FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the Month of: DECEMBER 2002
CABLEVISION S.A.
(Exact name of Registrant as specified in its charter)
CABLEVISION S.A.
(Translation of Registrant's name into English)
CUBA 2370, (C1428AEL) BUENOS AIRES, ARGENTINA
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1). [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7). [ ]
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82 - _______________
INDEX TO FORM 6-K
1. Notice to the Buenos Aires Stock Exchange, dated October 15, 2002,
regarding Negotiable Obligations (Notes) Series 10.
2. Notice to the Buenos Aires Stock Exchange, dated October 23, 2002,
regarding Negotiable Obligations (Notes) Series 5.
3. Notice to the SEC, dated October 24, 2002, regarding Negotiable
Obligations (Notes).
4. Notice to the Buenos Aires Stock Exchange, dated October 31, 2002,
regarding Resignations and Elections of New Officers.
5. Notice to the Argentine Securities Commission, dated November 11, 2002,
under Section 63 of the Buenos Aires Stock Exchange Regulations.
6. Press Release, dated November 14, 2002 regarding Nine-Month Period Results
ended September 30, 2002.
7. Consolidated Financial Statements as of September 30, 2002 and 2001 and
for the nine-month periods then ended.
ENCLOSURE # 1
Buenos Aires, October 15, 2002
Buenos Aires Stock Exchange
REF: NEGOTIABLE OBLIGATIONS (NOTES) SERIES 10 OF CABLEVISION S.A.
In my capacity of Attorney-in-fact of Cablevision S.A. I do hereby inform you
regarding the negotiable obligations, Series 10 issued by the corporation I
represent that: (i) as of July 25, 2000 the United States Securities and
Exchange Commission declared the effectiveness of the filing of such Negotiable
Obligations Series; (ii) their CUSIP number is 12686NAF2; (iii) their ISIN
Number is US12686NAF24; and (iv) such negotiable obligations may be traded by
multiple values of US$ 1,000 (one thousand United States Dollars), without any
requirement to trade a minimum volume above the foregoing figure.
Sincerely,
Javier Blanco,
Attorney-in-fact
ENCLOSURE # 2
Buenos Aires, October 23, 2002
Buenos Aires Stock Exchange
REF: NEGOTIABLE OBLIGATIONS (NOTES) SERIES 5 OF CABLEVISION S.A.
In my capacity of Attorney-in-fact of Cablevision S.A. I do hereby inform you
regarding the negotiable obligations, Series 5, issued by the corporation I
represent that: (i) as of November 3, 1999 the United States Securities and
Exchange Commission declared the effectiveness of the filing of such Negotiable
Obligations Series; (ii) their CUSIP number is 12686NAC9; and (iii) their ISIN
Number is US12686NAC92.
Sincerely,
Javier Blanco,
Attorney-in-fact
ENCLOSURE # 3
Buenos Aires, October 24, 2002
Securities Exchange Commission
REF: NEGOTIABLE OBLIGATIONS (NOTES) OF CABLEVISION S.A.
In my capacity of Attorney-in-fact of Cablevision S.A. ("Cablevision") I do
hereby inform you that my principal, the largest cable television service
provider in Argentina regarding the number of subscribers, will not pay
interests in the amount of US$ 18.9 million corresponding to Series 5 notes in
the amount of US$ 275,000,000 at 13.75% due May 9, 2009, neither will it pay
interests in the amount of US$ 17.2 million corresponding to Series 10 notes in
the amount of US$ 250,000,000 at 13.75% due April 30, 2007.
Accordingly, we refer to the statements set forth in our previous letters
informing about failure to make prior payments as the severe economic crisis of
the Argentine Republic and Cablevision has not changed so far.
Sincerely,
Javier Blanco,
Attorney-in-fact
ENCLOSURE # 4
Buenos Aires, October 31 2002
Buenos Aires Stock Exchange
RESIGNATIONS AND ELECTION OF NEW OFFICERS
Dear Sirs,
In my capacity of Attorney-in-fact of Cablevision S.A. I do hereby inform you
that on October 29, 2002 the corporation's Board of Directors has resolved to:
(i) accept the resignations submitted by Mr. Gary S. Howard and the Alternate
Director Mr. Michael John Erickson, who have resigned their offices due to
personal reasons; (ii) appoint Mr. Eric Charles Neuman as President of the
corporation and Mr. David J. Leonard as Vice President, who up to date have held
the offices of Vice President and Permanent Director, respectively; (iii)
appoint Mr. Francisco Martin Gutierrez as Permanent Director, who up to date has
held the office of Alternate Director.
Messrs Eric Neuman, David Leonard and Francisco Gutierrez have accepted the new
offices.
Sincerely,
Javier Blanco,
Attorney-in-fact
ENCLOSURE # 5
Buenos Aires, November 11, 2002
ARGENTINE SECURITIES COMMISSION
Ref: Section 63 of the Buenos Aires Stock Exchange Regulations
Dear Sirs,
The following information, given under Section 63 of your Regulations, refers to
the financial statements of the period closed as of September 30, 2002, which
have been approved by the Board of Directors Meeting held as of November 8,
2002.
- ------------------------------------ --------------- ---------------
$ $
- ------------------------------------ --------------- ---------------
1- Income (loss) (2,986,437,101)
- ------------------------------------ --------------- ---------------
Ordinary (2,986,437,101)
- ------------------------------------ --------------- ---------------
Extraordinary ---------
- ------------------------------------ --------------- ---------------
2- Stockholders' Equity (2,031,069,689)
- ------------------------------------ --------------- ---------------
Stock Capital- Registered value 188,132,670
- ------------------------------------ --------------- ---------------
Adjustment to Stock Capital 230,690,223
- ------------------------------------ --------------- ---------------
Irrevocable Contributions 20,574
- ------------------------------------ --------------- ---------------
Premium on Issuance of Shares 536,523,945
- ------------------------------------ --------------- ---------------
Retained Earnings (2,986,437,101)
- ------------------------------------ --------------- ---------------
3-Capital Structure
- ------------------------------------ --------------- ---------------
- -Common Registered Shares of a Par 188,132,670
Value of 1 each, with rights to 1
vote per share (fully subscribed,
paid-in, issued and registered)
- ------------------------------------ --------------- ---------------
- -Stockholders' interest in the Stock
Capital and votes (See Note 1 to the
separate Financial Statements of
Cablevision S.A. as of September 30,
2002):
- ------------------------------------ --------------- ---------------
35.865%
- ------------------------------------ --------------- ---------------
- ------------------------------------ --------------- ---------------
$ $
- ------------------------------------ --------------- ---------------
Southtel Holdings S.A.
- ------------------------------------ --------------- ---------------
AMI CV Holdings Ltd. 14.135%
- ------------------------------------ --------------- ---------------
VLG Argentina, Inc. 50.000%
- ------------------------------------ --------------- ---------------
Sincerely,
Ivan Perez,
Attorney-in-fact
[CABLEVISION LOGO]
ENCLOSURE # 6
[CABLEVISION LETTERHEAD]
CABLEVISION S.A. REPORTS NINE-MONTH PERIOD RESULTS ENDED SEPTEMBER 30, 2002
FOR IMMEDIATE RELEASE: Thursday, November 14, 2002.
BUENOS AIRES, ARGENTINA - CABLEVISION S.A. ("CABLEVISION"), the largest
multiple system operator (MSO) in Argentina, reported for the nine-month period
ended September 30, 2002 net revenues from services of Argentine Pesos ("Ps.")
557.8 million and earnings before interest, taxes, depreciation, amortization
and non-cash reserves ("EBITDA") of Ps. 150.7 million 1. When compared to the
same period of 2001, net revenues and EBITDA decreased in 2002 by Ps. 313.0
million and Ps. 140.8 million, or 35.9% and 48.3%, respectively in Peso terms
(see explanatory paragraph below). When calculated in Dollar terms, these
decreases equal 63.7% and 69.9% respectively.
The Argentine Government issued a decree which, among other things,
provided for the restoration of inflation accounting and instructed the Comision
Nacional de Valores ("CNV") to issue specific procedures
- --------
1 Includes one-time savings of approximately Ps. 17.9 MM registered during the
third quarter which corresponds to the full period.
to rule its application. Consequently, on July 25, 2002 the CNV issued
Resolution No. 415 which establishes the application of inflation accounting
procedures starting January 1, 2002, for any financial statements filed
subsequent to the date of that resolution. As a result, amounts for the
nine-month period ended September 30, 2001, presented herein for comparative
purposes, have been restated in constant pesos at September 30, 2002, using the
inflation rate measured by the wholesale internal price index, which was 121.2%
for the nine-month period ended September 30, 2002. Likewise, the figures for
the nine-month period ended September 30, 2002 have been restated in constant
pesos at September 30, 2002.
CableVision recorded a net loss of approximately Ps. 3.0 billion for the
nine-month period ended September 30, 2002 which was largely the result of
charges taken as a result of the government's decision to abandon the
Convertibility Law in January and allow the Argentine peso to float freely. The
extent of these losses resulted in CableVision reporting a negative
shareholders' equity of Ps. 2.0 billion.
Financials summary in millions, except otherwise indicated
9 months ended 9 months ended
9/30/02 9/30/01 Variance %
-------------- -------------- ----------
Subscribers (000) 1,237 1,442 (14%)
Net Revenues (Ps) 557.8 870.8 (36%)
Net Revenues (USD) (1) 142.8 393.7 (64%)
EBITDA (Ps) (2) 150.7 291.5 (48%)
EBITDA (USD) (1) (2) 39.7 131.8 (70%)
Net Loss (Ps) 2,986.4 163.1
Cash Balance (Ps) 55.7 48.4
Cash Balance (USD) (1) 14.9 21.9
Receivables from services (Ps) 34.5 79.8
Accounts payables (Ps) 163.4 311.4
Capex (Ps) 27.4 162.5
Capex (USD) (1) 9.2 73.5
Total Principal Debt (Ps) 2,973.3 1,840.2
Total Principal Debt (USD) (1) 795.0 831.9
Debt/EBITDA(annualized in USD) 15.0x 4.7x
(1) These items are included for comparative purposes only and have not
been derived from CableVision's Financial Statements.
(2) Includes one-time savings of approximately Ps. 17.9 MM registered
during the third quarter which corresponds to the full period.
IMPACT OF MACROECONOMIC CHANGES ON CABLEVISION
The repeal of the Convertibility Law and the devaluation of the peso
against the US Dollar, together with the deepening recession and mounting
unemployment, have severely impacted the cash flow of CableVision, both in real
and US dollar terms. All of CableVision revenues are peso generated (including
more than 20% of revenues that is collected in provincial bonds which sometimes
suffer significant discounts when converted to Pesos), while a portion of its
costs and more than 90% of its debt is denominated in US Dollars. In light of
this, CableVision, like many other Argentine issuers, is not presently making
interest or principal payments on its dollar-denominated debt:
- On February 15, 2002, the Company reported that it had failed to
reach an agreement to extend the maturity of its US$100,000,000
Floating Rate Notes due February 15, 2002.
- On March 4, CableVision announced that it would not make a US$ 6.25
million interest payment due on its US $100,000,000 12.5% Notes due
March 2, 2003. On August 27, CableVision announced that it would not
make a US$ 6.25 million interest payment due on this note.
- On April 26, CableVision announced that it would not make a US$ 17.2
million interest payment due on its US $250,000,000 13.75% Notes due
April 30, 2007. On October 23, CableVision announced that it would
not make a US$ 17.2 million interest payment due on this note.
- On April 26, CableVision announced that it would not make a US$ 18.9
million interest payment due on its US$275,000,000 13.75% Notes due
May 1, 2009. On October 23, CableVision announced that it would not
make a US$ 18.9 million interest payment due on this note.
As a consequence of this unprecedented economic crisis and the collapse of
the banking system, CableVision's only source of cash is the cash flow from its
operations, since it has no access to credit in the domestic or international
markets.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2002 VS. NINE-MONTH PERIOD ENDED SEPTEMBER
30, 2001
As previously indicated, the Argentine Government issued a decree which,
among other things, provided for the restoration of inflation accounting and
instructed the CNV to issue specific procedures to rule its application.
Consequently, on July 25, 2002 the CNV issued Resolution N(degree)415 which
establishes the application of inflation accounting procedures starting January
1, 2002, for any financial statements filed subsequent to the date of that
resolution. As a result, amounts for the nine-month period ended September 30,
2001, presented herein for comparative purposes, have been restated in constant
pesos at September 30, 2002, using the inflation rate measured by the wholesale
internal price index which was 121.2% for the nine-month period ended September
30, 2002. The same has been done with 2002 figures, restating them to September
2002 using the wholesale inflation index.
During the nine-month period ended September 30, 2002, CableVision had net
revenues from services provided of Ps. 557.8 million, a decrease of 35.9%
compared to Ps. 870.8 million registered in the nine-month period ended
September 30, 2001. The decrease is attributable to (i) the decrease in the
basic fee in real terms (which implies that revenues increased at a lower rate
than the inflation rate did) as a consequence of the inflationary environment in
Argentina, (ii) the lower number of subscribers in the nine-month period ended
September 30, 2002 compared to the same period of 2001, and (iii) a decrease in
advertising revenues during the nine-month period ended September 30, 2002. This
decrease was partially offset by (i) lower taxes on revenues during the
nine-month period ended September 30, 2002, which amounted to Ps. 2.5 million
(0.4% of gross revenues) compared to Ps. 18.5 million registered during the same
period of 2001 and (ii) higher revenues in real terms in FiberTel, CableVision's
high speed internet access subsidiary, due to an increase in its subscriber base
(which implies that revenues increased at a higher rate than the inflation rate
did).
By the end of the nine-month period ended September 30, 2002, in
comparison with the same period of 2001, CableVision suffered a loss of
approximately 205,000 basic subscribers or 14% of its subscriber base. The
annualized churn rate increased from 29.4% in the nine-month period ended
September 30, 2001 to 35.3% in the same period of 2002, as a consequence of the
current economic environment and competition faced by the Company in certain
regions of the country.
Programming costs decreased by 28.7% to Ps. 179.3 million in the
nine-month period ended September 30, 2002 from Ps. 251.6 million in the same
period of 2001. This variation is mainly due to a decrease in programming costs
in real terms. During the third quarter of 2002, CableVision registered one-time
savings of approximately Ps. 17.9 million due to the effect of renegotiation in
programming contracts. Such savings correspond to the whole nine-month period.
Programming costs as a percentage of gross cable revenues were 35.1% and 29.8%
in the nine-month period ended September 30, 2002 and the nine-month period
ended September 30, 2001, respectively.
CableVision's salaries, social security taxes and other payroll expenses
decreased 41.6% to Ps. 81.7 million in the nine-month period ended September 30,
2002, from Ps. 140.0 in the same period of 2001 principally due to a decrease,
in real terms, of salaries, and, to a lesser extent, a reduction in the number
of employees during the last twelve months.
Depreciation expense increased by 9.2% to Ps. 140.6 million in the
nine-month period ended September 30, 2002 from Ps. 128.8 million in the same
period of 2001. The increase is principally attributable to higher depreciation
charges in the installation (churn) of subscribers, as a consequence of the
higher number of disconnections during the period.
Other costs decreased to Ps. 146.2 million in the nine-month period ended
September 2002 from Ps. 187.8 million registered in the same period of 2001
principally due to (i) the decrease in real terms of the majority of the
Company's other operating costs, and (ii) a significant reduction in marketing
expenses. This decrease was partially offset by a higher bad debt charge of
approximately 2.5% to Ps. 33.2 million, during the nine-month period ended
September 30, 2002 from Ps. 32.4 million in the same period of 2001 as a
consequence of slower payments in receivables from services and receivables from
advertising.
Financial interest expense (including the effect of exposure to inflation)
increased from Ps. 200.9 million in the nine-month period ended September 30,
2001 to Ps. 1,448.5 million in the same period of 2002. This significant
increase is due principally to (i) a loss of Ps. 1,236.6 million as a result of
the exchange rate difference in the net dollar denominated debt and (ii) an
increase of Ps. 139.1 million in accrued interests denominated in US dollars,
which was partially offset by a net gain of Ps. 115.9 million as a consequence
of the effect of inflation applied to the net monetary position.
As a consequence of the factors described above, CableVision's EBITDA and
net loss for the nine-month period ended September 30, 2002 were Ps. 150.7
million and Ps. 3.0 billion respectively, compared to Ps. 291.5 million and Ps.
163.1 million in the same period of 2001. In Dollar terms, EBITDA dropped by
69.9% from US$ 131.8 million in the nine-month period ended September 30, 2001
to USD 39.7 million in the same period of 2002.
* * *
CableVision is the largest cable company in Argentina, based on the number
of subscribers served, which, as of September 30, 2002, was approximately 1.24
million. CableVision believes that it has the most technologically advanced
distribution network in the country. Its network passes approximately 3.5
million homes, of which 85% are passed by cable plant with a bandwidth capacity
of at least 450 Mhz, including approximately 50% that are passed by cable plant
with a bandwidth capacity of 750 Mhz.
CableVision's shareholders are VLG Argentina, Inc. with a 50% interest,
and companies affiliated with Hicks, Muse, Tate and Furst, Incorporated with the
remaining 50% ownership interest in CableVision, which jointly appoint the
management and control the Company.
CABLEVISION S.A.
Consolidated statements of cash flows as of September 30, 2002 and 2001.
(In million of argentine pesos)
9M 2002 9M 2001
NET LOSS FOR THE PERIOD (2,986.4) (163.1)
Adjustments to reconcile the net loss for the period to net
cash provided by operations:
Income (loss) on affiliates (17.9) 3.7
Depreciation of property, plant & equipment 140.6 128.8
Amortization of intangible assets 118.5 121.8
Increase in allowances and reserves 1,469.6 17.0
Uncollectable accounts 33.2 32.4
Minority interest in subsidiaries (2.4) (0.9)
Exchange rate difference 1,230.4 0.0
Gain on exposure to inflation (115.9) 0.0
Retired PP&E -net book value 3.7 0.0
CHANGES IN ASSETS AND LIABILITIES:
Receivables from services (25.8) (29.6)
Other receivables 27.7 (58.3)
Accounts payable (56.1) 58.7
Payroll and social security taxes (9.1) 3.6
Taxes payable (1.4) (19.1)
Other payables and reserves (8.9) (3.6)
Interest payable and other 304.2 33.4
NET CASH PROVIDED BY OPERATIONS 104.2 124.8
CASH USED FOR INVESTMENT ACTIVITIES
Acquisition of property, plant and equipment and materials (43.0) (120.9)
Sale of property, plant and equipment 0.0 1.2
Related parties (3.2) 0.0
NET CASH USED FOR INVESTMENT ACTIVITIES (46.3) (119.7)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
Proceeds from loans and other debts 246.0 2,015.3
Payments of loans and other debts (246.3) (2,017.7)
Increase in loans to affiliates, net 0.0 2.5
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (0.3) 0.1
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 57.6 5.2
Loss on exposure to inflation generated by funds (28.8) 0.0
Cash and cash equivalents at beginning of period 26.9 43.1
CASH AND CASH EQUIVALENTS AT END OF PERIOD (1) 55.7 48.4
(1) Cash and cash equivalents plus investments rapidly converted into cash
(investments with original maturity within less than three months).
CABLEVISION S.A.
Consolidated balance sheets as of September 30, 2002 and 2001.
(In million of argentine pesos)
9M 2002 9M 2001
CURRENT ASSETS
Cash and banks 55.7 22.7
Investments 0.0 25.7
Receivables from services 34.5 79.8
Other receivables 25.0 124.2
TOTAL CURRENT ASSETS 115.2 252.4
NONCURRENT ASSETS
Other receivables 38.8 72.6
Property, plant and equipment 641.1 771.5
Intangible assets 750.9 2,373.4
Other assets 1.5 3.2
TOTAL NONCURRENT ASSETS 1,432.3 3,220.7
TOTAL ASSETS 1,547.5 3,473.0
CURRENT LIABILITIES
Accounts payable 158.9 306.5
Loans 2,966.6 403.8
Accrued interest 346.0 73.1
Payroll and social security taxes 8.3 20.3
Taxes payable 10.3 27.4
Other payables 6.5 18.6
Reserves 15.9 17.2
TOTAL CURRENT LIABILITIES 3,512.4 866.7
NONCURRENT LIABILITIES
Accounts payable 4.6 4.9
Loans 6.7 1,436.4
Taxes payable 5.8 7.3
Other payables 21.8 40.9
Reserves 25.9 68.3
TOTAL NONCURRENT LIABILITIES 64.8 1,557.8
TOTAL LIABILITIES 3,577.2 2,424.5
MINORITY INTEREST IN SUBSIDIARIES 1.3 1.0
SHAREHOLDERS' EQUITY (2,031.1) 1,047.5
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,547.5 3,473.0
CABLEVISION S.A.
Consolidated Statements of income for the nine-month period ended
September 30, 2002 and 2001.
(In million of argentine pesos)
9M 2002 9M 2001
Net revenues from sales and services 557.8 870.8
Cost of services provided (405.3) (510.1)
GROSS INCOME 152.6 360.8
Selling expense (92.8) (146.3)
Administrative expense (49.9) (81.3)
Income (loss) on affiliates 17.9 (3.7)
Amortization of goodwill (112.7) (114.2)
OPERATING (LOSS) INCOME (84.9) 15.3
Financial interest expense (325.0) (111.6)
Other interest expense, exchange rate difference
and gain on exposure to inflation (1,123.5) (89.3)
Intangible assets allowance (1,455.0) 0.0
Other income (expense) (0.2) 22.0
Minority interest in subsidiaries 2.4 0.9
LOSS BEFORE INCOME TAX (2,986.3) (162.7)
Income tax (0.2) (0.4)
NET LOSS FOR THE PERIOD (2,986.4) (163.1)
EBITDA
Net revenues from sales and services 557.8 870.8
Programming costs (179.3) (251.6)
Salaries and costs related to personnel (81.7) (140.0)
Other operating costs (146.2) (187.8)
EBITDA 150.7 291.5
EBITDA / Net revenues from sales and services 27.0% 33.5%
SELECTED OPERATING DATA:
Capital expenditures 27.4 162.5
Homes passed (in thousands) 3,517 3,523
Basic subscribers served (in thousands) 1,237 1,442
Cable modem subscribers 52,900 41,400
ENCLOSURE # 7
[CABLEVISION LOGO]
CONSOLIDATED FINANCIAL STATEMENTS AS OF
SEPTEMBER 30, 2002 AND 2001 AND
FOR THE NINE-MONTH PERIODS THEN ENDED
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON UNAUDITED INTERIM FINANCIAL STATEMENTS
To the Board of Directors of
CABLEVISION SOCIEDAD ANONIMA:
1. We have reviewed the accompanying consolidated balance sheet of
CABLEVISION SOCIEDAD ANONIMA (hereinafter "the Company") and its subsidiaries
(Argentine Corporations) as of September 30, 2002 and the related consolidated
statements of income, cash flows and changes in shareholders' equity for the
nine-month period then ended, all expressed in Argentine pesos (Note 3.II.).
These financial statements are the responsibility of the Company's Management.
2. The consolidated financial statements of CABLEVISION SOCIEDAD ANONIMA
as of September 30, 2001, presented for comparative purposes, were reviewed by
Pistrelli, Diaz y Asociados Sociedad Civil, in its capacity as member firm of
Andersen. Such review concluded with a report of independent public accountants
on unaudited interim financial statements including no observations, dated
November 9, 2001.
3. We conducted our review in accordance with generally accepted auditing
standards in Argentina. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. A review
is substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards in Argentina, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
4. As described in Note 1 to the accompanying consolidated financial
statements, during this year, a deep change has been implemented in Argentina's
economic model as well as in the Convertibility Law that was in place since
March 1991 (whereby the Argentine peso was pegged at parity with the US dollar).
The main consequences of the set of measures adopted by the Argentine Federal
Government, which are detailed in the above mentioned note, are (a) the
devaluation of the Argentine peso with respect to the US dollar and
de-dollarization of certain assets and liabilities in foreign currency held in
the country; (b) the default on foreign public debt payments; (c) the
implementation of restrictions on the withdrawal of funds deposited with
financial institutions; (d) the restriction on transfers abroad on account of
financial loans and dividend distributions without prior authorization from the
Central Bank and (e) the increase in domestic prices. The future development of
the economic crisis may require further measures from the Argentine Federal
Government.
- 2 -
5. Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements mentioned in
paragraph 1. for them to be in conformity with generally accepted accounting
principles applicable to consolidated financial statements in Argentina
("Argentine GAAP") and the relevant regulations of the Business Associations Law
and the National Securities Commission ("CNV"). This statement should be read
taking into account the uncertainties described in paragraph 6. below, the
resolution of which cannot be determined as of the date of this report.
6. As explained in Note 1 to the accompanying consolidated financial
statements, as of the date of this report we are not able to predict the future
effects that continuation of the economic crisis may have on the Company's
operations. Moreover, as disclosed in such note, due to the losses incurred in
the period January through September 2002, Company's shareholders' equity as of
September 30, 2002 is negative and amounts to AR$2,031,069,689. Therefore, there
are uncertainties about Company's ability to continue as a going concern and its
ability to solve the events of default incurred on certain financial obligations
and settle its liabilities in the normal course of business. The abovementioned
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern and do not include any adjustments that might
result from the outcome of these uncertainties.
7. Accounting practices of the Company used in preparing the accompanying
consolidated financial statements conform with Argentine GAAP, but do not
conform with generally accepted accounting principles in the United States of
America ("US GAAP"). See Note 13.
Buenos Aires, Argentina PISTRELLI, DIAZ Y ASOCIADOS S.R.L.
November 8, 2002 C.P.C.E.C.F. Vol. 1 - Fol. 8
EDUARDO C. CODURI
Partner
Certified Public Accountant
Buenos Aires University
C.P.C.E.C.F. - Vol. 163 - Fol. 202
- 1 -
CABLEVISION SOCIEDAD ANONIMA
AND SUBSIDIARIES
Cuba 2370, Buenos Aires - Argentina
FISCAL YEARS NO. 23 AND 22 BEGINNING ON JANUARY 1, 2002 AND 2001
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002 AND 2001
Main business of the Company: Cable television - Community antenna.
Date of registration with the Public Registry of Commerce:
- - Of the statute of incorporation: August 29, 1979.
- - Of the last amendment to the bylaws: May 11, 2001.
Registration number with the Inspeccion General de Justicia (the governmental
regulatory agency of corporations): 67,673.
Termination of the statute of incorporation: August 29, 2078.
CAPITAL STOCK
(Stated in Argentine pesos)
SUBSCRIBED, PAID-IN
ISSUED AND REGISTERED
Common and nominative shares, face value 1, entitled to one vote per share (Note 6) 188,132,670
===========
MARCELO E. BOMBAU
Director
- 2 -
CABLEVISION SOCIEDAD ANONIMA
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2002 AND 2001
(Stated in Argentine pesos - Note 3.II.)
2002 2001
-------------- --------------
CURRENT ASSETS
Cash and banks 55,701,143 22,711,484
Short-term investments -- 25,655,718
Receivables from services (Note 4.a) 34,500,510 79,806,263
Other receivables (Note 4.b) 24,969,400 124,194,551
-------------- --------------
TOTAL CURRENT ASSETS 115,171,053 252,368,016
-------------- --------------
NONCURRENT ASSETS
Other receivables (Note 4.b) 38,750,997 72,562,974
Property, plant and equipment (Note 4.c) 641,118,908 771,452,103
Intangible assets (Note 4.d) 750,871,715 2,373,428,093
Other assets 1,548,423 3,207,449
-------------- --------------
TOTAL NONCURRENT ASSETS 1,432,290,043 3,220,650,619
-------------- --------------
TOTAL ASSETS 1,547,461,096 3,473,018,635
============== ==============
CURRENT LIABILITIES
Accounts payable (Note 4.e) 158,859,246 306,480,064
Loans (Note 4.f) 2,966,604,895 403,780,567
Accrued interest (Note 4.g) 346,012,161 73,061,005
Payroll and social security taxes 8,299,574 20,311,312
Taxes payable 10,278,906 27,379,867
Other payables (Note 4.h) 6,505,648 18,552,763
Reserves (Note 4.i) 15,861,289 17,183,351
-------------- --------------
TOTAL CURRENT LIABILITIES 3,512,421,719 866,748,929
-------------- --------------
NONCURRENT LIABILITIES
Accounts payable (Note 4.e) 4,579,481 4,944,966
Loans (Note 4.f) 6,729,331 1,436,392,029
Taxes payable 5,810,000 7,268,638
Other payables (Note 4.h) 21,766,826 40,892,565
Reserves (Note 4.i) 25,878,143 68,280,155
-------------- --------------
TOTAL NONCURRENT LIABILITIES 64,763,781 1,557,778,353
-------------- --------------
TOTAL LIABILITIES 3,577,185,500 2,424,527,282
MINORITY INTEREST IN SUBSIDIARIES 1,345,285 1,038,565
SHAREHOLDERS' EQUITY (Per respective statements) (2,031,069,689) 1,047,452,788
-------------- --------------
TOTAL LIABILITIES, MINORITY INTEREST IN SUBSIDIARIES AND SHAREHOLDERS'
EQUITY 1,547,461,096 3,473,018,635
============== ==============
The accompanying notes 1 to 14 are an integral part of these
consolidated financial statements.
MARCELO E. BOMBAU
Director
- 3 -
CABLEVISION SOCIEDAD ANONIMA
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Stated in Argentine pesos - Note 3.II.)
2002 2001
-------------- ------------
NET REVENUES FROM SERVICES (Note 4.k) 557,822,145 870,845,235
COSTS OF SERVICES PROVIDED (Note 14.4) (405,259,103) (510,050,739)
-------------- ------------
GROSS INCOME 152,563,042 360,794,496
SELLING EXPENSES (Note 14.4) (92,772,182) (146,294,397)
ADMINISTRATIVE EXPENSES (Note 14.4) (49,910,309) (81,297,791)
INCOME (LOSS) ON AFFILIATES 17,881,406 (3,711,458)
AMORTIZATION OF GOODWILL (Note 14.2) (112,681,310) (114,197,328)
-------------- ------------
OPERATING (EXPENSE) INCOME (84,919,353) 15,293,522
FINANCIAL EXPENSE - NET (Note 4.l) (1,448,512,082) (200,862,786)
INTANGIBLE ASSETS ALLOWANCE (Note 4.j) (1,455,000,000) --
OTHER (EXPENSE) INCOME - NET (248,944) 21,977,137
MINORITY INTEREST IN SUBSIDIARIES 2,409,052 923,626
-------------- ------------
NET LOSS BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME (2,986,271,327) (162,668,501)
INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME (165,774) (441,124)
-------------- ------------
NET LOSS FOR THE PERIOD (2,986,437,101) (163,109,625)
============== ============
The accompanying notes 1 to 14 are an integral part of these
consolidated financial statements.
MARCELO E. BOMBAU
Director
- 4 -
CABLEVISION SOCIEDAD ANONIMA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Stated in Argentine pesos - Note 3.II.)
2002
----------------------------------------------------------------------------------------
SHAREHOLDERS' CONTRIBUTIONS
--------------------------------------------------------------------
CAPITAL STOCK
------------------------------
CAPITAL
CONTRIBUTIONS
FOR FUTURE
FACE ADJUSTMENT SHARE ISSUANCE
VALUE TO CAPITAL SUBSCRIPTIONS PREMIUM SUBTOTAL
----------- ----------- -------------- ------------ -------------
Balances at beginning of year 188,132,670 230,690,223 20,574 791,718,947 1,210,562,414
Appropriation of accumulated
losses as of December 31, 2001
approved by the Regular General
Shareholders' Meeting held on
April 30, 2002, with issuance
premium (Note 6) -- -- -- (255,195,002) (255,195,002)
----------- ----------- -------------- ------------ -------------
Balances at end of period 188,132,670 230,690,223 20,574 536,523,945 955,367,412
=========== =========== ============== ============ =============
2002 TOTAL
-------------- ----------------------------------
ACCUMULATED
LOSSES 2002 2001
-------------- -------------- -------------
Balances at beginning of year (255,195,002) 955,367,412 871,643,056
Appropriation of accumulated
losses as of December 31, 2001
approved by the Regular General
Shareholders' Meeting held on
April 30, 2002, with issuance
premium (Note 6) 255,195,002 -- --
Increase of capital stock with
an issuance premium approved by
the Regular and Special
Shareholders' Meeting held on
February 6, 2001 (Note 6) -- -- 221,203,353
Appropriation of accumulated
losses as of December 31, 2000
approved by the Regular General
Shareholders' Meeting held on
May 28, 2001, with the
contribution of the remitted
debt by Shareholders on
February 6, 2001 and issuance
premium (Note 6) -- -- 117,716,004
Net loss for the period (2,986,437,101) (2,986,437,101) (163,109,625)
-------------- -------------- -------------
Balances at end of period (2,986,437,101) (2,031,069,689) 1,047,452,788
============== ============== =============
The accompanying notes 1 to 14 are an integral part of these
consolidated financial statements.
MARCELO E. BOMBAU
Director
- 5 -
CABLEVISION SOCIEDAD ANONIMA
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Stated in Argentine pesos - Note 3.II.)
2002 2001
-------------- --------------
CASH PROVIDED BY OPERATIONS
Net loss for the period (2,986,437,101) (163,109,625)
ADJUSTMENTS TO RECONCILE THE NET LOSS FOR THE PERIOD TO NET CASH PROVIDED
BY OPERATIONS:
(Income) loss on affiliates (17,881,406) 3,711,458
Depreciation of property, plant and equipment 140,594,761 128,816,255
Amortization of intangible assets 118,513,690 121,768,588
Increase in allowances and reserves 1,469,553,135 16,956,867
Uncollectable accounts 33,238,558 32,385,244
Minority interest in subsidiaries (2,409,052) (923,626)
Exchange rate difference 1,230,418,871 --
Gain on exposure to inflation (115,865,461) --
Retired property, plant and equipment - Net book value 3,668,873 --
CHANGES IN ASSETS AND LIABILITIES
Receivables from services (25,762,851) (29,630,985)
Other receivables 27,739,886 (58,257,801)
Accounts payable (56,063,476) 58,739,798
Payroll and social security taxes (9,060,066) 3,606,612
Taxes payable (1,374,436) (19,063,265)
Other payables and reserves (8,889,013) (3,632,391)
Accrued interest and other 304,180,266 33,421,152
-------------- --------------
NET CASH PROVIDED BY OPERATIONS 104,165,178 124,788,281
-------------- --------------
CASH USED FOR INVESTING ACTIVITIES
Acquisition of property, plant and equipment and materials (43,039,680) (120,862,849)
Sale of property, plant and equipment -- 1,161,871
Other receivables with affiliate (3,236,554) --
-------------- --------------
NET CASH USED FOR INVESTING ACTIVITIES (46,276,234) (119,700,978)
-------------- --------------
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
Proceeds from loans and other financial debts 246,042,082 2,015,349,163
Payments of loans and other financial debts (246,333,627) (2,017,696,573)
Increase in loans from affiliates, net -- 2,480,320
-------------- --------------
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (291,545) 132,910
-------------- --------------
INCREASE IN CASH AND CASH EQUIVALENTS 57,597,399 5,220,213
LOSS FROM EXPOSURE TO INFLATION GENERATED ON CASH AND CASH
EQUIVALENTS (28,837,121) --
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 26,940,865 43,146,989
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 55,701,143 48,367,202
============== ==============
(1) Cash and cash equivalents plus investments rapidly converted into cash
(investments with original maturity within less than three months).
The accompanying notes 1 to 14 are an integral part of these
consolidated financial statements.
MARCELO E. BOMBAU
Director
- 6 -
CABLEVISION SOCIEDAD ANONIMA
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002 AND 2001
(Stated in Argentine pesos - Note 3.II.)
1. EFFECTS OF THE DEVALUATION OF THE ARGENTINE PESO AND OTHER CHANGES IN
ECONOMIC LEGISLATION AND REGULATIONS
Since early December 2001, Argentine authorities implemented a number of
monetary and currency exchange control measures that mainly included
restrictions on the free disposition of funds deposited with banks and the
impossibility of making transfers abroad, with the exception of transfers
related to foreign trade and other authorized transactions. Later, the
Government declared the official default on foreign debt payments and, on
January 6, 2002, the Argentine Congress approved Law No. 25,561 on Public
Emergency and Exchange System Reform that introduced dramatic changes to
the economic model implemented until that date and that amended the
Convertibility Law (the currency board that pegged the Argentine peso at
parity with the US dollar) that had been enacted in March 1991. The new
law empowers the Federal Executive to implement, among other things,
additional monetary, financial and exchange measures to overcome the
economic crisis in the medium term.
In this respect, several regulations were issued, including Federal
Executive Decree No. 214/2002, Decree No. 260/2002, Decree No. 320/2002,
Decree No. 883/2002, Decree No. 1316/2002 and Laws No. 25,587 and 25,589.
The main aspects as of the date of approval of these consolidated
financial statements were:
a) implementation of a freely floating exchange market that channels
all foreign trade transactions and, subject to BCRA (the Central
Bank of Argentina) prior approval, financial transactions with
foreign parties;
b) de-dollarization of all private agreements entered as of January 6,
2002, at a AR$1 = US$1 rate - with certain exceptions -, of deposits
in US dollars with Argentine banks at the AR$1.40 = US$1 rate and of
all dollar-denominated obligations outstanding as of January 6,
2002, in Argentina at a AR$1 = US$1 rate. The agreements, deposits
and debts converted into pesos could be subsequently adjusted
applying the CER (benchmark stabilization coefficient) to be
published by the BCRA and which will be applied as from the date of
publication of Decree No. 214/2002 (February 3, 2002) plus minimum
and maximum interest rates for deposits and obligations with the
banking system, respectively, fixed by the BCRA;
c) de-dollarization of public service rates which were originally
agreed upon in US dollars;
d) restrictions on the free disposition of funds deposited with banks;
- 7 -
e) suspension of dismissals without a just cause for a 180-day period
as from January 6, 2002, extended for 180 additional days counted as
from the original expiry, in accordance with Decree No. 883/2002
dated May 29, 2002; in the event of employees being dismissed during
such term, the penalty provided is to double the amount of the
termination pay provided for in current labor regulations;
f) for a 120-day term as from July 24, 2002, suspension of performance
and execution of all precautionary measures and definitive judgments
stemming from judicial actions brought against the Government in
relation to loans, debts, deposits, and financial reprogramming
affected by the new economic regulations; and
g) declaration of a state of emergency to last until December 10, 2003,
covering production and credit aspects, which implies the
suspension, for a 180-day term as from February 14, 2002, of
execution of all precautionary measures that involve the seizure or
dispossession of assets in habitual use in the activities of
commercial and industrial establishments, or others similar, and
necessary to their operations. This 180-day period was extended for
90 additional days, in accordance with Law No. 25,640.
As of the date of approval of these consolidated financial statements, the
Federal Government is still analyzing supplementary policies that will
define, among other things, the way in which secured loans in US dollars
related to the local debt swap will be switched into pesos and the way in
which external private debt payments will be made.
As provided in such Emergency Law, the loss resulting from the application
of the new exchange rate on the net position of assets and liabilities in
foreign currency as of January 6, 2002, will be deductible from income tax
at an annual 20% rate over the five fiscal years ended after the Law's
effective date.
On the other hand, and as a consequence of the changes implemented, during
the period ended September 30, 2002 there was an accumulated increase in
the Argentine consumer price index of 40% and in the Argentine wholesale
price index of 121% compared to December 2001, according to the
information provided by the INDEC (Argentine Institute of Statistics and
Census).
As shown in the consolidated statement of income, in the nine-month period
ended September 30, 2002, Cablevision S.A. (hereinafter "the Company")
carried losses in 2,986,437,101. Consequently, the Company carries
negative shareholders' equity in the amount of 2,031,069,689. Should such
situation continue, the Company would fall under the conditions for
dissolution and mandatory capital stock reduction, as provided in Sections
94, Subsection 5 and Section 206 of the Argentine Business Associations
Law. The Decree No. 1269/2002 dated July 16, 2002, suspended the
effectiveness of the Sections mentioned above until December 10, 2003.
As of September 30, 2002, the Company's consolidated noncurrent assets
amount to 1,432,290,043. The Company has maintained the book value of such
assets in accordance with its plans and the economic and cash-flow
projections prepared by its Management at the beginning of the current
fiscal year, on the basis of information available within the conditions
of uncertainty resulting from the changes in Argentina's economic
framework, explained in prior paragraphs. The Company's plans assume a
positive resolution on the renegotiation of the main Company's operating
costs and foresee a recovery of the Argentine market over the term of the
projections. The recoverability of such book value depends on the actual
execution of such plans and projections and, hence, on the success of
future operations.
In addition, the Company's outstanding corporate bonds amounting to
US$725,000,000, described in Note 8 to these consolidated financial
statements, include covenants that entitle creditors to declare their
respective receivables immediately due and payable in the event of default
on obligations undertaken in the related contracts or restrictions that
could limit the Company's capacity to settle its debts. As a consequence
of the economic situation described above, the Company did not pay upon
maturity the principal of Series 11 Notes for an amount of US$100,000,000
nor interest related to Series 5, 9 and 10 Notes for a total amount of
approximately US$84,700,000; which were due between February and November,
2002, nor other bank payables or loans for the purchase of equipment,
amounting to about US$38,900,000 and 37,000,000. Such circumstances
constitute events of default from obligations assumed in various
debt-securities issuance agreements. Although as of the date of issuance
of these consolidated financial statements the Company is analyzing
alternative available courses of action to resolve such situations, as
described in Note 8, and has not received any notification from its
creditors declaring the acceleration of their rights, no assurance can be
given that such creditors will not exercise in the future the actions
provided in the agreements to declare their respective receivables
immediately due and payable. Any such action would trigger cross-default
provisions
- 8 -
and accelerate the repayment of basically all the Company's financial
loans and a portion of the loans it was granted to the Company for the
purchase of equipment. In view of such circumstances, the Company, in
compliance with Argentine professional accounting standards, includes in
current loans as of September 30, 2002, an amount of 1,995,658,092
originally agreed-upon as long-term loans.
As of September 30, 2002, the consolidated current assets are lower than
consolidated current liabilities by about 3,400,000,000. Furthermore, as
of the date of issuance of these consolidated financial statements, due to
the country's economic situation, available third-party financing are
insufficient to cover, plus funds generated internally, the Company's
current-debt service and this situation is not expected to develop
favorably in the short term. Although the Company will make its best
efforts to obtain such financing, as of the date of issuance of these
consolidated financial statements no assurance can be given as to the
outcome of such efforts or whether restrictions imposed on hard-currency
remittances abroad will allow the Company to settle its liabilities in the
normal course of business while continuing to operate normally.
Taking into account the abovementioned situations, the uncertainty on
Argentina's economic path and that certain matters will require new
measures and further regulation by the Government, as of the date of
approval of these consolidated financial statements it is not possible to
determine the future effects that the continuation of the economic crisis
may have on the Company's financial position and results of operations.
The consolidated financial statements do not include any adjustment that
may result from such uncertainties. The Company's Management is
continuously evaluating the magnitude of the impacts that the
abovementioned matters may have on the Company's financial position and
results of operations. The associated effects will be reported in the
financial statements once they become known and quantifiable.
2. COMPANY'S BUSINESS, ACQUISITION OF COMPANIES AND COMPANY REORGANIZATION
PROCESSES
I. COMPANY'S BUSINESS
The Company was organized on April 5, 1979, to engage in installing,
operating and exploiting supplementary radiobroadcasting services.
The main business of Cablevision S.A. and part of its subsidiaries
consists in operating the cable television network in Buenos Aires
City, cities in Greater Buenos Aires, La Plata, localities in the
Province of Buenos Aires, Santa Fe, Entre Rios, Cordoba and in certain
regions in northern Argentina (mainly in Misiones, Chaco and Salta).
As of the date of issuance of these consolidated financial statements
and after the changes mentioned in Note 11, the Company shareholders'
equity interests and voting rights are as follows: Southtel Holdings
S.A. 35.865%, AMI CV Holdings Ltd. 14.135%, companies related to Hicks,
Muse, Tate & Furst, Incorporated (HMT&F) and VLG Argentina, Inc.
(formerly denominated Liberty Argentina, Inc.) 50%.
II. ACQUISITION OF COMPANIES AND COMPANY REORGANIZATION PROCESSES
From August 1997 through July 1998, the Company carried out an
extensive process to acquire companies engaged in the operation of
cable television networks in Argentina, as Televisora La Plata S.A.,
Fintelco S.A., UIH Group and Mandeville Argentina S.A.
On April 1, July 1 and July 3, 1998, three corporate reorganization
processes were effected whereby the Company absorbed most of the
interests acquired.
As of the date of issuance of these consolidated financial statements,
such reorganization processes had been approved by C.N.V. (Argentine
Securities Commission). On May 14 and May 30, 2001, two of these
reorganizations were registered with the Argentine Public Registry of
Commerce, but the spin-off-merger effected on July 1, 1998, had not
been registered yet. Company's Management has not become aware of any
events or circumstances giving any indication that the pending
registration will not be complied with.
- 9 -
3. SIGNIFICANT ACCOUNTING POLICIES
I. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED AND COMPANIES SUBJECT
TO CONSOLIDATION
These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable to
consolidated financial statements in Argentina ("Argentine GAAP") and
considering the requirements of C.N.V.
In accordance with Argentine GAAP, the presentation of the parent
company's individual financial statements is mandatory. Consolidated
financial statements are to be included as supplementary information to
the individual financial statements. For the purpose of these
consolidated financial statements, individual financial statements have
been omitted since they are not required by the Securities and Exchange
Commission ("SEC").
The preparation of consolidated financial statements calls for the
consideration by the Company's Management of estimates and assumptions
that impact on the reported balances of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of such
consolidated financial statements, as well as the amounts of income and
expense for each period. Final results may differ from those previously
estimated.
The Company has consolidated its balance sheets as of September 30,
2002 and 2001 and the statements of income and cash flows for the
nine-month periods then ended, with the respective financial statements
with independent public accountants' report of:
i) for 2002: a) Televisora La Plata S.A., Fibertel S.A.,
Cablepost S.A. and Construred S.A. as of September 30, 2002,
and b) Cablevision Federal S.A. as of June 30, 2002;
ii) for 2001: a) Televisora La Plata S.A., Fibertel S.A.,
Cablepost S.A. and Construred S.A. as of September 30, 2001,
and b) Cablevision Federal S.A. as of June 30, 2001.
In the case of this company for which financial statements dated prior
to September 30, 2002 and 2001 were used, the Company has computed the
significant equity changes and their effect on the results for the
period between the closing date of the last available financial
statements of the issuing company and the issuance date of the
Company's consolidated financial statements, obtained from management
information of such company.
Company's Management has not become aware of any other events causing
changes in shareholders' equity, cash flows, or income (loss) of this
company, for the periods ended September 30, 2002 and 2001, that have a
significant impact on the Company's consolidated financial statements.
The financial statements used for consolidation purposes have been
prepared under accounting methods consistent with those applied to
Cablevision's financial statements. The auditors of the companies
subject to consolidation are those who reviewed the Company's
consolidated financial statements.
As from the effective date of Law No. 25,063, any dividends in cash or
in any kind received by the Company on its investments in other
companies, in excess of accumulated taxable income (determined as
required by this law), will be subject, upon distribution, to a 35%
income tax withholding as a single and final payment. The Company has
not accrued any income tax charge on such dividends since, according to
its estimates, dividends from income recorded under the equity method
will not be subject to this tax.
- 10 -
The respective direct and indirect interests in the companies subject
to consolidation as of September 30, 2002 and 2001, are as follows:
INTEREST % (DIRECT AND
INDIRECT) (1)
----------------------
COMPANY 2002 2001
------- ------ -----
Cablevision Federal S.A. 99.99 99.99
Televisora La Plata S.A. 70.00 70.00
Fibertel S.A. 99.99 99.99
Construred S.A. 92.80 92.80
Cablepost S.A. 99.99 99.99
(1) Participation in capital stock and voting rights.
II. RESTATEMENT IN CONSTANT PESOS
The Company presents its consolidated financial statements in constant
pesos following the restatement method provided by Technical Resolution
No. 6 of the FACPCE (Argentine Federation of Professional Councils in
Economic Sciences), using adjustment coefficients derived from the
domestic wholesale price index (domestic WPI) of the INDEC and in
accordance with the provisions of Resolution No. 415 of the C.N.V.
Under the restatement in constant pesos method mentioned above,
accounting measurements were restated based on the change in the
purchasing power of the Argentine peso until August 31, 1995. As from
such date, considering the then prevailing economic stability
conditions, as required by the C.N.V. and as accepted by professional
accounting standards, accounting measurements were no longer restated
under such method until December 31, 2001. Pursuant to C.N.V. General
Resolution No. 415, the restatement in constant pesos method has been
reinstated as from January 1, 2002, and accounting measurements prior
to such date are considered as stated in the currency of December 31,
2001. The balances as of September 30, 2001, presented comparatively,
were restated in the currency of September 30, 2002, as provided by the
C.N.V.
The restatement in constant pesos method has been applied to the cost
values booked immediately before the capitalization of the foreign
exchange losses mentioned in note 3.III.j). At period-end, the amounts
of intangible assets include accumulated foreign exchange losses that
exceed the inflation-adjusted values of such assets by about
157,000,000. Such foreign exchange losses represent an advanced
recognition of the effects of changes in the purchasing power of the
Argentine peso. (See note 3.III.f).
- 11 -
III. VALUATION METHODS
The main valuation methods used to prepare these consolidated financial
statements were as follows:
a) Cash and banks, receivables and payables (except reserves):
- In local currency: at nominal value adjusted, if
applicable, on the basis of the CER published by the
BCRA.
- In foreign currency: at the exchange rate effective
as of each period-end for the settlement of these
transactions. Exchange differences have been
credited/charged to income/expense of each period
(see paragraph j) below and Note 14.3).
Receivables and payables include the portion of respective
financial income (expense) accrued through each period-end, if
applicable.
b) Short-term investments: at nominal value plus interest accrued
as of September 30, 2001, and translated at the exchange rate
effective as of that date for settling these transactions.
c) Noncurrent investments - Affiliates:
These investments have been valued by the equity method
following the procedure established by Technical Resolution
No. 5 of the FACPCE. To determine the equity value of the
Company's interest in Fintelco S.A., its consolidated
financial statements as of September 30, 2002 and 2001 have
been used. This investment has been disclosed as "Noncurrent -
Other payables" as of September 30, 2002 and 2001.
The accounting methods applied to the financial statements of
affiliates to obtain the valuation by the equity method are,
if applicable, similar to those described in the present note.
d) Other assets:
This is related to the value of the building for sale of
Proainvest S.A. (Cablevision Federal S.A.'s subsidiary). Such
building has been valued at cost restated as indicated in Note
3.II, net of the estimated impairment in value, which does not
exceed its estimated recoverable value at the end of each
period.
e) Property, plant and equipment:
Valued at acquisition cost restated as indicated in Note
3.II., net of the respective accumulated depreciation,
calculated from the addition or operation of each asset.
Depreciation is calculated following the straight-line method,
by applying estimated depreciation rates that the Company's
Management considers are sufficient to use up the asset value
at the end of the respective estimated useful life.
The network materials have been valued at acquisition cost
restated as indicated in Note 3.II, net of the allowance for
obsolescence.
As described in Note 1, although the book value of such assets
carried by the Company is based on its plans and the economic
and cash-flow projections, the recoverability of such book
value depends on the actual execution of such Management's
plans and projections and, hence, on the success of future
operations.
- 12 -
f) Intangible assets:
- Goodwill: this is related to the excess of the
acquisition cost of investments in subsidiaries and
affiliates over the equity book value of these
companies as of the acquisition date, restated as
indicated in Note 3.II, net of the respective
accumulated amortization. Additionally, as mentioned
in Note 3.III.j), the Company has capitalized
exchange differences arisen over the period ended
September 30, 2002.
Amortization is carried out by the straight-line
method over 240 months as from the acquisition dates.
- Deferred costs: this account includes commissions and
expenses related to the corporate bonds issuance
program, valued at nominal value restated as
indicated in Note 3.II, net of the respective
accumulated amortization calculated as from the date
of issuance of the abovementioned corporate bonds and
over their maturity term.
- Advance for trademark: at nominal value restated as
indicated in Note 3.II.
As of September 30, 2002, the Company has recorded an
allowance for valuation of intangible assets in the amount of
1,612,000,000, since there is no reasonable assurance that
projected results of operations will be able to absorb future
amortizations. The Company will evaluate such allowance from
time to time and, if prevailing conditions allow recovery of
the amortizations, it will reverse the allowance.
As described in Note 1, the recoverability of such book value
depends on the actual execution of Management's plans and
projections and, hence, on the success of future operations.
g) Allowances and reserves:
Deducted from assets:
- For doubtful accounts and obsolescence: they have
been set to reduce the valuation of receivables from
services, other receivables and materials at their
probable recoverable value on the basis of an
analysis of doubtful accounts and of their future
expected use, respectively.
- For not returned equipment: has been recorded to
reduce the valuation of equipment recorded in the
account "Property, plant and equipment" on the basis
of the equipment provided under loan-for-use and not
returned by customers who have ceased to subscribe to
the service.
- For intangible assets: see Note 3.III.f).
Included in liabilities:
They have been set up for contingent situations that could
result in obligations for the Company. To estimate such
amount, their possibility of such occurrences has been
considered taking into account the expectations of the
Company's Management and the opinion of its legal counsel.
h) Income tax and tax on minimum presumed income:
The Company determines the income tax applying the current tax
rate of 35% on the year's taxable income without considering
the effect of temporary differences between book and taxable
income. In the case of interim periods, the tax charge is
determined by applying the effective rate estimated for the
year to the income (loss) for the period. Additionally, the
Company determines the tax on minimum presumed income by
applying the effective tax rate of 1% on certain
income-generating assets as of the end of each year in
proportion to the period elapsed. This tax is supplementary to
income tax. The Company's tax liabilities in each fiscal year
shall be the higher of these two taxes. However, if the tax on
minimum presumed income exceeds income tax during one fiscal
year, such excess may be computed as prepayment of any income
tax excess over the tax on minimum presumed income that may be
generated in the next ten years.
- 13 -
The Company is exempt from the tax on minimum presumed income
for a certain period of time (see Note 12).
As of September 30, 2002, the Company has estimated taxable
losses and has maintained the allowance for the accumulated
receivable resulting from payments of the tax on minimum
presumed income by the Company and one subsidiary, which
amounts to 7,822,722 (Note 4.b).
In each year in which the net tax loss carryforward is set off
against income tax, the tax benefit (the effect of the current
tax rate on the tax loss carryforward used) will be recovered
if income tax (net of the setoff) is equal to or higher than
minimum presumed income, but will be reduced by any excess of
the latter over income tax and when tax on minimum presumed
income is not recoverable and is charged to income of the
year.
i) Shareholders' equity accounts:
They have been restated as indicated in Note 3.II., except for
the "Capital stock - Face value" account, which has been left
at original value. The adjustment derived from restatement is
disclosed in the account "Capital stock - Adjustment to
capital".
j) Statement of income accounts:
All accounts were restated in the currency effective as of the
period-end by applying the following criteria:
- Accounts accumulating monetary transactions booked
through each period were restated by applying the
original amounts from the coefficients related to the
month in which they were accrued.
- Charges for consumption of nonmonetary assets, valued
at cost, were restated based on the adjusted amounts
of such assets.
- Income (loss) on affiliates was computed on the basis
of such company's income (loss) adjusted for
inflation as of the period-end.
- Under financial expense-net the following items are
disclosed collectively: (a) exchange difference
derived from foreign currency assets and liabilities,
net of the effect of inflation on such items, (b)
financial expense and income, (c) amortization of
deferred costs and (d) the effect of general
inflation on assets and liabilities in Argentine
pesos.
C.N.V. General Resolution No. 398 provides for the
exceptional treatment contained in the Professional
Council of Economic Sciences of the Autonomous City
of Buenos Aires ("CPCECABA") Resolution MD No.
3/2002, which sets forth that the exchange
differences net of the effect of inflation arisen as
from January 6, 2002, related to liabilities in
foreign currency existing as of such date, must be
allocated to the cost value of the assets acquired or
constructed with such financing. The abovementioned
shall apply provided a series of conditions and
requirements established in such professional rule
are complied with and provided there shall be a
direct relation between financing and acquisition,
construction or production of the assets qualifying
for the allocation of such exchange rate differences
(property, plant and equipment, intangible assets and
interests in other companies organized in Argentina
and existing as of January 6, 2002). Such financing,
total or partial, is deemed to refer to the financing
granted by the supplier of goods, invoiced in foreign
currency or the financing obtained from financial
institutions for the same purposes. In the cases in
which the relation between financing and acquisition,
production or construction of qualifying assets is
not direct, such exchange rate differences may also
be allocated, under certain conditions, to the cost
values of such assets.
As of September 30, 2002, the Company has capitalized
as intangible assets certain exchange losses which
exceed the values adjusted for inflation for
approximately 157,000,000 (Note 4.d)), which were
fully accrued (Note 3.III.f). Note 14.3 discloses all
foreign currency liabilities existing as of January
6, 2002, which financed such assets and are held as
of the period-end.
- 14 -
IV. MODIFICATION OF ARGENTINE GAAP
Effective December 8, 2000, the Governance Board of the FACPCE
approved Technical Resolutions No. 16, 17, 18, and 19 which provide
for changes in professional accounting principles relating to
valuation and disclosure. On December 21, 2001, CPCECABA approved,
with certain modifications, such Resolutions through resolutions No.
238, 243, 261 and 262 and required mandatory application thereof for
fiscal years beginning July 1, 2002, and thereafter. As of the date
of issuance of these consolidated financial statements, the C.N.V.
is analyzing the scope and timing for adopting such standards.
4. BREAKDOWN OF THE MAIN ACCOUNTS
The main accounts of the consolidated financial statements as of September
30, 2002 and 2001 break down as follows:
2002 2001
------------ ------------
A) RECEIVABLES FROM SERVICES:
Subscribers and advertising 60,911,587 132,788,162
Less: Allowance for doubtful accounts (Note 4.j) (26,411,077) (52,981,899)
------------ ------------
34,500,510 79,806,263
============ ============
B) OTHER RECEIVABLES:
CURRENT
Tax credits 11,463,466 87,063,226
Affiliate and related party (Note 7) -- 7,941,647
Prepaid expenses 2,635,401 11,169,132
Advances to suppliers 980,878 2,122,873
Other 10,903,899 15,897,673
Less: Allowance for doubtful accounts (Note 4.j) (1,014,244) --
------------ ------------
24,969,400 124,194,551
============ ============
NONCURRENT
Tax credits 23,644,859 43,060,493
Affiliate party (Note 7) 5,554,602 --
Tax on minimum presumed income 7,902,927 17,623,430
Prepaid expenses 5,307,061 11,780,273
Other 4,164,270 98,778
Less: Allowance for doubtful accounts (Note 4.j) (7,822,722) --
------------ ------------
38,750,997 72,562,974
============ ============
- 15 -
2002 2001
-------------- --------------
C) PROPERTY, PLANT AND EQUIPMENT:
Net book value of PP&E (Note 14.1) 551,407,191 675,334,965
Network materials 96,282,790 97,846,169
Network materials in transit 2,041,885 3,763,552
Advance for property, plant and equipment 107,675 1,845,190
Less: Allowance for obsolescence and for not returned
equipment (Note 4.j) (8,720,633) (7,337,773)
-------------- --------------
641,118,908 771,452,103
============== ==============
D) INTANGIBLE ASSETS:
Net book value of intangible assets (Note 14.2) 2,188,175,447 2,355,731,825
Capitalization of exchange differences (Note 3.III.j) 157,000,000 --
Advance for trademark (Note 5.c) 17,696,268 17,696,268
Less: Allowance for intangible assets (Note 4.j) (1,612,000,000) --
-------------- --------------
750,871,715 2,373,428,093
============== ==============
E) ACCOUNTS PAYABLE:
CURRENT
Suppliers 65,960,566 136,824,865
Accruals 65,784,762 34,398,219
Related parties (Note 7) 26,247,018 134,615,490
Notes payable 866,900 641,490
-------------- --------------
158,859,246 306,480,064
============== ==============
NONCURRENT
Suppliers 4,579,481 3,982,731
Notes payable -- 962,235
-------------- --------------
4,579,481 4,944,966
============== ==============
F) LOANS:
CURRENT
Corporate bonds (See Notes 1 and 8) 2,711,500,000 221,203,353
Bank loans and loans for purchase of equipment 255,104,895 182,577,214
-------------- --------------
2,966,604,895 403,780,567
============== ==============
NONCURRENT
Corporate bonds (See Notes 1 and 8) -- 1,382,520,954
Bank loans and loans for purchase of equipment 6,729,331 53,871,075
-------------- --------------
6,729,331 1,436,392,029
============== ==============
G) ACCRUED INTEREST:
Corporate bonds (See Note 8) 327,509,190 70,825,642
Bank loans and others 18,502,971 2,235,363
-------------- --------------
346,012,161 73,061,005
============== ==============
- 16 -
2002 2001
----------- -----------
H) OTHER PAYABLES:
CURRENT
Payables on acquisition of companies 1,426,652 3,595,782
Advance payments from subscribers -- 11,131,147
Other 5,078,996 3,825,834
----------- -----------
6,505,648 18,552,763
=========== ===========
NONCURRENT
Equity interest in Fintelco S.A. (See Note 3.III.c) 21,766,826 39,258,364
Other -- 1,634,201
----------- -----------
21,766,826 40,892,565
=========== ===========
I) RESERVES:
Balances at beginning of year 68,340,887 75,936,870
Increases 13,946,217 (3) 13,438,515 (4) (5)
Decreases (2) (6,074,896) (3,911,879)
Gain on exposure to inflation (34,472,776) --
----------- -----------
Balances at end of period (1) 41,739,432 85,463,506
=========== ===========
(1) Includes 15,861,289 and 17,183,351 disclosed as current reserves as
of September 30, 2002 and 2001, respectively.
(2) Corresponds to payments and applications during each period.
(3) Includes 5,420,513 and 8,525,704 disclosed as "Litigation" (Note
14.4) and Financial expense - net in the consolidated statement of
income.
(4) Includes 7,895,566 and 5,087,677 disclosed as "Litigation" (Note
14.4) and Other (expense) income - net in the consolidated statement
of income.
(5) Includes 455,272 related to additions for the consolidation of
Integra Cable and Ultravision Teledifusora Rio Tercero S.A.
J) ALLOWANCES DEDUCTED FROM ASSETS:
2002 2001
----------- -----------
FOR DOUBTFUL ACCOUNTS
Balances at beginning of year 74,989,125 46,773,551
Increases (1) 33,238,558 32,385,244
Decreases (50,262,599) (26,176,896)
Gain on exposure to inflation (22,717,041) --
----------- -----------
Balances at end of period 35,248,043 (2) 52,981,899
=========== ===========
(1) Disclosed as "Uncollectable accounts" (Note 14.4).
(2) Includes 26,411,077 corresponding to the allowance for doubtful accounts
(receivables from services).
2002 2001
---------- ----------
FOR OBSOLESCENCE AND FOR NOT RETURNED EQUIPMENT
Balances at beginning of year 8,183,131 5,090,548
Increases 606,918 (1) 2,744,140
Decreases (69,416) (496,915)
---------- ----------
Balances at end of period 8,720,633 7,337,773
========== ==========
- 17 -
(1) Includes 480,625 for obsolescence disclosed as "Other" (Note 14.4)
and 126,293 for not returned equipment disclosed as "Other (expense)
income - net" in the consolidated statement of income.
2002 2001
------------- -------
FOR INTANGIBLE ASSETS
Balances at beginning of year -- --
Net increase (1) 1,612,000,000 --
------------- -------
Balances at end of period 1,612,000,000 --
============= =======
(1) Includes 1,455,000,000 and 157,000,000 disclosed as "Intangible
assets allowance" in the consolidated statement of income and
"Financial expense - net" (Note 4.l), respectively.
INCOME (LOSS)
-----------------------------------
2002 2001
-------------- --------------
K) NET REVENUES FROM SERVICES:
Subscribers 540,642,004 850,190,587
Advertising 5,915,687 17,935,139
Installations and additional outlets 13,731,259 21,177,328
Taxes deducted from revenues (See Note 12) (2,466,805) (18,457,819)
-------------- --------------
557,822,145 870,845,235
============== ==============
L) FINANCIAL EXPENSE - NET:
Generated by liabilities
Exchange rate difference (1) (1,236,569,413) --
Gain on exposure to inflation 283,792,820 --
Financial interests - Related parties (Note 7) -- (4,563,624)
Financial interests- Others (325,038,856) (185,934,329)
Commercial interests - Related party (Note 7) -- (969,275)
Commercial - Others (13,892,228) (2,121,617)
Tax interests (1,027,580) (892,235)
Discounts earned 14,302,619 --
-------------- --------------
(1,278,432,638) (194,481,080)
-------------- --------------
Generated by assets
Loss on exposure to inflation (167,927,359) --
Interests earned 3,680,295 1,189,554
-------------- --------------
(164,247,064) 1,189,554
-------------- --------------
Amortization of deferred costs (Note 14.2) (5,832,380) (7,571,260)
-------------- --------------
(1,448,512,082) (200,862,786)
============== ==============
(1) Includes 157,000,000 corresponding to the allowance for intangible
assets (see Note 3.III.j).
5. GUARANTEES GIVEN AND OTHER COMMITMENTS
a) Video Cable Comunicacion S.A. (VCC), Enequis S.A. and Fintelco S.A.,
investor companies in Sierras de Mazan S.A. benefit from certain tax
deferrals maturing in 2014. The tax deferrals are conditioned upon
- 18 -
the uninterrupted maintenance of certain guarantees, in favor of the
Tax Bureau. As of the date of issuance of these consolidated
financial statements and in compliance with applicable tax
regulations, the Company, as a 50% successor in interest to
Fintelco, has obtained, for the benefit of VCC, surety insurance in
the amount of approximately 1,000,000 and liens on Construred S.A.'s
shares for about 8,200,000 in favor of Federal Public Revenues
Administration ("AFIP"), as a guarantee of the fiscal obligations
related to the abovementioned tax deferrals. Such surety insurance
is a temporary guarantee and has been implemented for a maximum term
of up to 180 days, expiring on November 18, 2002, when they must be
replaced with a final guarantee.
b) The Federal Broadcasting Committee ("COMFER") has opened
administrative proceedings against the Company for alleged
noncompliance with certain provisions of the Broadcasting Law. In
this connection, the Company has filed for the benefits of the
compensation - based moratorium system established by Federal
Executive Decree No. 1201/1998, amended by Federal Executive Decrees
No. 644/1999, No. 937/1999 and No. 762/2001 (dated June 11, 2001),
to be applied to the above mentioned administrative proceedings of
which the Company had been notified through August 31, 1998, April
30, 1999, and December 9, 1999, respectively, that allows it to: (i)
obtain an 85% reduction on any fines determined in connection with
these proceedings, and (ii) set-off the "amount to be settled" by
crediting such amount to TELAM SOCIEDAD ANONIMA to be applied to
public interest advertising campaigns of the Federal Government. As
regards those administrative proceedings initiated by the COMFER and
notified to the Company through December 9, 1999, the enforcement
agency determined the amount to be offset under the abovementioned
compensation system at 14,585,770 net of the 85% reduction provided
by Federal Executive Decree No. 644/1999. The Company has objected
to this determination. As regards the "amount to be settled", the
Federal Executive Decree No. 937/1999 has set up a ceiling of
15,000,000 on any fines to be settled by any company that is the
owner of broadcasting services, or that holds an authorization or a
license for its operation, in relation with the benefits of the
compensation - based moratorium system provided in the above
detailed decrees.
Additionally, on July 20, 2001, the Company adhered to the
payment-in-installments plan established by Decree No. 762/2001, in
connection with the administrative proceedings initiated by the
COMFER and notified to the Company from December 10, 1999, through
December 31, 2000. Such plan allows the Company to (i) reduce the
total amount claimed by 70%, (ii) settle 19.80% by assigning
advertising seconds, and (iii) settle the remaining 10.20% in cash.
For such period, the total amount determined and notified by the
COMFER was 20,086,450, which has to be settled as follows, net of
reductions: (i) 3,977,117 by assigning advertising seconds and (ii)
2,048,818 in cash.
On September 26, 2001, the COMFER assigned to the Ministry of the
Interior the receivable with the Company for 2,048,818 in cash,
assessed as mentioned in the paragraph above. Such assignment has
been provided by Decree No. 1210/2001, published on September 28,
2001, and approved by the Ministry of the Interior and the COMFER
through Joint Resolution No. 46/1674 of October 2, 2001. In
addition, on October 4, 2001, the Company subscribed an agreement
with the Ministry of the Interior whereby the amount receivable has
to be settled by assigning television-advertising seconds.
The Company has been notified through a number of resolutions issued
by the COMFER, of fines in the amount of about 2,700,000 imposed on
the Company for alleged violations to the Broadcasting Law since
January 1, 2001.
The Company believes that the resolution of the above mentioned
issues will not materially affect its equity position as of
period-end.
c) Pramer S.C.A., a company indirectly owned by Liberty Media
International Inc., formerly named Tele-Communications
International, Inc., ("LIBERTY"), owns the trademark "CableVision"
and certain related trademarks and service marks, which it licenses
to the Company. The Company and LIBERTY have declared its
willingness to have the Company acquire such rights for an amount of
about US$25,000,000, and set-off the payment of US$8,000,000 made as
a down payment. The disbursement, restated in constant pesos as of
period-end, amounts to 17,696,268 (Note 4.d).
d) Fintelco S.A. had a negative shareholders' equity of 43,533,651 as
of September 30, 2002. Under the Argentine Business Associations
Law, Section 94, Subsection 5 and Section 206, this could bring its
dissolution, unless its capital is restored. Decree No. 1269/2002
dated July 16, 2002, suspended the application of the above
mentioned sections through December 10, 2003. The Company and
Multicanal S.A. each hold 50% of the equity of Fintelco, and, in
that proportion, the Company makes the contributions required to pay
the liabilities of Fintelco and of its subsidiaries when due.
- 19 -
6. CAPITAL STOCK
As of September 30, 2002, capital stock amounts to 188,132,670 and has
been fully subscribed, paid-in, issued and registered with the Public
Registry of Commerce.
The Regular and Special Shareholders' Meeting held on December 29, 2000,
unanimously approved the capitalization of 150,000,000 through
contribution of a portion of the loans granted to the Company by its
shareholders. Such Meeting was adjourned until January 19, 2001, when
capital stock was subscribed in the amount of 15,778,611 (15,778,611
nominative non-endorsable shares with a nominal value of 1, entitling its
owner to one vote per share) with a 134,221,389 issuance premium at
original value (8.50654 per share).
On February 6, 2001, the Regular and Special Shareholders' Meeting
unanimously resolved to capitalize all the other loans previously granted
by shareholders for an aggregate of 100,000,000 (221,203,353, restated in
constant pesos as of period-end) by approving an increase in capital stock
of 9,697,230 with an issuance premium of 90,302,770 at original value. The
capital increase was structured as follows:
- Issuance of 6,955,774 nominative non-endorsable shares of face value
1, entitled to one vote per share with an 8.50654 issuance premium
at original value per share.
- Issuance of 2,741,456 nominative non-endorsable shares of face value
1, entitled to one vote per share with an 11.35655 issuance premium
at original value per share.
In addition, on February 6, 2001, the Company's shareholders and the
Company itself subscribed an agreement whereby the Company was released
from the obligation to pay all the interests and other financial costs
accrued and outstanding as of such date on medium-term loans granted by
shareholders and contributed to the Company. The amount of debt remitted
by the shareholders was 117,716,004 in constant pesos as of period-end
(53,216,194 at original value) and was booked as a capital transaction.
On May 28, 2001, the Regular General Shareholders' Meeting resolved to
appropriate the accumulated losses existing as of December 31, 2000, which
amounted to 152,281,055 in pesos as of such date, resorting to the whole
of the abovementioned shareholders' remission, and to a portion of the
issuance premium as of that date.
Furthermore, on April 30, 2002, the Regular General Shareholders' Meeting
decided to appropriate all the accumulated losses existing as of December
31, 2001, in the amount of 255,195,002 in constant pesos as of period-end
(115,366,697 at original value), using part of the issuance premium
existing as of such date.
7. BALANCES AND TRANSACTIONS WITH AFFILIATE AND RELATED PARTIES
As of September 30, 2002 and 2001, the balances with affiliate and related
parties were as follows:
OTHER RECEIVABLES ACCOUNTS PAYABLE
------------------------------- ----------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
AFFILIATE PARTY
Fintelco Group 5,554,602 7,924,926 -- --
RELATED PARTIES
LIBERTY -- -- 9,066,858 10,329,843
HMT&F -- -- 2,833,333 1,843,361
Univent's S.A -- 16,721 -- --
Pan-American Sports Network (2) (6) -- -- -- 6,388,647
Pramer S.C.A. (2) (7) -- -- -- 14,953,495
Torneos y Competencias Group (2) -- -- 7,166,476 40,111,742
Discovery Group (2) (7) -- -- -- 2,370,130
AOL Time Warner Group (2) (7) -- -- -- 22,491,778
Fox Pan American Sports Ltd. (2) (8) -- -- 4,253,175 5,132,234
Imagen Satelital S.A. (2) -- -- 2,927,176 8,772,129
Arris Group Inc. (3) (7) -- -- -- 3,445,977
CableNetwork Inc. (1) -- -- -- 18,776,154
----------- ----------- ----------- -----------
5,554,602(5) 7,941,647(4) 26,247,018 134,615,490
=========== =========== =========== ===========
(1) Related party until December 2001.
(2) Programming suppliers.
(3) Formerly named Antec Inc.
(4) Disclosed as Current - Other receivables.
(5) Disclosed as Noncurrent - Other receivables.
(6) The Company is evaluating an eventual claim that could bring against
Pan-American Sports Network on the basis of the contract that was in
effect until February 8, 2002.
(7) Related parties until June 2002.
(8) Fox Group for the year 2001.
- 20 -
The main transactions with affiliate and related parties, during the
nine-month periods ended September 30, 2002 and 2001, were as follows:
INTERESTS PURCHASES AND SERVICES
ACCRUED ACCRUED
----------- ----------------------------
2001 2002 2001
----------- ----------- -----------
AFFILIATE PARTY
Fintelco Group -- 49,641 4,028,808
RELATED PARTIES
Telefonica Internacional S.A 2,122,592 -- --
South Cable Holdings S.A 2,122,592 -- --
LIBERTY 318,440 3,988,058 4,194,750
HMT&F -- 2,067,728 1,843,361
Tevefe Comercializacion S.A -- -- 1,712,955
Pan-American Sports Network (1) -- -- 13,639,669
Pramer S.C.A. (2) -- 13,227,084 27,300,108
Torneos y Competencias Group -- 56,694,111 81,537,870
Discovery Group (2) -- 2,584,237 4,969,112
AOL Time Warner Group (2) -- 33,228,202 35,274,474
Fox Group (4) -- 14,502,507 8,538,867
Imagen Satelital S.A -- 8,556,737 12,480,574
Arris Group Inc. (2) -- -- 4,706,931
CableNetwork Inc. (3) 969,275 -- 25,367,070
----------- ----------- -----------
5,532,899 134,898,305 225,594,549
=========== =========== ===========
(1) The Company is evaluating an eventual claim that could bring against
Pan-American Sports Network on the basis of the contract that was in
effect until February 8, 2002.
(2) Related parties until June 2002.
(3) Related party until December 2001.
(4) Includes Fox Group until June 2002 and Fox Pan American Sports Ltd.
until September 2002.
8. CORPORATE BONDS
At Special and Regular Shareholders' Meetings held on February 26, 1998,
the Company's shareholders unanimously approved the Company's Global
Medium - Term Note Program ("the Program") in an aggregate principal
amount of up to US$1,500,000,000. The C.N.V., through Resolution No.
12,276 dated June 18, 1998, approved the Company's Program.
Under the framework of such Program, through September 30, 2002, the
Company had issued eleven Series of corporate bonds for an aggregate
principal amount of US$1,455,000,000 of which US$725,000,000 principal
amount was outstanding as of September 30, 2002, with the following terms
and conditions:
SERIES 5 NOTES (1)
Face value: US$275,000,000
Annual interest rate: 13.75%
Maturity: May 1, 2009
SERIES 9 NOTES
Face value: US$100,000,000
Annual interest rate: 12.50%
Maturity: March 2, 2003
- 21 -
SERIES 10 NOTES (2)
Face value: US$250,000,000
Annual interest rate: 13.75%
Maturity: April 30, 2007
SERIES 11 NOTES
Face value: US$100,000,000
Annual interest rate: Variable (3)
Maturity: February 15, 2002
(1) On November 3, 1999, the SEC declared effective the registration of
such series of corporate bonds.
(2) On July 25, 2000, the SEC declared effective the registration of
such series of corporate bonds.
(3) Based on LIBO rate plus a margin.
The proceeds received by the Company through the corporate bond
issuance were used to settle liabilities obtained for the
acquisition of noncurrent assets and to refinance the Company's
working capital.
The Program also places restrictions on certain of the Company's and
its subsidiaries' transactions during the Program term, such as
restrictions on the sale, transfer or other forms of disposition of
all or part of its businesses or properties, restrictions on
encumbering assets, restrictions on the incurrence of further
financial indebtedness, restrictions on certain payments (including
dividends) and business reorganization transactions, and
restrictions on the disposal of licenses, franchises and other
rights. In addition, the effective Program requires the Company, in
order to obtain additional borrowing, to maintain a ratio of
consolidated debt to EBITDA that not exceed 6.5.
Additionally for the issuance of Series 11 of corporate bonds
carried out on March 2, 2001, with maturity on February 15, 2002 and
unpaid as of the date of issuance of these consolidated financial
statements, the Company agreed to maintain certain additional
financial ratios and/or financial ratios stricter than the ones
mentioned in the prior paragraph.
EBITDA is defined in the Program as the sum of the Company's and its
subsidiaries' consolidated net income, determined under generally
accepted accounting principles in Argentina, excluding non-recurring
and extraordinary income/losses and income/losses on affiliates,
plus interest expense, income tax charges, other non-cash charges
and depreciation and amortization charges for the relevant period.
If the Company is unable to come into compliance with the
abovementioned restrictions and financial ratios, the holders on
such notes may declare an event of default and accelerate the
financial indebtedness outstanding under such notes.
As a consequence of the economic situation described in Note 1, the
Company did not pay upon maturity the principal of Series 11 Notes
for an amount of US$100,000,000 and interests related to Series 5, 9
and 10 Notes for a total amount of approximately US$84,700,000;
which were due between February and November, 2002, nor other bank
payables or loans for the purchase of equipment, amounting to about
US$38,900,000 and 37,000,000. Such circumstances constitute events
of default from obligations assumed in various debt-securities
issuance agreements.
- 22 -
As of the date of issuance of these consolidated financial
statements the Company had not paid the principal of Series 11 Notes
and has not received any notification from its creditors declaring
the acceleration and execution of their rights. The holders of
Series 5, 9 and 10 Notes have notified the Company that non-payments
of interests in due time constitutes an event of default.
Technically, such notice does not imply acceleration of principal
payments of such Series according to the indenture agreement.
However, no assurance can be given that such creditors will not
exercise in the future the actions provided in the agreements to
declare their respective receivables immediately due and payable.
Any such action would trigger cross-default provisions and
accelerate the repayment of basically all the Company's financial
loans and a portion of the loans it was granted to the Company for
the purchase of equipment. Company's Management, together with its
legal and financial counsel, is evaluating the action alternatives
available in the current context related to the company's
indebtedness and the events of default described above. On September
4, 2002, AMI CV Holdings Ltd. and VLG Acquisition announced that
Merril Lynch & Co. had been appointed to provide financial advisory
services to the Company's shareholders in connection with evaluation
Cablevision S.A.'s debt restructuring alternatives. In view of such
circumstances, the Company, in compliance with Argentine
professional accounting standards, includes in current loans as of
September 30, 2002, an amount of 1,995,658,092 originally
agreed-upon as long-term loans.
9. REGULATORY FRAMEWORK
The installation and operation of cable television services in Argentina
are governed by the Radiobroadcasting Law and other related regulations.
Cable television companies in Argentina are required to obtain a
nonexclusive license from the COMFER to be able to broadcast their signal.
Additionally, other approvals are required, including municipal approval.
Licenses are granted for an initial 15-year term, and upon expiration may
be extended for another 10 years. A license extension is subject to the
COMFER's approval, which is subject to COMFER determining that the terms
and conditions under which the original license had been granted were
complied with. Cablevision and each subsidiary (if applicable) are
licensed to provide cable television services. The remaining weighted
average term of the licenses in force granted to the Company and its
subsidiaries is 16 years, based on the number of subscribers and the
assumption by the Company's Management that each 10-year extension will be
granted. Please note that if a license is rendered forfeited or its
extension is denied, and no other license in the area may be obtained, the
Company shall cease operating its service in the licensed area.
Pursuant to COMFER Resolution No. 870/93, licenses may be transferred with
COMFER's approval and complying with certain regulatory conditions. As of
the date of issuance of these consolidated financial statements,
applications for the transfer of licenses made by the Company under the
abovementioned resolution, related with acquisition and the reorganization
processes described in Note 2.II, were pending approval by the COMFER.
10. MANAGEMENT AGREEMENT
During 1997, the Company signed an agreement with TINTA Cable Management
Inc. ("TCM"), a subsidiary of LIBERTY, which provides that TCM will manage
the Company through September 30, 2002. On April 30, 2001, in accordance
with an amendment to the shareholders' agreement, the Company's
shareholders agreed to terminate the management agreement. The settlement
of fees, expenses and additional charges for prior periods is pending. As
from such date, the Company's management advisory activities were assumed
by LIBERTY and HMT&F in consideration of an annual management fee of
4,000,000 to be distributed in equal parts. This fee, stated in Argentine
pesos, is payable as from such date on a quarterly basis. As stated in
Note 11, as from June 25, 2002, VLG Argentina, Inc. was the successor
company to LIBERTY with respect to all rights and obligations related to
the Company' advisory and management business.
- 23 -
11. CHANGES IN SHAREHOLDERS
On May 4, 2001, the Company's Board of Directors was notified of the
following share transfers by the shareholders effected on April 30, 2001:
- Telefonica Internacional S.A. transferred to ACH Acquisition Co.
("ACH"), all of its interests in the Company involving 67,473,306
common shares representative of 35.865% of the Company's total
capital stock.
- ACH transferred to Liberty Argentina, Inc. 40,880,277 common shares
representative of 21.73% of the Company's total capital stock.
These transactions, conducted according with agreements entered into by
Company's shareholders, were approved by the Argentine Competition and
Consumer Defense Department through Resolution No. 245 of October 27, 2000
and Resolution No. 2 of April 10, 2001.
On February 5, 2002, the Company's Board of Directors was notified that
ACH (one of its three shareholders as of that date) transferred to AMI CV
Holdings Ltd. all of its interest in the Company involving 26,593,029
common shares representative of 14.135% of the capital stock.
On June 27, 2002, LIBERTY had notified to the Company of the sale to VLG
Acquisition Corp. ("VLG Acquisition") of 208 Series "A" shares, not
entitled to vote, with a face value of US$0.01 per share, and of 10 Series
"B" shares, entitled to vote, with a face value of US$0.01 per share,
belonging to Liberty Argentina, Inc. ("Liberty Argentina"). These shares
account for 100% of Liberty Argentina's political rights and 21.8% of its
economic rights. LIBERTY keeps the remaining 78.2% of Liberty Argentina's
economic rights. As a result of the transfer, VLG Acquisition controls the
corporate will of Liberty Argentina, which changed its corporate name to
VLG Argentina, Inc.
12. TAX REFORM
A tax on bank account credits and debits was created on March 26, 2001,
upon publication of the Competitiveness Law No. 25,413 in the Official
Bulletin. This tax was subsequently regulated by Decree No. 380/2001
fixing the rate applicable to checking account credits and debits at
.25% and ordering that the tax would become effective on April 3, 2001.
Decree No. 613/2001 provided that the tax rate must be set at .4% for
taxable events occurring from May 12, 2001, through July 31, 2001. Decree
No. 969/2001 dated August 1, 2001, increased the tax on bank transactions
to .6%, establishing that 58% of such tax may be computed as a credit for
some taxes. Later, Decree No. 315/2002 dated February 14, 2002, abrogated
the possibility to compute such tax as a tax credit, effective as from
publication of such decree (February 18, 2002). On June 4, 2002, Decree
No. 920/2002, providing for the tax rate abatement to .075% and .05% for
certain transactions subject to the tax.
On June 12, 2001, Decree No. 761/2001 was published in the Official
Bulletin, establishing certain tax benefits for cable television
companies, which would be granted once such companies started to bill
their services at the general 21% value-added tax ("VAT") rate and have
been included in a roll of beneficiaries prepared for such purpose. These
benefits, in force through March 31, 2003, are:
1) Considering as VAT credit the payments for SADAIC (Argentine
Association of Music Authors and Composers) royalties, FNA (Federal
Arts Fund) charge, Argentores (General Argentine Authors
Association) dues, and AADI (Argentine Performance Association) -
CAPIF (Argentine Chamber of Phonogram Producers and Related
Industries) fees.
- 24 -
2) Tax on minimum presumed income exemption.
On October 31, 2001, the Company was included in the abovementioned roll
of beneficiaries, in force through June 30, 2002, and renewed on July 15,
2002.
Effective August 14, 2001, Decree No. 1008/2001 provided that taxpayers
may compute as payment on account of VAT all amounts actually paid for
COMFER, and any balances of such tax may be used in future tax periods.
Subsequently, on November 26, 2001, Decree No. 1522/2001 reduced the rate
payable to the COMFER, from 6% to 3.5% for the television stations
situated in the interior of the country. This rate came into effect for
services billed as from December 1, 2001.
On May 15, 2002, Law No. 25,585 was published in the Official Bulletin.
Such law amended Personal Assets Tax Law (Law No. 23,966, Title VI, as
revised in 1997, and as amended) as regards the tax burden placed on
shares of and interests in companies governed by Law No. 19,550. Law No.
25,585 considers that these companies are subject to personal assets tax
where they are owned by individuals and undivided succession states
located in Argentina or abroad, as well as by any foreign legal entity.
The tax must be paid by the local issuer company, as a substitute
taxpayer. For such purposes, the tax will be determined by applying the
0.50% rate to the value obtained by the equity method of the shares owned
by each stockholder, regardless of the 102,300 threshold. This mode of
paying the tax is also applicable when the shares of stock are owned by,
or in the name of, any taxpayer resident in Argentina.
13. ACCOUNTING PRINCIPLES FOLLOWED BY THE COMPANY
These consolidated financial statements are presented on the basis of
Argentine GAAP. Certain accounting practices applied by the Company that
conform with Argentine GAAP do not conform with US GAAP.
The Company has not presented a reconciliation of the effect on the
accompanying consolidated financial statements for the nine-month period
ended September 30, 2002 of the differences between Argentine and US GAAP.
14. OTHER FINANCIAL STATEMENTS INFORMATION
The following tables present additional consolidated financial statements
disclosures required under Argentine GAAP:
1) Evolution of property, plant and equipment.
2) Evolution of intangible assets.
3) Foreign currency assets and liabilities.
4) Expenses incurred -- Information required by Section 64, Subsection
I, Point b) of Law No. 19,550.
5) Breakdown by maturity of receivables and liabilities as of September
30, 2002.
-25-
1) EVOLUTION OF PROPERTY, PLANT AND EQUIPMENT (STATED IN ARGENTINE PESOS - NOTE
3.II.)
2002
-----------------------------------------------------------------------
ORIGINAL COST
----------------------------------------------------------------------
AT BEGINNING AT END
MAIN ACCOUNT OF YEAR INCREASES DECREASES TRANSFERS OF PERIOD
- ---------------- ------------- ---------- ---------- --------- ------------
Buildings 53,419,665 - - - 53,419,665
Improvements to
leased buildings 23,434,465 328,473 - - 23,762,938
Machinery and 156,237,220 121,980 - 156,359,200
equipment -
Furniture and 17,052,137 186,538 (1,177,350) - 16,061,325
fixtures
Hardware 45,852,413 1,322,363 - - 47,174,776
Installations 79,661,393 1,001,319 - - 80,662,712
Automobiles 42,707,612 609,923 (448,251) - 42,869,284
Tools 11,401,584 556,308 - - 11,957,892
Cables and cable 965,940,437 22,604,937 - 17,915,281 1,006,460,655
laying
Amplifiers 44,203,915 - - - 44,203,915
Adapters 3,633,137 - - - 3,633,137
Assets under loan 92,380,864 - (7,751,161) - 84,629,703
for use
Internet equipment 12,365,106 416,636 - - 12,781,742
Construction in 20,036,445 231,078 (17,915,281) 2,352,242
progress -
Other fixed assets 1,287,136 - - - 1,287,136
------------- ---------- ---------- --------- -------------
TOTAL 1,569,613,529 27,379,555 (9,376,762) - 1,587,616,322
============= ========== ========== ========= =============
2002
-------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
-------------------------------------------------------------------------------------
AT BEGINNING DEPRECIATION AT END NET BOOK
MAIN ACCOUNT OF YEAR RATES INCREASES DECREASES OF PERIOD VALUE
- ---------------- ------------- --------- ----------- ---------- ------------- -----------
Buildings 12,206,503 2% 821,172 - 13,027,675 40,391,990
Improvements to
leased buildings 19,107,608 33% 1,523,461 - 20,631,069 3,131,869
Machinery and 103,510,552 10% 11,279,907 114,790,459 41,568,741
equipment -
Furniture and 11,127,515 10% 1,256,868 (735,844) 11,648,539 4,412,786
fixtures
Hardware 36,116,241 33% 3,478,691 - 39,594,932 7,579,844
Installations 45,659,394 10% 5,450,409 - 51,109,803 29,552,909
Automobiles 30,375,976 20% 2,642,062 (448,251) 32,569,787 10,299,497
Tools 9,501,511 20% 1,171,065 - 10,672,576 1,285,316
Cables and cable 500,112,395 10% - 30% 104,440,743 - 604,553,138 401,907,517
laying
Amplifiers 38,677,727 33% 2,209,372 - 40,887,099 3,316,816
Adapters 3,633,137 10% - - 3,633,137 -
Assets under loan 83,006,945 33% 4,313,944 82,797,095 1,832,608
for use (4,523,794)
Internet equipment 7,501,344 33% 1,920,134 - 9,421,478 3,360,264
Construction in - - - - - 2,352,242
progress
Other fixed assets 785,411 10% 86,933 - 872,344 414,792
----------- ----------- ---------- ------------- -----------
TOTAL 901,322,259 140,594,761 (5,707,889) 1,036,209,131 551,407,191
=========== =========== ========== ============= ===========
- 26 -
1) EVOLUTION OF PROPERTY, PLANT AND EQUIPMENT (STATED IN ARGENTINE PESOS - NOTE
3.II.) (CONTINUED)
2001
-----------------------------------------------------------------------
ORIGINAL COST
----------------------------------------------------------------------
AT BEGINNING AT END
MAIN ACCOUNT OF YEAR INCREASES DECREASES TRANSFERS OF PERIOD
- ---------------- ------------- ---------- ---------- --------- ------------
52,977,331
Buildings 52,644,135 1,549,815 (1,216,619) -
Improvements to 22,739,331
leased buildings 19,375,454 3,363,877 - - 155,895,436
Machinery and
equipment 152,399,879 3,495,557 - - 16,683,110
Furniture and
fixtures 14,751,107 1,932,003 - - 41,495,555
Hardware 38,647,347 2,848,208 - - 77,851,655
Installations 69,746,477 8,105,178 - - 43,314,380
Automobiles 36,393,320 7,581,617 (660,557) - 11,142,599
Tools 10,276,800 865,799 - -
Cables and cable
laying 810,287,927 93,100,563 - 29,573,481 932,961,971
Amplifiers 41,037,812 3,166,103 - - 44,203,915
Adapters 3,633,137 - - - 3,633,137
Assets under loan
for use 87,161,014 5,424,110 - - 92,585,124
Internet equipment 10,212,264 575,140 - - 10,787,404
Construction in
progress 21,243,114 30,528,104 - (29,573,481) 22,197,737
Other fixed assets 1,287,136 - - - 1,287,136
--------------------------------------------------------------------------
TOTAL 1,369,096,923 162,536,074(1) (1,877,176) - 1,529,755,821
============== =========== ========= ========== =============
2001
----------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
----------------------------------------------------------------------------------------
AT BEGINNING DEPRECIATION AT END NET BOOK
MAIN ACCOUNT OF YEAR RATES INCREASES DECREASES OF PERIOD VALUE
- ---------------- ------------- ------------ ----------- ---------- ------------- -------------
Buildings 11,133,996 2% 856,066 (54,748) 11,935,314 41,042,017
Improvements to
leased buildings 17,948,380 33% 697,632 - 18,646,012 4,093,319
Machinery and
equipment 87,982,112 10% 11,840,429 - 99,822,541 56,072,895
Furniture and
fixtures 9,441,904 10% 1,246,768 - 10,688,672 5,994,438
Hardware 30,460,737 33% 3,098,991 - 33,559,728 7,935,827
Installations 37,903,133 10% 5,815,964 - 43,719,097 34,132,558
Automobiles 28,956,421 20% 2,262,581 (660,557) 30,558,445 12,755,935
Tools 7,329,029 20% 1,612,931 - 8,941,960 2,200,639
Cables and cable
laying 377,743,205 10% - 25% 90,156,046 - 467,899,251 465,062,720
Amplifiers 35,549,104 33% 2,326,953 - 37,876,057 6,327,858
Adapters 3,476,799 10% 119,211 - 3,596,010 37,127
Assets under loan
for use 69,933,174 33% 9,624,964 - 79,558,138 13,026,986
Internet equipment 5,267,799 33% 1,595,398 - 6,863,197 3,924,207
Construction in
progress - - - - - 22,197,737
Other fixed assets 669,501 10% 86,933 - 756,434 530,702
-------------------- ---------------------------- ---------------------------------
TOTAL 723,795,294 131,340,867 (2) (715,305) 854,420,856 675,334,965
=========== =========== ======= =========== ===========
(1) Includes 7,892,832 of increases by the consolidation of
Integra Cable S.A. and Ultravision Teledifusora Rio Tercero
S.A.
(2) Includes 2,524,612 of increases by the consolidation of
Integra Cable S.A. and Ultravision Teledifusora Rio Tercero
S.A.
- 27 -
2) EVOLUTION OF INTANGIBLE ASSETS (STATED IN ARGENTINE PESOS - NOTE 3.II.)
2002
-------------------------------
ORIGINAL COST
-------------------------------
AT BEGINNING AT END
MAIN ACCOUNT OF YEAR OF PERIOD
- --------------------------------- ------------- -------------
GOODWILL
Televisora Belgrano S.A. 176,221,857 176,221,857
Oeste Cable Color S.A. 230,631,190 230,631,190
Cable Rios de los Deltas S.A. 8,457,226 8,457,226
Televisora La Plata S.A. 14,022,118 14,022,118
Mandeville Group 1,258,342,428 1,258,342,428
Fintelco S.A. 1,036,328,812 1,036,328,812
UIH Group 251,241,146 251,241,146
Merlo Vision S.A. 3,339,078 3,339,078
Cordoba Systems and others 37,657,055 37,657,055
------------- -------------
SUBTOTAL 3,016,240,910 3,016,240,910
DEFERRED COSTS
Corporate bonds issuance program 75,801,531 75,801,531
------------- -------------
TOTAL 3,092,042,441 3,092,042,441
============= =============
2002
-----------------------------------------------------------------
ACCUMULATED AMORTIZATION
-----------------------------------------------------------------
AT BEGINNING AT END NET BOOK
MAIN ACCOUNT OF YEAR INCREASES OF PERIOD VALUE
- ------------------------------------------ ----------- ----------- ----------- -------------
GOODWILL
Televisora Belgrano S.A. 58,925,702 6,608,320 65,534,022 110,687,835
Oeste Cable Color S.A. 60,540,690 8,648,671 69,189,361 161,441,829
Cable Rios de los Deltas S.A. 2,016,848 317,146 2,333,994 6,123,232
Televisora La Plata S.A. 3,151,805 525,829 3,677,634 10,344,484
Mandeville Group 290,600,361 46,760,116 337,360,477 920,981,951
Fintelco S.A. 265,383,133 38,862,330 304,245,463 732,083,349
UIH Group 56,105,726 9,421,544 65,527,270 185,713,876
Merlo Vision S.A. 1,780,844 125,214 1,906,058 1,433,020
Cordoba Systems and others 6,224,651 1,412,140 7,636,791 30,020,264
----------- ----------- ----------- -------------
SUBTOTAL 744,729,760 112,681,310 857,411,070 2,158,829,840
DEFERRED COSTS
Corporate bonds issuance program 40,623,544 5,832,380 46,455,924 29,345,607
----------- ----------- ----------- -------------
TOTAL 785,353,304 118,513,690 903,866,994 2,188,175,447
=========== =========== =========== =============
- 28 -
2) EVOLUTION OF INTANGIBLE ASSETS (STATED IN ARGENTINE PESOS - NOTE 3.II.)
(CONTINUED)
2001
-------------------------------------------------------
ORIGINAL COST
------------------------------------------------------
AT BEGINNING AT END
MAIN ACCOUNT OF YEAR INCREASES OF PERIOD
- ------------------------------------ ---------------- ---------- ----------------
GOODWILL
Televisora Belgrano S.A. 176,221,857 - 176,221,857
Oeste Cable Color S.A. 230,631,190 - 230,631,190
Cable Rios de los Deltas S.A. 8,457,226 - 8,457,226
Televisora La Plata S.A. 14,022,118 - 14,022,118
Mandeville Group 1,258,342,428 - 1,258,342,428
Fintelco S.A. 1,036,328,812 - 1,036,328,812
UIH Companies 251,241,146 - 251,241,146
Merlo Vision S.A. 3,339,078 - 3,339,078
Cordoba Systems and others 29,065,408 8,591,647 37,657,055
------------- ---------- -------------
SUBTOTAL 3,007,649,263 8,591,647 3,016,240,910
DEFERRED COSTS
Corporate bonds issuance program 71,127,775 4,673,756 75,801,531
------------- ---------- -------------
TOTAL 3,078,777,038 13,265,403 3,092,042,441
============= ========== =============
2001
----------------------------------------------------------------------
ACCUMULATED AMORTIZATION
----------------------------------------------------------------------
AT BEGINNING AT END NET BOOK
MAIN ACCOUNT OF YEAR INCREASES OF PERIOD VALUE
- ---------------------------- ------------------- ------------ ----------- ----------------
GOODWILL
Televisora Belgrano S.A. 50,114,608 6,608,320 56,722,928 119,498,929
Oeste Cable Color S.A. 49,009,131 8,648,671 57,657,802 172,973,388
Cable Rios de los Deltas S.A. 1,593,987 317,146 1,911,133 6,546,093
Televisora La Plata S.A. 2,450,699 525,829 2,976,528 11,045,590
Mandeville Group 218,997,311 47,189,034 266,186,345 992,156,083
Fintelco S.A. 213,566,692 38,862,329 252,429,021 783,899,791
UIH Companies 43,543,670 9,421,543 52,965,213 198,275,933
Merlo Vision S.A. 1,613,891 125,214 1,739,105 1,599,973
Cordoba Systems and others 3,254,695 2,499,242 5,753,937 31,903,118
----------- ----------- ----------- -------------
SUBTOTAL 584,144,684 114,197,328 698,342,012 2,317,898,898
DEFERRED COSTS
Corporate bonds issuance program 30,397,344 7,571,260 37,968,604 37,832,927
----------- ----------- ----------- -------------
TOTAL 614,542,028 121,768,588 736,310,616 2,355,731,825
=========== =========== =========== =============
- 29 -
3) FOREIGN CURRENCY ASSETS AND LIABILITIES
2002 2001
--------------------------------------------------- ------------------------------------
CURRENCY EXCHANGE BOOK VALUE CURRENCY BOOK VALUE
ACCOUNT AND AMOUNT(1) RATE IN PESOS IN PESOS AND AMOUNT(1) IN PESOS
- -------------------- ------------- ------------- ------------ ------------- ------------
ASSETS
Cash and banks 100,000 3.64 (2) 364,000 4,585,478 10,143,231
Other receivables - - 9,140,945 20,220,077
---------- ----------- ---------- ----------
TOTAL ASSETS 100,000 364,000 13,726,423 30,363,308
========== =========== ========== ==========
LIABILITIES
Accounts payable 10,263,988 3.74(3) 38,387,315 82,694,650 182,923,338
Loans 777,907,418(4) 3.74(3) 2,909,373,743 831,686,385 1,839,718,167
Accrued interest 91,212,528(4) 3.74(3) 341,134,855 33,028,887 73,061,005
Other payables 1,184,758 3.74(3) 4,430,995 2,581,865 5,711,172
----------- ------------- ----------- -------------
TOTAL LIABILITIES 880,568,692 3,293,326,908 949,991,787 2,101,413,682
=========== ============= =========== =============
(1) US dollars.
(2) Buying exchange rate as of the period-end.
(3) Selling exchange rate as of the period-end.
(4) Include approximately US$580,000,000 and US$15,000,000 corresponding to
foreign liabilities, which financed the acquisition of intangible
assets mentioned in Note 3.III.j).
- 30 -
4) EXPENSES INCURRED -- INFORMATION REQUIRED BY SECTION 64, SUBSECTION I, POINT
B) OF LAW NO. 19,550 (STATED IN ARGENTINE PESOS - NOTE 3.II.)
2002 2001
------------------------------------------------------------ ------------
COSTS OF SERVICES SELLING ADMINISTRATIVE
ACCOUNT PROVIDED EXPENSES EXPENSES TOTAL TOTAL
- --------------------------------------------------- ----------------- --------- -------------- ----------- ------------
Salaries and social security taxes 38,337,232 17,595,517 24,078,085 80,010,834 135,355,285
Public utilities and assessments 12,248,469 1,088,828 2,587,764 15,925,061 17,576,420
Power and fuels 3,048,446 166,619 370,224 3,585,289 5,336,073
Entertainment expenses - 169,726 - 169,726 471,207
Other payroll expenses 814,048 202,860 624,184 1,641,092 4,690,476
Maintenance of property, plant and equipment and
network expenses 6,343,740 427,501 1,334,594 8,105,835 14,326,905
Rents 14,600,826 523,628 3,125,350 18,249,804 27,620,083
Depreciation of property, plant and equipment 131,792,889 7,354,961 1,446,911 140,594,761 128,816,255
Fees for services 2,539,618 2,217,088 11,183,446 15,940,152 25,408,753
Advertising and promotion - 3,801,772 - 3,801,772 27,642,409
Office supplies 82,485 21,949 2,209,845 2,314,279 5,018,697
Postage and mailing - 960,170 27,987 988,157 2,823,488
Production of magazine - 9,666,078 - 9,666,078 13,138,333
Programming costs 179,264,419 - - 179,264,419 251,559,237
Data transmission costs 8,345,779 - - 8,345,779 3,690,462
Uncollectable accounts - 33,238,558 - 33,238,558 32,385,244
Banks expenses and credit card commissions - 11,885,748 769,467 12,655,215 20,298,746
Litigation 4,985,795 - 434,718 5,420,513 7,895,566
Other 2,855,357 3,451,179 1,717,734 8,024,270 13,589,288
----------- ----------- ---------- ----------- -----------
TOTAL 2002 405,259,103 92,772,182 49,910,309 547,941,594
=========== =========== ========== ===========
TOTAL 2001 510,050,739 146,294,397 81,297,791 737,642,927
=========== =========== ========== ===========
- 31 -
5) BREAKDOWN BY MATURITY OF RECEIVABLES AND LIABILITIES AS OF SEPTEMBER 30, 2002
(STATED IN ARGENTINE PESOS)
LIABILITIES
-------------------------------------
OTHER
TERM RECEIVABLES LOANS LIABILITIES(5)
- ----------------------------- ------------- ------------- -------------
WITHOUT MATURITY 15,234,386 2,960,213,584(6) 391,723,127
------------- ------------- -------------
WITH A MATURITY DATE
- - PAST DUE
- -Up to three months 29,073,462 -- 18,364,527
- -From three to six months 17,713,592 -- 21,156,511
- -From six to nine months 1,540,167 -- 6,309,747
- -From nine to twelve months 350,012 -- 1,060,738
- -From one to two years 2,833,105 -- 1,146,894
- -From two to three years -- -- 4,502
------------- ------------- -------------
TOTAL PAST DUE 51,510,338 -- 48,042,919
------------- ------------- -------------
- - NOT YET DUE
- -Up to three months 23,096,366 1,836,753 79,643,980
- -From three to six months 2,054,606 1,793,567 6,608,182
- -From six to nine months 2,016,225 1,464,519 2,089,409
- -From nine to twelve months 1,687,938 1,296,472 1,847,918
- -From one to two years 6,888,672 4,542,615 3,308,575
- -From two to three years 5,179,480 2,051,232 1,598,761
- -More than three years 16,963,973 135,484 27,248,971
------------- ------------- -------------
TOTAL NOT YET DUE 57,887,260 13,120,642 122,345,796
------------- ------------- -------------
TOTAL WITH A MATURITY DATE 109,397,598 13,120,642 170,388,715
------------- ------------- -------------
TOTAL 124,631,984(1)(4) 2,973,334,226(2) 562,111,842(3)
============= ============= =============
(1) Accrues no interest.
(2) Approximately 20% accrues interest at variable rate; the average
weighted rate (included withholding) is approximately 12% per annum.
(3) Approximately 8% accrues interest at fixed rate; the average weighted
rate is approximately 12% per annum.
(4) The allowance for doubtful accounts (receivables from services) for
26,411,077 was not allocated to these balances (Note 4.j).
(5) Does not include reserves.
(6) Includes 2,711,500,000 corresponding to the Series 5, 9, 10 and 11
Notes and 248,713,584 corresponding to other bank loans and loans
granted to the Company for the purchase of equipment (see Notes 1 and
8).
MARCELO E. BOMBAU
Director
[CABLEVISION LOGO]
SIGNATURE
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.
CABLEVISION S.A.
By: /s/ Mariana Vazquez
-------------------------
Name: Mariana Vazquez
Title: General Counsel
Dated: December 2, 2002