
for management and investors in determining the income generating capacity
of the content business as a whole.
Content Segment Share of Adjusted EBITDA is not a financial measure
recognized under GAAP. The measure is calculated as content segment
Adjusted EBITDA plus Share of Net Income/(Losses) of affiliates before our
share of interest, taxes, depreciation and amortization of such affiliates.
Management believes Content Segment Share of Adjusted EBITDA is helpful for
understanding the aggregate performance of the content segment, and that it
provides useful supplemental information to investors. In particular, this
non-GAAP financial measure reflects an additional way of viewing aspects of
content segment operating performance that, when viewed with its GAAP
results and the related reconciliations, provide a more complete
understanding of factors and trends affecting the business. Because
non-GAAP financial measures are not standardized, it may not be possible to
compare Content Segment Share of Adjusted EBITDA with other companies'
non-GAAP financial measures that have the same or similar names. The
presentation of this supplemental information is not meant to be considered
in isolation or as a substitute for net cash provided by operating
activities, operating income/(loss), net income/(loss), or other measures
of financial performance reported in accordance with GAAP.
Content Segment Share of Adjusted EBITDA is not intended to suggest
and should not be construed as suggesting that Telewest's management
controls or directs the operations of UKTV and sit-up or that a
consolidated presentation of the results of those entities with those of
Telewest is otherwise appropriate under GAAP.
SIT-UP ADJUSTED EBITDA:
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2004 2003
(POUND)M (POUND)M
- ----------------------------------------------------------------- -------------- ----------------
RECONCILIATION OF ADJUSTED EBITDA TO RETAINED PROFIT FOR THE
FINANCIAL YEAR
- ----------------------------------------------------------------- -------------- ----------------
ADJUSTED EBITDA 13 -
Depreciation (2) (1)
- ----------------------------------------------------------------- -------------- ----------------
Profit on ordinary activities before taxation 11 (1)
Taxation (3) 5
- ----------------------------------------------------------------- -------------- ----------------
Profit on ordinary activities after taxation 8 4
Preference share dividend/appropriation (1) (1)
- ----------------------------------------------------------------- -------------- ----------------
RETAINED PROFIT FOR THE FINANCIAL YEAR 7 3
- ----------------------------------------------------------------- -------------- ----------------
Telewest's primary measure of income or loss for each of its segments is
Adjusted EBITDA. However, the portion of the business of Telewest's content
segment attributable to non-consolidated entities is not reflected in
content segment Adjusted EBITDA. Telewest's share of the results of sit-up
are excluded from the Adjusted EBITDA calculation, and are presented as
Share of Net Income/(Losses) of Affiliates in accordance with GAAP.
Management for some purposes view and assess the performance of the content
segment, including sit-up, as a whole. Given the impending completion of
the Company's acquisition of the remaining equity in sit-up, which would
lead to management taking overall control, management believes that the use
of a pro forma non-GAAP measure of sit-up's Adjusted EBITDA provides useful
supplemental information for management and investors in determining the
income generating capacity of the content business as a whole going
forward.
sit-up Adjusted EBITDA is not a financial measure recognized under
GAAP. The measure is calculated based on the audited UK GAAP financial
statements of sit-up as retained profit for the financial year before,
preference share dividend/appropriation, taxation and depreciation.
Management believes that sit-up Adjusted EBITDA is helpful for
understanding the aggregate performance of the content segment going
forward and that it provides useful supplemental information to investors.
In particular, this non GAAP financial measure reflects an additional way
of viewing aspects of future content segment operating performance that,
when viewed with its GAAP results and the related reconciliations, provide
a more complete understanding of factors and trends affecting the business.
Because non-GAAP financial measures are not standardized, it may not be
possible to compare sit-up Adjusted EBITDA with other companies' non-GAAP
financial measures that have the same or similar names. The presentation of
this supplemental information is not meant to be considered in isolation or
as a substitute for net cash provided by operating activities, operating
income/(loss), net income/(loss), or other measures of financial
performance reported in accordance with GAAP.
sit-up Adjusted EBITDA is not intended to suggest and should not be
construed as suggesting that Telewest's management controlled or directed
the operations of sit-up during the periods presented or that a
consolidated presentation of the results of the entity with those of
Telewest is otherwise appropriate under GAAP.
ADJUSTED EBITDA:
THREE MONTHS THREE MONTHS THREE MONTHS THREE MONTHS THREE MONTHS
ENDED MAR. 31 ENDED DEC. 31 ENDED SEP. 31 ENDED JUN. 31 ENDED MAR. 31
2005 2004 2004 2004 2004
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- ----------------------------------- ---------------------- ----------------- ------------------- ---------------- ----------------
RECONCILIATION OF
ADJUSTED EBITDA
TO NET INCOME/(LOSS):
- ----------------------------------- ---------------------- ----------------- ------------------- ---------------- ----------------
ADJUSTED EBITDA 134 128 122 122 122
Financial restructuring charges - - - (12) (9)
Depreciation (101) (101) (103) (90) (94)
Amortization (9) (9) (9) - -
- ----------------------------------- ---------------------- ----------------- ------------------- ---------------- ----------------
Operating income 24 18 10 20 19
Interest income 4 5 6 8 7
Interest expense (including
amortization of debt discount) (29) (47) (49) (121) (109)
Foreign exchange
(losses)/gains, net (4) 3 - (37) 77
Share of net income of
affiliates 6 4 4 5 3
Other, net - - - - (1)
Income taxes charge - - - (1) -
- ----------------------------------- ---------------------- ----------------- ------------------- ---------------- ----------------
NET INCOME/(LOSS) 1 (17) (29) (126) (4)
- ----------------------------------- ---------------------- ----------------- ------------------- ---------------- ----------------
Telewest's primary measure of income or loss for each of our reportable
segments is Adjusted EBITDA. Our management, including our chief operating
decision maker, considers Adjusted EBITDA an important indicator of the
operational strength and performance of our reportable segments. Adjusted
EBITDA for each segment and in total excludes the impact of costs and
expenses that do not directly affect our cash flows or do not directly
relate to the operating performance of that segment. These costs and
expenses include depreciation, amortization, financial restructuring
charges, interest expense, foreign exchange gains/(losses), share of net
income/(loss) from affiliates and income taxes. It is the belief of
management that the legal and professional costs relating to our financial
restructuring are not characteristic of our underlying business operations.
Furthermore management believes that some of the components of these
charges are not directly related to the performance of a single reportable
segment.
Adjusted EBITDA is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure net
income/(loss). Some of the significant limitations associated with the use
of Adjusted EBITDA as compared to net income/(loss) are that Adjusted
EBITDA does not reflect the amount of required reinvestment in depreciable
fixed assets, financial restructuring charges, interest expense, foreign
exchange gains or losses, income taxes expense or benefit and similar items
on our results of operations. We believe Adjusted EBITDA is helpful for
understanding our performance and assessing our prospects for the future,
and that it provides useful supplemental information to investors. In
particular, this non-GAAP financial measure reflects an additional way of
viewing aspects of our operations that, when viewed with our GAAP results
and the reconciliations to net income/(loss), shown above, provide a more
complete understanding of factors and trends affecting our business.
Because non-GAAP financial measures are not standardized, it may not be
possible to compare Adjusted EBITDA with other companies' non-GAAP
financial measures that have the same or similar names. The presentation of
this supplemental information is not meant to be considered in isolation or
as a substitute for net cash provided by operating activities, operating
income/(loss), net income/(loss), or other measures of financial
performance reported in accordance with GAAP.
FREE CASH FLOW:
THREE MONTHS THREE MONTHS THREE MONTHS THREE MONTHS THREE MONTHS
ENDED MAR. 31 ENDED DEC. 31 ENDED SEP. 31 ENDED JUN. 31 ENDED MAR. 31
2005 2004 2004 2004 2004
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- --------------------------------- ---------------------- ----------------- ------------------- ------------------- ----------------
RECONCILIATION OF FREE
CASH FLOW TO NET CASH
PROVIDED BY
OPERATING ACTIVITIES:
- --------------------------------- ---------------------- ----------------- ------------------- ------------------- ----------------
FREE CASH FLOW 63 (3) 39 37 25
Deduct cash paid for financial
restructuring charges (1) (9) (17) (10) (9)
Add capital expenditure 54 64 50 61 66
- --------------------------------- ---------------------- ----------------- ------------------- ------------------- ----------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 116 52 72 88 82
- --------------------------------- ---------------------- ----------------- ------------------- ------------------- ----------------
Telewest's primary measure of cash flow is free cash flow. Free cash flow
is defined as net cash provided by/(used in) operating activities excluding
cash paid for financial restructuring charges; less capital expenditure.
Our management, including our chief operating decision maker, considers
free cash flow an important indicator of the operational performance of our
business.
Free cash flow is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure net cash
provided by/(used in) operating activities. The significant limitation
associated with the use of free cash flow as compared to net cash provided
by/(used in) operating activities is that free cash flow does not consider
the amount of cash required to pay financial restructuring charges. We
believe free cash flow is helpful for understanding our performance and it
provides useful supplemental information to investors. Because non-GAAP
financial measures are not standardized, it may not be possible to compare
free cash flow with other companies' non-GAAP financial measures that have
the same or similar names. The presentation of this supplemental
information is not meant to be considered in isolation or as a substitute
for net cash provided by/(used in) operating activities, or other measures
of financial performance reported in accordance with GAAP.
- -------------------------------------------------------------------------------
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT
NO.
DESCRIPTION
- --------- -------------------------------------------------------------------
99.1 Press release of Telewest Global, Inc., dated May 12, 2005
announcing US GAAP results for the three months ended March
31, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TELEWEST GLOBAL, INC.
Dated: May 12, 2005
By: /s/ Clive Burns
-----------------------------------
Name: Clive Burns
Title: Company Secretary
EXHIBIT INDEX
EXHIBIT
- ---------
99.1 Press release of Telewest Global, Inc., dated May 12, 2005
announcing US GAAP results for the three months ended March
31, 2005.