1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-22616
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NTL COMMUNICATIONS CORP.
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(Exact name of registrant as specified in its charter)
Delaware 52-1822078
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 East 59th Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 906-8440
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ------
The number of shares outstanding of the issuer's common stock as of March 31,
2001 was 12. The Registrant is an indirect wholly-owned subsidiary of NTL
Incorporated and there is no market for the Registrant's common stock. The
Registrant meets the conditions for the reduced disclosure format set forth in
General Instruction H(1)(a) and (b) of Form 10-Q.
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NTL Communications Corp. and Subsidiaries
Index
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 2001 and December 31, 2000 ............................. 2
Condensed Consolidated Statements of Operations-
Three months ended March 31, 2001 and 2000 ....................... 4
Condensed Consolidated Statement of Shareholder's Equity-
Three months ended March 31, 2001 ................................ 5
Condensed Consolidated Statements of Cash Flows-
Three months ended March 31, 2001 and 2000 ....................... 7
Notes to Condensed Consolidated Financial Statements ............. 8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ............................... 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................. 24
SIGNATURES ................................................................ 25
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in millions)
MARCH 31, DECEMBER 31,
2001 2000
----------- ------------
(unaudited) (see note)
ASSETS
Current assets:
Cash and cash equivalents $ 283.9 $ 423.5
Accounts receivable - trade, less allowance for doubtful
accounts of $134.7 (2001) and $135.2 (2000) 461.8 527.4
Due for affiliates 100.0 105.1
Other 343.9 284.1
--------- ---------
Total current assets 1,189.6 1,340.1
Fixed assets, net 10,554.6 10,916.8
Intangible assets, net 10,371.5 10,566.1
Other assets, net of accumulated amortization
of $81.3 (2001) and $81.8 (2000) 287.8 318.6
Deferred incomes taxes 6.0 4.9
--------- ---------
Total assets $22,409.5 $23,146.5
========= =========
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NTL Communications Corp. and Subsidiaries
Condensed Consolidated Balance Sheets - continued
(dollars in millions)
MARCH 31, DECEMBER 31,
2001 2000
----------- ------------
(unaudited) (see note)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 370.8 $ 451.1
Accrued expenses and other 1,089.8 1,105.6
Accrued construction costs 124.1 172.9
Due to affiliates -- 117.9
Interest payable 161.6 127.6
Deferred revenue 285.9 291.5
Current portion of long-term debt 3.0 10.7
----------- -----------
Total current liabilities 2,035.2 2,277.3
Long-term debt 12,101.2 11,843.4
Other 14.0 13.6
Commitments and contingent liabilities
Shareholder's equity:
Common stock - $.01 par value; authorized
100 shares; issued and outstanding 12 (2001)
and 12 (2000) shares -- --
Additional paid-in capital 13,951.8 13,746.7
Accumulated other comprehensive (loss) (501.7) (379.3)
(Deficit) (5,191.0) (4,355.2)
----------- -----------
8,259.1 9,012.2
----------- -----------
Total liabilities and shareholder's equity $ 22,409.5 $ 23,146.5
=========== ===========
Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date.
See accompanying notes.
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NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in millions)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2001 2000
---------- ---------
REVENUES
Consumer telecommunications and television $ 502.2 $ 248.3
Business and international telecommunications 200.2 158.0
Broadcast transmission and other 68.1 64.6
---------- ---------
770.5 470.9
COSTS AND EXPENSES
Operating expenses 386.8 213.0
Selling, general and administrative expenses 279.4 189.2
Other charges 7.4 --
Corporate expenses 4.1 6.6
Depreciation and amortization 623.7 235.3
---------- ---------
1,301.4 644.1
---------- ---------
Operating (loss) (530.9) (173.2)
OTHER INCOME (EXPENSE)
Interest income and other, net 7.6 8.5
Interest expense (308.0) (188.7)
Foreign currency transaction (losses) gains (5.7) 12.0
---------- ---------
(Loss) before income tax taxes (837.0) (341.4)
Income tax benefit 1.2 4.7
---------- ---------
Net (loss) $ (835.8) $ (336.7)
========== =========
See accompanying notes.
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6
NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholder's Equity
(Unaudited)
(dollars in millions)
COMMON STOCK
$.01 PAR VALUE
SHARES PAR
-----------------
Balance, December 31, 2000 12 $ --
Contribution from NTL
(Delaware), Inc
Comprehensive loss:
Net loss for the three months ended
March 31, 2001
Currency translation adjustment
Unrealized net gains on derivatives
Total
-----------------
Balance, March 31, 2001 12 $ --
=================
See accompanying notes.
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NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholder's Equity
(Unaudited) - continued
(dollars in millions)
ACCUMULATED OTHER
COMPREHENSIVE LOSS
---------------------------
ADDITIONAL FOREIGN UNREALIZED
PAID-IN COMPREHENSIVE CURRENCY NET GAINS ON
CAPITAL LOSS TRANSLATION DERIVATIVES DEFICIT
-------------------------------------------------------------------------
Balance, December 31, 2000 $ 13,746.7 $ (379.3) $ (4,355.2)
Contribution from NTL 205.1
(Delaware), Inc.
Comprehensive loss:
Net loss for the three months ended
March 31, 2001 $ (835.8) (835.8)
Currency translation adjustment (125.1) (125.1)
Unrealized net gains on derivatives 2.7 $2.7
--------
Total $ (958.2)
-------------------------------------------------------------------------
Balance, March 31, 2001 $ 13,951.8 $ (504.4) $2.7 $ (5,191.0)
=========================================================================
See accompanying notes.
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NTL Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
THREE MONTHS ENDED
MARCH 31,
--------------------
2001 2000
--------------------
Net cash (used in) operating activities $ (160.3) $ (1.7)
INVESTING ACTIVITIES
Purchase of marketable securities -- (2.2)
Proceeds from sales of marketable securities -- 5.0
Increase in other assets (8.8) (0.9)
Purchase of fixed assets (542.0) (356.9)
-------- --------
Net cash (used in) investing activities (550.8) (355.0)
FINANCING ACTIVITIES
Cash released from escrow -- 83.3
Increase in deferred financing costs -- (0.7)
Proceeds from borrowings, net of financing costs 596.7 --
Principal payments (22.1) (75.3)
Contribution from NTL (Delaware), Inc. 7.0 6.0
-------- --------
Net cash provided by financing activities 581.6 13.3
Effect of exchange rate changes on cash (10.1) (4.5)
-------- --------
Decrease in cash and cash equivalents (139.6) (347.9)
Cash and cash equivalents at beginning of period 423.5 1,074.2
-------- --------
Cash and cash equivalents at end of period $ 283.9 $ 726.3
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest exclusive of
amounts capitalized $ 164.4 $ 90.0
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Conversion of Convertible Notes $ 109.5 $ --
Contribution from NTL (Delaware), Inc. 198.1 --
See accompanying notes.
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in a Current Report on
Form 8-K/A dated May 4, 2001 of NTL Communications Corp.
Certain prior period amounts have been reclassified to conform to the current
presentation.
NOTE B - CORPORATE RESTRUCTURING
On May 18, 2000, NTL Incorporated completed a corporate restructuring to create
a holding company structure in connection with the acquisition of certain assets
of Cable & Wireless Communications plc ("CWC") (the operations acquired from CWC
are called "ConsumerCo"). The holding company restructuring was accomplished
through a merger so that all the stockholders of NTL Incorporated at the
effective time of the merger became stockholders of the new holding company, and
NTL Incorporated became a subsidiary of the new holding company. The new holding
company has taken the name NTL Incorporated and the holding company's subsidiary
simultaneously changed its name to NTL (Delaware), Inc. ("NTL Delaware"). The
Company is a wholly-owned subsidiary of NTL Delaware.
On February 21, 2001, the Company completed a transaction whereby it acquired
the entire issued share capital of NTL (CWC Holdings) Limited (the entity that
owns ConsumerCo) from NTL Incorporated and the entire issued share capital of
NTL Business Limited (formerly Workplace Technologies plc) from NTL Delaware in
exchange for shares of its common stock. As a result of this transaction,
ConsumerCo and NTL Business Limited became wholly-owned subsidiaries of the
Company. The Company accounted for the transaction in a manner consistent with a
transfer of entities under common control, which is similar to a "pooling of
interests." Accordingly, the net assets and results of operations of ConsumerCo
and NTL Business Limited have been included in the consolidated financial
statements from their original dates of acquisition, May 30, 2000 and September
20, 1999, respectively.
NOTE C - FIXED ASSETS
Fixed assets consist of:
MARCH 31, DECEMBER 31,
2001 2000
--------------------------
(unaudited)
(in millions)
Operating equipment $ 10,107.9 $ 10,004.9
Other equipment 1,139.2 1,079.8
Construction-in-progress 1,178.6 1,509.7
----------- -----------
12,425.7 12,594.4
Accumulated depreciation (1,871.1) (1,677.6)
----------- -----------
$ 10,554.6 $ 10,916.8
=========== ===========
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE C - FIXED ASSETS (CONTINUED)
Depreciation expense for the three months ended March 31, 2001 and 2000 was
$292.9 million and $145.3 million, respectively.
NOTE D - INTANGIBLE ASSETS
Intangible assets consist of:
MARCH 31, DECEMBER 31,
2001 2000
----------- -----------
(unaudited)
(in millions)
Goodwill, net of accumulated amortization
of $1,096.9 (2001) and $837.3 (2000) $ 10,082.3 $ 10,236.4
License acquisition costs, net of accumulated
amortization of $227.3 (2001) and $215.8 (2000) 121.6 139.2
Customer lists, net of accumulated amortization
of $77.8 (2001) and $70.4 (2000) 139.5 158.6
Other intangibles, net of accumulated amortization
Of $7.4 (2001) and $5.5 (2000) 28.1 31.9
----------- -----------
$ 10,371.5 $ 10,566.1
=========== ===========
In September 1999, NTL Delaware acquired the shares of Workplace Technologies
plc. On February 21, 2001, the Company completed a transaction whereby it
acquired the entire issued share capital of NTL Business Limited (formerly
Workplace Technologies plc) from NTL Delaware in exchange for shares of its
common stock. As a result of this transaction, NTL Business Limited became a
wholly-owned subsidiary of the Company. The Company accounted for the
transaction in a manner consistent with a transfer of entities under common
control, which is similar to a "pooling of interests." Accordingly, the net
assets and results of operations of NTL Business Limited have been included in
the Company's consolidated financial statements from the date of acquisition by
NTL Delaware.
On May 30, 2000, NTL Incorporated acquired ConsumerCo. On February 21, 2001, the
Company completed a transaction whereby it acquired the entire issued share
capital of NTL (CWC Holdings) Limited (the entity that owns ConsumerCo) from NTL
Incorporated in exchange for shares of its common stock. As a result of this
transaction, ConsumerCo became a wholly-owned subsidiary of the Company. The
Company accounted for the transaction in a manner consistent with a transfer of
entities under common control, which is similar to a "pooling of interests."
Accordingly, the net assets and results of operations of ConsumerCo have been
included in the Company's consolidated financial statements from the date of
acquisition by NTL Incorporated.
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE D - INTANGIBLE ASSETS (CONTINUED)
A significant component of the pro forma results is associated with the
acquisition of ConsumerCo. The historical results of ConsumerCo reflect certain
intercompany costs and expenses as they were prior to the separation of
ConsumerCo, which was completed in the second quarter of 2000. These costs and
expenses do not necessarily reflect the costs and expenses that would have been
incurred had ConsumerCo reported as a separate entity for these periods.
Therefore the historical results of ConsumerCo, which are included in the pro
forma results below are not reflective of results on a going forward basis. The
pro forma unaudited consolidated results of operations for the three months
ended March 31, 2000 assuming consummation of the above mentioned transactions
as of January 1, 2000 is as follows (in millions):
Total revenue $ 761.2
Net (loss) (692.0)
Amortization of intangible and other assets charged to expense for the three
months ended March 31, 2001 and 2000 was $330.8 million and $90.0 million,
respectively.
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE E - LONG-TERM DEBT
Long-term debt consists of:
MARCH 31, DECEMBER 31,
2001 2000
----------- -----------
(unaudited)
(in millions)
NTL Communications:
12-3/4% Senior Deferred Coupon Notes $ 277.8 $ 277.8
11-1/2% Senior Deferred Coupon Notes 1,050.0 1,040.5
10% Senior Notes 400.0 400.0
9-1/2% Senior Sterling Notes, less unamortized
discount 176.9 186.5
10-3/4% Senior Deferred Coupon Sterling Notes 344.4 353.6
9-3/4% Senior Deferred Coupon Notes 1,073.6 1,048.5
9-3/4% Senior Deferred Coupon Sterling Notes 350.5 360.8
11-1/2% Senior Notes 625.0 625.0
12-3/8% Senior Deferred Coupon Notes 333.3 323.6
7% Convertible Subordinated Notes 489.8 599.3
9-1/4% Senior Euro Notes 219.9 234.7
9-7/8% Senior Euro Notes 307.8 328.6
11-1/2% Senior Deferred Coupon Euro Notes 123.2 127.9
11-7/8% Senior Notes, less unamortized discount 489.9 489.6
12-3/8% Senior Euro Notes 263.8 --
NTL Communications Limited:
Credit Agreement 3,547.5 375.3
Other 2.3 --
NTL Business:
Credit Agreement -- 3,030.3
ConsumerCo:
Term Loan Facility and Other -- 21.7
NTL Triangle:
11.2% Senior Discount Debentures 517.3 517.3
Other 4.5 5.2
Diamond:
13-1/4% Senior Discount Notes 285.1 285.1
11-3/4% Senior Discount Notes 531.0 531.0
10-3/4% Senior Discount Notes 383.8 373.9
10% Senior Sterling Notes 191.6 201.9
9-1/8% Senior Notes 110.0 110.0
Other 5.2 6.0
----------- -----------
12,104.2 11,854.1
Less current portion 3.0 10.7
----------- -----------
$ 12,101.2 $ 11,843.4
=========== ===========
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE E - LONG-TERM DEBT (CONTINUED)
In May 2000, NTL Business Limited ("NTL Business") and NTL Communications
Limited ("NTLCL"), wholly-owned indirect subsidiaries of the Company, entered
into a pound sterling 2,500.0 million ($3,547.5 million) credit agreement in
connection with the ConsumerCo acquisition. As of March 31, 2001, there was
pound sterling 2,500.0 million ($3,547.5 million) outstanding under the credit
agreement. The effective rate of interest at March 31, 2001 was 8.03%.
In January and February 2001, the Company issued euro 300.0 million ($263.8
million) aggregate principal amount of 12-3/8% Senior Euro Notes due February 1,
2008. The Company received proceeds of approximately $271.9 million after
underwriters' discount and commissions and other fees. Interest is payable
semiannually in cash at a rate of 12-3/8% per annum beginning on August 1, 2001.
These notes may not be redeemed by the Company except in limited circumstances.
In February 2001, $109.5 million principal amount of 7% Convertible Subordinated
Notes due December 15, 2008 were converted into 2.8 million shares of NTL
Incorporated's common stock at the applicable conversion price of $39.20 per
share. NTL Incorporated issued as a premium on the conversion an additional 0.5
million shares which were valued at the closing common stock price on the dates
of conversion. The premium, which amounted to $17.6 million, is included in
interest expense. Additionally, accrued and unpaid interest of $1.2 million at
the time of the conversion was waived by the holders of the convertible notes.
On February 21, 2001, as required by the NTL Business and NTLCL credit
agreement, the Company completed a transaction whereby it acquired the entire
issued share capital of NTL (CWC Holdings) Limited (the entity that owns
ConsumerCo) from NTL Incorporated and the entire issued share capital of NTL
Business from NTL Delaware in exchange for shares of its common stock.
As a result of this transaction, ConsumerCo and NTL Business became subsidiaries
of the Company and NTL Business' interest in the pound sterling 2,500.0 million
credit agreement was assigned to a subsidiary of NTLCL.
On April 27, 2001, the Company received a commitment from a unit of GE Capital
for $388.0 million in financing. Subject to definitive documentation and
customary closing conditions, GE Capital will provide pound sterling 200.0
million ($283.8 million) through an increase to the pound sterling 2,500.0
million credit agreement of NTLCL. This increase is also subject to the consent
of the existing lenders under the credit agreement. The remainder will be in the
form of 5.75% convertible notes, convertible into NTL Incorporated common stock
at a conversion price of $35.00 per share. The Company intends to use
approximately half of the proceeds to repay outstanding amounts under the pound
sterling 2,500.0 million credit agreement and the remainder for construction,
capital expenditure and general corporate purposes.
On May 9, 2001, NTL Incorporated announced that the Company had priced an issue
of $1,000.0 million of 6-3/4% Convertible Senior Notes due May 15, 2008.
Interest will be payable semiannually commencing on November 15, 2001. These
notes will be convertible into shares of NTL Incorporated common stock at the
option of the holder after August 13, 2001 at a conversion price of $32.728 per
share. After May 20, 2004, the notes will be redeemable, in whole or from time
to time in part, at the option of NTL Incorporated or the Company. NTL
Incorporated will be a co-obligor of the notes on a subordinated basis. The
closing of the sale of the notes is expected to occur on May 15, 2001.
NTLCL has a pound sterling 1,300.0 million ($1,844.7 million) credit agreement
with a group of banks which is available to finance working capital requirements
of the U.K. Group, as defined. For purposes of this credit agreement, Diamond
Cable Communications Limited and subsidiaries, NTL (Triangle) LLC and
subsidiaries and certain other entities are excluded from the U.K. Group.
Pursuant to the credit agreement, in connection with the issuance of notes by
the Company beginning in October 2000, the commitment was reduced by pound
sterling 255.1 million ($362.0 million). Following the issuance of the 6-3/4%
Convertible Senior Notes, the commitment will be further reduced by
approximately pound sterling 382.1 million ($542.2 million). As of March 31,
2001, there were no amounts borrowed under this credit agreement. As of May 9,
2001, pound sterling 455.1 million ($645.7 million) had been borrowed.
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - DERIVATIVE FINANCIAL INSTRUMENTS
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS Nos. 137 and
138. The new accounting standard requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in the results of operations or in other
comprehensive income (loss), depending on whether a derivative is designated as
a fair value or cash flow hedge. The ineffective portion of all hedges is
recognized in the results of operations.
On January 1, 2001, the Company recorded all of its outstanding derivative
instruments at their fair value. The outstanding derivative instruments were
comprised of cross currency swaps to hedge exposure to movements in the British
pound/U.S. dollar exchange rate. The aggregate fair value on January 1, 2001 was
a liability of $2.2 million, which was recorded as other comprehensive loss. In
2001, the Company entered into cross currency swaps to hedge exposure to
movements in the Euro/British pound exchange rate. In the three months ended
March 31, 2001, the Company recorded other comprehensive income of $4.9 million
as result of changes in the fair values. The aggregate fair value at March 31,
2001 was a net asset of $2.7 million.
NOTE G - OTHER CHARGES
Other charges of $7.4 million in 2001 are principally for costs incurred to
integrate the acquired companies and are primarily related to information
technology integration, and costs incurred for business rationalization.
NOTE H - RESTRUCTURING COSTS
The Company recorded restructuring costs in November 2000 as a result of the
completion of a consolidation review. This charge consisted of employee
severance and related costs of $47.9 million for approximately 2,300 employees
to be terminated and lease exit costs of $18.0 million. As of March 31, 2001,
$20.5 million of the provision had been used, including $17.5 million for
employee severance and related costs and $3.0 million for lease exit costs. As
of March 31, 2001, approximately 1,100 employees had been terminated. The
remaining restructuring reserve of $45.4 million includes $30.4 million for
employee severance and related costs and $15.0 million for lease exit costs.
NOTE I - RELATED PARTY TRANSACTIONS
On April 12, 2001, NTL Incorporated purchased $15.0 million of an unsecured
convertible note of CoreComm Limited, a company that offers telecommunications
and Internet services to residential and business customers in the United
States. In addition, concurrently with the note purchase and without additional
compensation, NTL Incorporated entered into a network and software agreement
with CoreComm. Under the agreement, CoreComm will provide U.S. network access on
CoreComm's network for Internet traffic from NTL Incorporated's U.K. customers,
as well as royalty free license to use certain billing and provisioning software
and know-how. Certain officers and directors of NTL Incorporated are also
officers and directors of CoreComm. In light of this relationship, the
independent directors of NTL Incorporated examined the transaction with
CoreComm. The board of directors determined that the transaction was inherently
fair and provided NTL Incorporated with benefits that exceeded those that could
be obtained from a third party.
NOTE J - COMPREHENSIVE LOSS
The Company's comprehensive loss for the three months ended March 31, 2001 and
2000 was $958.2 million and $398.0 million, respectively.
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE K - SEGMENT DATA
BROADCAST CONSUMER BUSINESS SHARED TOTAL
--------------------------------------------------------
(in millions)
Three months ended March 31, 2001
Revenues $ 68.1 $ 502.2 $ 200.2 $ -- $ 770.5
EBITDA(1) 34.1 157.0 70.7 (157.5) 104.3
Three months ended March 31, 2000
Revenues $ 64.6 $ 248.3 $ 158.0 $ -- $ 470.9
EBITDA(1) 34.6 72.3 36.2 (74.4) 68.7
Total assets
March 31, 2001(2) $ 607.7 $ 18,572.9 $1,562.8 $1,666.1 $22,409.5
December 31, 2000(3) 647.3 19,113.0 1,753.3 1,632.9 23,146.5
(1) Represents earnings before interest, taxes, depreciation and amortization,
other charges, corporate expenses, and foreign currency transaction (losses)
gains.
(2) At March 31, 2001, shared assets included $221.5 million of cash and cash
equivalents, $491.3 million of goodwill and $953.3 million of other assets.
(3) At December 31, 2000, shared assets include $355.0 million of cash and cash
equivalents, $418.8 million of goodwill and $859.1 million of other assets.
The reconciliation of segment combined EBITDA to loss before income tax benefit
is as follows:
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
----------------------------
(in millions)
Segment Combined EBITDA $ 104.3 $ 68.7
(Add) Deduct:
Other charges 7.4 --
Corporate expenses 4.1 6.6
Depreciation and amortization 623.7 235.3
Interest income and other, net (7.6) (8.5)
Interest expense 308.0 188.7
Foreign currency transaction losses (gains) 5.7 (12.0)
------- -------
941.3 410.1
------- -------
(Loss) before income tax benefit $(837.0) $(341.4)
======= =======
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NTL Communications Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE L - COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2001, the Company was committed to pay approximately $1,115.0
million for equipment and services, which includes approximately $780.0 million
for certain operations and maintenance contracts through 2008.
The Company is involved in certain disputes and litigation arising in the
ordinary course of its business. None of these matters are expected to have a
material adverse effect on the Company's financial position, results of
operations or cash flows.
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NTL Communications Corp. and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
UK & IRELAND CUSTOMER STATISTICS (IN 000S)
MARCH 31, 2001
(UK) (IRELAND) NTL UK & IRELAND
NTL CABLELINK
- ---------------------------------------------------------------------------------
Homes in Franchise 11,411.2 420.0 11,831.2
Homes passed 8,404.1 419.4 8,823.5
Homes marketed (Telco) 7,472.3 20.0 7,492.3
Homes marketed (CATV) 7,695.8 419.4 8,115.2
Homes marketed (Ethernet) -- -- --
Customers 2,849.8 370.6 3,220.4
Single RGU 828.6 367.1 1,195.7
Dual / Triple RGU 2,021.2 3.5 2,024.7
CATV 2,311.5 370.6 2,682.1
Digital 757.3 -- 757.3
Telephone (Direct) 2,559.5 3.5 2,563.0
Broadband Internet 26.3 -- 26.3
RGUs 4,897.3 374.1 5,271.4
Internet Subscribers 1,953.3 -- 1,953.3
Wholesale 1,043.3 -- 1,043.3
ntlworld 602.4 -- 602.4
Telephone (Indirect) 435.2 -- 435.2
Residential Customers 4,328.3 370.6 4,698.9
Residential Services 7,259.5 374.1 7,633.6
Business Customers 76.6 1.0 77.6
PENETRATION
CATV 30.0% 88.4% 33.1%
Telephone 34.3% nm 34.2%
Customer 37.0% 88.4% 39.7%
RGU 63.6% 89.2% 65.0%
Dual / Triple 70.9% 0.9% 62.9%
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NTL Communications Corp. and Subsidiaries
RESULTS OF OPERATIONS
As a result of the completion of the acquisition of the consumer cable
telephone, Internet and television operations of Cable & Wireless Communications
plc ("ConsumerCo") in May 2000, the Company consolidated the results of
operations of ConsumerCo from the date of acquisition.
Three Months Ended March 31, 2001 and 2000
For the three months ended March 31, 2000, certain revenues have been
reclassified from business telecommunications to broadcast transmission and
other, and certain costs have been reclassified from operating expenses to
selling, general and administrative expenses to conform to the 2001
classifications. In 2000 and 2001, the substantial majority of revenues in all
segments were derived from operations in the United Kingdom.
Consumer telecommunications and television revenues increased to $502.2 million
from $248.3 million as a result of an acquisition and from growth in the
Company's customer base. The 2001 revenue includes $239.9 million from
ConsumerCo. The Company's immediate goal is to drive the majority of revenue
growth from average revenue per unit ("ARPU") increases rather than adding new
customers. Achievement of this goal would allow the Company to achieve its
revenue targets, have a lower capital requirement due to fewer installations,
and improve EBITDA as the Company reduces front-loaded costs such as customer
acquisition costs and higher initial maintenance costs. In the first quarter of
2001, the Company increased revenues from existing customers as a result of
migrating customers to digital television, price increases and upselling
additional products and services. The Company expects this trend to continue in
the second quarter of 2001.
Business telecommunications revenues increased to $200.2 million from $158.0
million as a result of an acquisition, growth in the Company's customer base and
increases in carrier services revenues. The 2001 revenue includes $26.5 million
from ConsumerCo. The Company continues to focus specific sales and marketing
effort on winning business customers in its franchise areas and increasing
revenue from its existing customers. Carrier services revenues increased due to
growth in services provided by the Company's wholesale operation to other
telephone companies, including wireless service operators. Revenue growth in
carrier services is primarily dependent upon the Company's ability to continue
to attract new customers and expand services to existing customers.
Broadcast transmission and other revenues increased to $68.1 million from $64.6
million. The increase reflects increases in the number of broadcast television
and FM radio customers and accounts, which exceeded price cap reductions in the
Company's regulated services, and increases in satellite and media services used
by broadcast and media customers. The Company expects growth in broadcast
services to be driven primarily by contracts related to the increased demand for
tower infrastructure by wireless services operators expanding and upgrading
their networks for wireless broadband, the privatization of national broadcast
networks, the digitalization of analog television and radio signals and the
further development of programming for the European markets requiring satellite
and terrestrial distribution services.
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NTL Communications Corp. and Subsidiaries
Operating expenses (including network expenses) increased to $386.8 million from
$213.0 million as a result of an acquisition and increases in interconnection
and programming costs due to customer growth. The 2001 expense includes $107.3
million from ConsumerCo.
Selling, general and administrative expenses increased to $279.4 million from
$189.2 million as a result of the acquisition of ConsumerCo. The 2001 expense
includes $92.0 million from ConsumerCo.
Other charges of $7.4 million in 2001 are principally for costs incurred to
integrate the acquired companies and are primarily related to information
technology integration, and costs incurred for business rationalization.
Corporate expenses decreased to $4.1 million from $6.6 million due to a
reduction in various overhead costs.
Depreciation and amortization expense increased to $623.7 million from $235.3
million due to an increase in amortization on acquisition related intangibles
and an increase in depreciation of telecommunications and cable television
equipment. The 2001 expense includes $396.2 million from ConsumerCo, including
amortization of acquisition related intangibles.
Interest expense increased to $308.0 million from $188.7 million due to the
issuance of additional debt, and the increase in the accretion of original issue
discount on the deferred coupon notes. The 2001 expense includes $58.2 million
in interest on acquisition related debt. Interest of $186.0 million and $103.6
million was paid in cash in the three months ended March 31, 2001 and 2000,
respectively.
Foreign currency transaction (losses) gains decreased to losses of $5.7 million
from gains of $12.0 million primarily due to the effect of changes in exchange
rates. The Company and certain of its subsidiaries have cash, cash equivalents
and debt denominated in non U.S. dollar currencies that are affected by changes
in exchange rates. In addition, foreign subsidiaries of the Company whose
functional currency is not the U.S. dollar hold cash, cash equivalents and debt
denominated in U.S. dollars which are affected by changes in exchange rates.
The Company recorded restructuring costs in November 2000 as a result of the
completion of a consolidation review. This charge consisted of employee
severance and related costs of $47.9 million for approximately 2,300 employees
to be terminated and lease exit costs of $18.0 million. As of March 31, 2001,
$20.5 million of the provision had been used, including $17.5 million for
employee severance and related costs and $3.0 million for lease exit costs. As
of March 31, 2001, approximately 1,100 employees had been terminated. The
remaining restructuring reserve of $45.4 million includes $30.4 million for
employee severance and related costs and $15.0 million for lease exit costs.
In September 2000, the Board of Directors approved modifications to certain
stock options granted to employees in November 1999 through May 2000. Options to
purchase an aggregate of approximately 16.5 million shares of NTL Incorporated
common stock with a weighted average exercise price of $64.39 per share were
modified such that the exercise price was reduced to $44.50 per share and the
vesting schedule was delayed and/or lengthened. NTL Incorporated is accounting
for these options as a variable plan beginning in September 2000. The Company
will recognize non-cash compensation expense for the difference between the
quoted market price of the common stock and the exercise price of the vested
options while the options remain outstanding.
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NTL Communications Corp. and Subsidiaries
LIQUIDITY AND CAPITAL RESOURCES
The Company will continue to require significant amounts of capital to finance
construction of its local and national networks, for connection of telephone,
telecommunications, Internet and cable television customers to the networks, for
other capital expenditures and for debt service. The Company estimates that
these requirements, net of cash from operations, will aggregate up to
approximately $1,450.0 million from April 1, 2001 to December 31, 2001. The
Company's commitments at March 31, 2001 for equipment and services through 2001
of approximately $335.0 million are included in the anticipated requirements.
The Company had approximately $283.9 million in cash on hand at March 31, 2001.
The Company expects to utilize the proceeds from the issuance of convertible
notes in May 2001, proceeds from the proposed GE Capital financing and a portion
of its bank credit facilities to fund the balance of these requirements.
On April 27, 2001, the Company received a commitment from a unit of GE Capital
for $388.0 million in financing. Subject to definitive documentation and
customary closing conditions, GE Capital will provide pound sterling 200.0
million ($283.8 million) through an increase to the pound sterling 2,500.0
million credit agreement of NTL Communications Limited ("NTLCL"). This increase
is also subject to the consent of the existing lenders under the credit
agreement. The remainder will be in the form of 5.75% convertible notes,
convertible into NTL Incorporated common stock at a conversion price of $35.00
per share. The Company intends to use half of the proceeds to repay outstanding
amounts under the pound sterling 2,500.0 million credit agreement and the
remainder for construction, capital expenditure and general corporate purposes.
On May 9, 2001, NTL Incorporated announced that the Company had priced an issue
of $1,000.0 million of 6-3/4% Convertible Senior Notes due May 15, 2008.
Interest will be payable semiannually commencing on November 15, 2001. These
notes will be convertible into shares of NTL Incorporated common stock at the
option of the holder after August 13, 2001 at a conversion price of $32.728 per
share. After May 20, 2004, the notes will be redeemable, in whole or from time
to time in part, at the option of NTL Incorporated or the Company. NTL
Incorporated will be a co-obligor of the notes on a subordinated basis. The
closing of the sale of the notes is expected to occur on May 15, 2001.
NTLCL entered into a pound sterling 1,300.0 million ($1,844.7 million) credit
agreement with a group of banks dated May 30, 2000. Pursuant to the credit
agreement, in connection with the issuance in October 2000 of $500.0 million
aggregate principal amount of the Company's 11-7/8% notes, and the issuance in
January and February 2001 of euro 300.0 million aggregate principal amount of
the Company's 12-3/8% notes, the commitment was reduced by pound sterling 255.1
million ($362.0 million). Following the issuance of the 6-3/4% Convertible
Senior Notes, the commitment will be further reduced by approximately pound
sterling 382.1 million ($542.2 million). As of March 31, 2001, there were no
amounts borrowed under this agreement. As of May 9, 2001, pound sterling 455.1
million ($645.7 million) had been borrowed. NTLCL and other members of the UK
Group may utilize the proceeds under this credit agreement to finance the
working capital requirements of the UK Group, provided that in no event shall
the proceeds be used for a purpose other than to finance the construction,
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NTL Communications Corp. and Subsidiaries
capital expenditure and working capital needs of a cable television or telephone
or telecommunications business, or a related business, in the United Kingdom or
Ireland. For purposes of this credit agreement, Diamond Cable Communications
Limited and subsidiaries, NTL (Triangle) LLC and subsidiaries and certain other
entities are excluded from the UK Group. Interest is payable at least every
six months at LIBOR plus a margin rate of 4.5% per annum. The margin rate shall
increase by 0.5% on the three month anniversary of the initial advance and by an
additional 0.5% on each subsequent three month anniversary, up to a maximum
total interest rate of 16% per annum. The unused portion of the commitment is
subject to a commitment fee of 0.75% payable quarterly. Principal is due in full
on March 31, 2006.
Regarding the Company's estimated cash requirements described above, there can
be no assurance that: (a) actual construction costs will not exceed the amounts
estimated or that additional funding substantially in excess of the amounts
estimated will not be required, (b) conditions precedent to advances under
credit facilities will be satisfied when funds are required, (c) the Company and
its subsidiaries will be able to generate sufficient cash from operations to
meet capital requirements, debt service and other obligations when required, (d)
the Company will be able to access such cash flow or (e) the Company will not
incur losses from its exposure to exchange rate fluctuations or be adversely
affected by interest rate fluctuations.
The accreted value at March 31, 2001 of the Company's consolidated long-term
indebtedness is $12,101.2 million, representing approximately 59.4% of total
capitalization. The following summarizes the terms of the significant credit
facilities and notes issued by the Company and its subsidiaries.
NTL Communications:
(1) 12-3/4% Senior Deferred Coupon Notes due April 15, 2005, principal amount
at maturity of $277.8 million, interest payable semiannually from October
15, 2000, redeemable at the Company's option on or after April 15, 2000;
(2) 11-1/2% Senior Deferred Coupon Notes due February 1, 2006, principal amount
at maturity of $1,050.0 million, interest payable semiannually beginning on
August 1, 2001, redeemable at the Company's option on or after February 1,
2001;
(3) 10% Senior Notes due February 15, 2007, principal amount at maturity of
$400.0 million, interest payable semiannually from August 15, 1997,
redeemable at the Company's option on or after February 15, 2002;
(4) 9-1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of pound sterling 125.0 million ($177.4 million), interest payable
semiannually from October 1, 1998, redeemable at the Company's option on or
after April 1, 2003;
(5) 10-3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008, principal
amount at maturity of pound sterling 300.0 million ($425.7 million),
interest payable semiannually beginning on October 1, 2003, redeemable at
the Company's option on or after April 1, 2003;
(6) 9-3/4% Senior Deferred Coupon Notes due April 1, 2008, principal amount at
maturity of $1,300.0 million, interest payable semiannually beginning on
October 1, 2003, redeemable at the Company's option on or after April 1,
2003;
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22
NTL Communications Corp. and Subsidiaries
(7) 9-3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009, principal
amount at maturity of pound sterling 330.0 million ($468.3 million),
interest payable semiannually beginning on October 15, 2004, redeemable at
the Company's option on or after April 15, 2004;
(8) 11-1/2% Senior Notes due October 1, 2008, principal amount at maturity of
$625.0 million, interest payable semiannually from April 1, 1999,
redeemable at the Company's option on or after October 1, 2003;
(9) 12-3/8% Senior Deferred Coupon Notes due October 1, 2008, principal amount
at maturity of $450.0 million, interest payable semiannually beginning on
April 1, 2004, redeemable at the Company's option on or after October 1,
2003;
(10) 7% Convertible Subordinated Notes due December 15, 2008, principal amount
at maturity of $489.8 million, interest payable semiannually from June 15,
1999, convertible into shares of NTL Incorporated common stock at a
conversion price of $39.20 per share, redeemable at the Company's option on
or after December 15, 2001;
(11) 9-1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of euro 250.0 million ($219.9 million), interest payable
semiannually beginning on May 15, 2000;
(12) 9-7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of euro 350.0 million ($307.8 million), interest payable
semiannually beginning on May 15, 2000, redeemable at the Company's option
on or after November 15, 2004;
(13) 11-1/2% Senior Deferred Coupon Euro Notes due November 15, 2009, principal
amount at maturity of euro 210.0 million ($184.7 million), interest payable
semiannually beginning on May 15, 2005, redeemable at the Company's option
on or after November 15, 2004;
(14) 11-7/8% Senior Notes due October 1, 2010, principal amount at maturity of
$500.0 million, interest payable semiannually beginning on April 1, 2001,
redeemable at the Company's option on or after October 1, 2005;
(15) 12-3/8% Senior Euro Notes due February 1, 2008, principal amount at
maturity of euro 300.0 million ($263.8 million), interest payable
semiannually beginning on August 1, 2001;
NTLCL:
(16) Credit Agreement of pound sterling 1,300.0 million ($1,844.7 million), no
amounts were outstanding at March 31, 2001, pound sterling 455.1 million
($645.7 million) outstanding as of May 9, 2001, interest payable at least
every six months at LIBOR plus a margin rate of 4.5% per annum, which is
subject to adjustment, the unused portion of the commitment is subject to a
commitment fee of 0.75% payable quarterly, principal is due in full on
March 31, 2006, pursuant to the credit agreement, following the issuance of
the Company's notes beginning in October 2000, the commitment was reduced
by pound sterling 255.1 ($362.0 million), following the issuance of the
6-3/4% Convertible Senior Notes, the commitment will be further reduced by
approximately pound sterling 382.1 million ($542.2 million);
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NTL Communications Corp. and Subsidiaries
(17) Credit Agreement of pound sterling 2,500.0 million ($3,547.5 million), of
which pound sterling 2,500.0 million ($3,547.5 million) was outstanding at
March 31, 2001, interest payable at least every six months at LIBOR plus a
margin rate of 2.25% per annum, which is subject to adjustment, effective
interest rate of 8.03% at March 31, 2001, the unused portion of the
commitment is subject to a commitment fee of 0.75% payable quarterly, which
is reduced to 0.50% when over 50% of the commitment is utilized, principal
is due in six quarterly installments beginning on June 30, 2004;
NTL Triangle:
(18) 11.2% Senior Discount Debentures due November 15, 2007, principal amount at
maturity of $517.3 million, interest payable semiannually beginning on May
15, 2001, redeemable at NTL Triangle's option after November 15, 2000;
Diamond:
(19) 13-1/4% Senior Discount Notes due September 30, 2004, principal amount at
maturity of $285.1 million, interest payable semiannually from March 31,
2000, redeemable at Diamond's option on or after September 30, 1999;
(20) 11-3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531.0 million, interest payable semiannually beginning on June
15, 2001, redeemable at Diamond's option on or after December 15, 2000;
(21) 10-3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $420.5 million, interest payable semiannually beginning on
August 15, 2002, redeemable at Diamond's option on or after December 15,
2002;
(22) 10% Senior Sterling Notes due February 1, 2008, issued by Diamond Holdings
plc, a wholly-owned subsidiary of Diamond, principal amount at maturity of
pound sterling 135.0 million ($191.6 million), interest payable
semiannually from August 1, 1998, redeemable at Diamond's option on or
after February 1, 2003; and
(23) 9-1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount at maturity of $110.0 million, interest payable
semiannually from August 1, 1998, redeemable at Diamond's option on or
after February 1, 2003.
Management does not anticipate that the Company and its subsidiaries will
generate sufficient cash flow from operations to repay at maturity the entire
principal amount of the outstanding indebtedness of the Company and its
subsidiaries. Accordingly, the Company may be required to consider a number of
measures, including: (a) refinancing all or a portion of such indebtedness, (b)
seeking modifications to the terms of such indebtedness, (c) seeking additional
debt financing, which may be subject to obtaining necessary lender consents, (d)
seeking additional equity financing, or (e) a combination of the foregoing.
There can be no assurance that financing will be available on acceptable terms
or at all.
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NTL Communications Corp. and Subsidiaries
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries. As a holding company, the Company holds no
significant assets other than cash, securities and its investments in and
advances to its subsidiaries. Accordingly, the Company's ability to make
scheduled interest and principal payments when due to holders of its
indebtedness may be dependent upon the receipt of sufficient funds from its
subsidiaries.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash used in operating activities was $160.3 million and $1.7 million in the
three months ended March 31, 2001 and 2000, respectively. Cash paid for interest
exclusive of amounts capitalized in the three months ended March 31, 2001 and
2000 was $164.4 million and $90.0 million, respectively. The remainder of this
change is primarily due to the increase in the net loss and changes in working
capital as a result of the timing of receipts and disbursements.
Purchases of fixed assets were $542.0 million in 2001 and $356.9 million in 2000
as a result of the continuing fixed asset purchases and construction, including
purchases and construction by acquired companies.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of 1995.
When used herein, the words, "believe," "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates," "projects," "positioned," "strategy,"
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed or
implied, by such forward-looking statements. Such factors include the following:
general economic and business conditions, the Company's ability to continue to
design networks, install facilities, obtain and maintain any required
governmental licenses or approvals and finance construction and development, all
in a timely manner at reasonable costs and on satisfactory terms and conditions,
as well as assumptions about customer acceptance, churn rates, overall market
penetration and competition from providers of alternative services, the impact
of new business opportunities requiring significant up-front investment, and
availability, terms and deployment of capital. The Company assumes no
obligation to update the forward-looking statements contained herein to reflect
actual results, changes in assumptions or changes in factors affecting such
statements.
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NTL Communications Corp. and Subsidiaries
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
During the quarter ended March 31, 2001, the Company filed the
following current reports on Form 8-K:
(i) Report dated January 15, 2001 (filed January 16, 2001)
reporting under Item 5, Other Events, that on January 15,
2001, NTL Communications Corp. announced that it had launched
an issue of up to euro 200.0 million of Senior Notes due 2008.
(ii) Report dated January 17, 2001 (filed January 19, 2001)
reporting under Item 5, Other Events, that on January 17,
2001, NTL Communications Corp. announced that it had priced an
issue of euro 200.0 million of Senior Notes due 2008.
(iii) Report dated February 5, 2001 (filed February 7, 2001)
reporting under Item 5, Other Events, that NTL Communications
Corp. announced that it had launched an additional euro 100.0
million of Senior Notes due 2008.
(iv) Report dated February 21, 2001 (filed March 7, 2001) reporting
under Item 2, Acquisition or Disposition of Assets, that on
February 21, 2001, NTL Communications Corp. completed a
transaction whereby it acquired the entire issued share
capital of NTL (CWC Holdings) Limited from its ultimate parent
company NTL Incorporated and the entire issued share capital
of NTL Business Limited from its direct parent company NTL
(Delaware), Inc. in exchange for shares of its common stock.
As part of this transaction, NTL's pound sterling 2.5 billion
credit facility was novated to a subsidiary of NTL
Communications Corp.
No financial statements were filed with these reports.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTL COMMUNICATIONS CORP.
Date: May 14, 2001 By: /s/ Barclay Knapp
-------------------------
Barclay Knapp
President and Chief Executive Officer
Date: May 14, 2001 By: /s/ Gregg N. Gorelick
--------------------------
Gregg N. Gorelick
Vice President-Controller
(Principal Accounting Officer)
25