UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarterly Period Ended:
SEPTEMBER 30, 1998
OR
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from ________ to ________.
Commission File Number 0-24792
NTL (BERMUDA) LIMITED
(Exact name of registrant as specified in its charter)
Bermuda Not Applicable
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Cedar House Secretary NTL Incorporated
41 Cedar Avenue 110 East 59th Street
Hamilton, HM 12, Bermuda New York, NY 10022
(441) 295-2244 (212) 906-8440
- --------------------------------------------------------------------------------
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area code, and telephone number, including
of Registrant's principal executive offices) area code, of agent for service)
COMCAST UK CABLE PARTNERS LIMITED
Clarendon House
2 Church Street West
Hamilton, HM 11, Bermuda
- --------------------------------------------------------------------------------
(Former Name and Former Address)
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes __X__ No ____
--------------------------
As of September 30, 1998, there were 37,231,997 Class A Common Shares and
12,872,605 Class B Common Shares outstanding.
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet
as of September 30, 1998 and December 31,
1997 (Unaudited)..........................................2
Condensed Consolidated Statement of
Operations and Accumulated Deficit for
the Nine and Three Months Ended September 30,
1998 and 1997 (Unaudited).................................3
Condensed Consolidated Statement of Cash
Flows for the Nine Months Ended September 30,
1998 and 1997 (Unaudited).................................4
Notes to Condensed Consolidated
Financial Statements (Unaudited).....................5 - 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................11 - 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................18
Item 6. Exhibits and Reports on Form 8-K.........................18
SIGNATURE..........................................................19
-----------------------------------
This Quarterly Report on Form 10-Q contains forward looking statements made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that such forward looking statements
involve risks and uncertainties which could significantly affect expected
results in the future from those expressed in any such forward looking
statements made by, or on behalf of, the Company. Certain factors that could
cause actual results to differ materially include, without limitation, the
effects of legislative and regulatory changes; the potential for increased
competition; technological changes; the need to generate substantial growth in
the subscriber base by successfully launching, marketing and providing services
in identified markets; pricing pressures which could affect demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, programming, equipment and capital costs; the Company's continued ability
to create or acquire programming and products that customers will find
attractive; future acquisitions; strategic partnerships and divestitures;
general business and economic conditions; and other risks detailed from time to
time in the Company's periodic reports filed with the Securities and Exchange
Commission.
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, December 31,
1998 1997
(Unaudited) (See Note)
(in (UK Pound)000's, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................................... (UK Pound)86,363 (UK Pound)37,372
Accounts receivable, less allowance for doubtful accounts of
(UK Pound)3,204 and (UK Pound)2,598......................................... 4,075 4,255
Other current assets.......................................................... 5,932 5,419
----------------- -----------------
Total current assets...................................................... 96,370 47,046
----------------- -----------------
INVESTMENTS IN AFFILIATES........................................................ 50,307 61,363
----------------- -----------------
PROPERTY AND EQUIPMENT........................................................... 364,693 315,702
Accumulated depreciation ..................................................... (51,205) (33,000)
----------------- -----------------
Property and equipment, net................................................... 313,488 282,702
----------------- -----------------
DEFERRED CHARGES................................................................. 58,785 60,770
Accumulated amortization...................................................... (14,587) (13,985)
----------------- -----------------
Deferred charges, net......................................................... 44,198 46,785
----------------- -----------------
FOREIGN EXCHANGE PUT OPTIONS, net................................................ 5,886 7,958
----------------- -----------------
(UK Pound)510,249 (UK Pound)445,854
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses........................................ (UK Pound)25,783 (UK Pound)23,605
Accrued interest.............................................................. 271
Current portion of long-term debt............................................. 94,941 1,683
Notes payable to Comcast U.K. Holdings, Inc................................... 12,037
Other......................................................................... 809 920
----------------- -----------------
Total current liabilities................................................. 133,841 26,208
----------------- -----------------
LONG-TERM DEBT, less current portion............................................. 246,677 234,010
----------------- -----------------
FOREIGN EXCHANGE CALL OPTION..................................................... 2,562 2,688
----------------- -----------------
NOTES PAYABLE TO COMCAST U.K. HOLDINGS, INC...................................... 11,272
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred shares, (UK Pound).01 par value - authorized, 10,000,000
shares; issued, none........................................................
Class A common shares, (UK Pound).01 par value - authorized, 50,000,000
shares; issued, 37,231,997.................................................. 372 372
Class B common shares, (UK Pound).01 par value - authorized, 50,000,000
shares; issued, 12,872,605.................................................. 129 129
Additional capital............................................................ 358,548 358,548
Accumulated deficit........................................................... (231,880) (187,373)
----------------- -----------------
Total shareholders' equity................................................ 127,169 171,676
----------------- -----------------
(UK Pound)510,249 (UK Pound)445,854
================= =================
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
2
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
1998 1997 1998 1997
(in (UK Pound)000's, except per share data)
REVENUES
Service income................................. (UK Pound)55,692 (UK Pound)39,166 (UK Pound)19,665 (UK Pound)13,961
Consulting fee income.......................... 840 776 279 280
------------------ ------------------ ------------------ ------------------
56,532 39,942 19,944 14,241
------------------ ------------------ ------------------ ------------------
COSTS AND EXPENSES
Operating...................................... 18,147 14,484 6,385 4,590
Selling, general and administrative............ 26,089 22,720 8,893 7,902
Management fees................................ 2,174 2,494 704 787
Depreciation and amortization.................. 22,952 18,830 8,268 6,641
------------------ ------------------ ------------------ ------------------
69,362 58,528 24,250 19,920
------------------ ------------------ ------------------ ------------------
OPERATING LOSS.................................... (12,830) (18,586) (4,306) (5,679)
INVESTMENT (INCOME) EXPENSE
Interest expense............................... 26,751 18,706 9,344 6,421
Investment income.............................. (6,752) (5,807) (2,263) (1,781)
Equity in net losses of affiliates............. 15,916 15,509 4,731 5,195
Exchange (gains) losses and other.............. (4,238) 7,336 (3,388) 5,168
------------------ ------------------ ------------------ ------------------
31,677 35,744 8,424 15,003
------------------ ------------------ ------------------ ------------------
NET LOSS.......................................... (44,507) (54,330) (12,730) (20,682)
ACCUMULATED DEFICIT
Beginning of period .......................... (187,373) (120,017) (219,150) (153,665)
------------------ ------------------ ------------------ ------------------
End of period.................................((UK Pound)231,880) ((UK Pound)174,347) ((UK Pound)231,880) ((UK Pound)174,347)
================== ================== ================== ==================
NET LOSS PER SHARE................................ ((UK Pound).89) ((UK Pound)1.08) ((UK Pound).25) ((UK Pound).41)
================== ================== ================== ==================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD.......... 50,105 50,105 50,105 50,105
================== ================== ================== ==================
See notes to condensed consolidated financial statements.
3
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1998 1997
(UK Pound)000 (UK Pound)000
OPERATING ACTIVITIES
Net loss......................................................((UK Pound)44,507) ((UK Pound)54,330)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization.............................. 22,952 18,830
Amortization on foreign exchange contracts................. 2,072 2,072
Non-cash interest expense.................................. 20,168 18,300
Non-cash investment income................................. (2,181) (1,825)
Exchange (gains) losses.................................... (7,211) 7,116
Equity in net losses of affiliates......................... 15,916 15,509
(Increase) decrease in accounts receivable and other
current assets ......................................... (333) 150
Increase in accounts payable and accrued expenses and
accrued interest........................................ 2,449 3,177
---------------- ----------------
Net cash provided by operating activities........... 9,325 8,999
---------------- ----------------
FINANCING ACTIVITIES
Repayments of debt............................................ (1,567) (1,111)
Proceeds from borrowings...................................... 93,000
Deferred financing costs...................................... (1,634)
Net transactions with affiliates.............................. (1,020) (1,517)
---------------- ----------------
Net cash provided by (used in) financing activities. 88,779 (2,628)
---------------- ----------------
INVESTING ACTIVITIES
Proceeds from sales of short-term investments, net............ 45,805
Capital contributions and loans to affiliates................. (1,768) (8,670)
Capital expenditures.......................................... (47,012) (59,709)
Deferred charges.............................................. (333) (687)
---------------- ----------------
Net cash used in investing activities............... (49,113) (23,261)
---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................. 48,991 (16,890)
CASH AND CASH EQUIVALENTS, beginning of period.................... 37,372 63,314
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period.......................... (UK Pound)86,363 (UK Pound)46,424
================ ================
See notes to condensed consolidated financial statements.
4
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1997 has been
condensed from the audited consolidated balance sheet as of that date. The
condensed consolidated balance sheet as of September 30, 1998, the
condensed consolidated statement of operations and accumulated deficit for
the nine and three months ended September 30, 1998 and 1997, and the
condensed consolidated statement of cash flows for the nine months ended
September 30, 1998 and 1997 have been prepared by NTL (Bermuda) Limited
(formerly Comcast UK Cable Partners Limited) (the "Company") and have not
been audited by the Company's independent auditors. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of September 30, 1998 and for all periods
presented have been made.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's December
31, 1997 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the periods ended September 30,
1998 are not necessarily indicative of operating results for the full year.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used
in 1998.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997. The Company
has adopted SFAS No. 130, which had no effect on the consolidated financial
statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards
for the way that public enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. SFAS No. 131 is effective for financial statements for periods
beginning after December 15, 1997. The Company is assessing whether changes
in reporting will be required upon the adoption of this new standard. The
Company will adopt SFAS No. 131 for fiscal year ending December 31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement, which establishes
accounting and reporting standards for derivatives and hedging activities,
is effective for fiscal years beginning after June 15, 1999. Upon the
adoption of SFAS No. 133, all derivatives are required to be recognized in
the statement of financial position as either assets or liabilities and
measured at fair value. The Company is currently evaluating the impact the
adoption of SFAS No. 133 will have on its financial position and results of
operations.
5
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
3. AMALGAMATION WITH NTL
Effective October 29, 1998, NTL Incorporated ("NTL"), NTL (Bermuda)
Limited, a wholly owned subsidiary of NTL, and Comcast UK Cable Partners
Limited ("Partners") consummated a transaction (the "Amalgamation")
pursuant to the Agreement and Plan of Amalgamation, dated February 4, 1998,
as amended, among the same (the "Amalgamation Agreement"), whereby NTL
(Bermuda) Limited amalgamated with Partners, such that the separate
existence of NTL (Bermuda) Limited and Partners continued in the form of
the company that resulted from the Amalgamation and which is a wholly owned
subsidiary of NTL (the "Amalgamated Company"). Under the terms of the
Amalgamation Agreement, shareholders of Partners received 0.3745 shares of
common stock of NTL in consideration for each of their shares of common
stock of Partners. Accordingly, as a result of the Amalgamation,
shareholders of Partners received a total of approximately 18,700,000
shares of NTL common stock, representing approximately 31.2% of the shares
of NTL common stock outstanding after giving effect to the consummation of
the Amalgamation.
The Amalgamated Company shall operate under the name "NTL (Bermuda)
Limited". Effective as of the Amalgamation, (i) the memorandum of
association of NTL (Bermuda) Limited shall be the memorandum of the
Amalgamated Company until thereafter changed or amended as provided therein
or by applicable law, (ii) the bye-laws of NTL (Bermuda) Limited, as in
effect immediately prior to the Amalgamation, shall be the bye-laws of the
Amalgamated Company until thereafter changed or amended as provided therein
or by applicable law and (iii) the persons serving as directors and
officers of NTL (Bermuda) Limited immediately prior to the Amalgamation
shall be the directors and officers, respectively, of the Amalgamated
Company until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal.
Immediately following the Amalgamation, the Amalgamated Company and Bank of
Montreal Trust Company, as trustee, executed a First Supplemental Indenture
(the "First Supplemental Indenture") relating to Partner's 11.20% Senior
Discount Debentures due 2007 (the "Debentures"), which provides for the
assumption by the Amalgamated Company of the liabilities and the
obligations of Partners under the Indenture, dated as of November 15, 1995,
governing the Debentures (together with the First Supplemental Indenture,
the "Indenture") and the Debentures issued pursuant thereto. The First
Supplemental Indenture likewise provides that the Amalgamated Company shall
succeed to, and be substituted for, and may exercise every right and power
of, Partners under the Indenture and the Debentures.
Pursuant to existing arrangements between Partners and Telewest
Communications plc ("Telewest"), a co-owner of interests in Cable London
PLC ("Cable London") and Birmingham Cable Corporation Limited ("Birmingham
Cable"), Telewest had certain rights to acquire either or both of Partner's
interests in these systems (see Note 4) as a result of the Amalgamation. On
August 14, 1998, Partners and NTL entered into an agreement (the "Telewest
Agreement") with Telewest relating to Partner's ownership interests in
Birmingham Cable, Partner's and Telewest's respective ownership interests
in Cable London and certain other related matters. Pursuant to the Telewest
Agreement, Partners sold its 27.5% ownership interest in Birmingham Cable
to Telewest for (UK Pound)125 million, plus (UK Pound)5 million for certain
subordinated debt and fees. Partners and Telewest have also agreed within a
certain time period to rationalize their joint ownership of Cable London
pursuant to an agreed procedure (the "Shoot-out"). Between April 29 and
July 29, 1999, the Amalgamated Company can notify Telewest of the price at
which it is willing to sell its 50% ownership interest in Cable London to
Telewest. Following such notification, Telewest at its option will be
required at that price to either purchase the Amalgamated Company's 50%
ownership interest in Cable London or sell its 50% ownership interest in
Cable London to the Amalgamated Company. If the Amalgamated Company fails
to give notice to Telewest during the Shoot-out period, it will be deemed
to have given a notice to Telewest offering to sell its Cable London
interest for (UK Pound)100 million. The sale or purchase by the Company as
per the Cable London Shoot-out is expected to be completed by November
1999.
6
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
4. INVESTMENTS IN AFFILIATES
The Company has invested in two affiliates: Birmingham Cable and Cable
London (together, the "Equity Investees"). The Equity Investees operate
integrated cable communications, residential telephony and business
telecommunications systems in their respective major metropolitan areas
under exclusive cable television licenses and non-exclusive
telecommunications licenses. As of September 30, 1998, the Company's
ownership interest in the Equity Investees is as follows:
Birmingham Cable................................27.5%
Cable London....................................50.0%
Included in investments in affiliates as of September 30, 1998 and December
31, 1997, are loans to Cable London of (UK Pound)28.5 million and accrued
interest of (UK Pound)8.0 million and (UK Pound)6.0 million, respectively.
The loans accrue interest at a rate of 2% above the published base lending
rate of Barclays Bank plc (9.5% effective rate as of September 30, 1998)
and are subordinate to Cable London's credit facility. Of these loans, (UK
Pound)21.0 million as of September 30, 1998 and December 31, 1997, are
convertible into ordinary shares of Cable London at a per share conversion
price of (UK Pound)2.00. Also included in investments in affiliates as of
September 30, 1998 and December 31, 1997, are loans to Birmingham Cable of
(UK Pound)3.7 million and (UK Pound)1.9 million and accrued interest of (UK
Pound)320,000 and (UK Pound)133,000, respectively. The Birmingham Cable
loans accrue interest at a fixed rate of 7.8% and are subordinate to
Birmingham Cable's credit facility.
As described in Note 3, the Company sold its interest in Birmingham Cable
in October 1998 for (UK Pound)125 million, plus (UK Pound)5 million for
certain subordinated debt and fees. The Company will record a gain on the
sale of Birmingham Cable of approximately (UK Pound)110 million in the
fourth quarter of 1998. Also, the Company and Telewest have agreed to the
Cable London Shoot-out pursuant to which the Company will either sell its
interest in Cable London to Telewest or Telewest will sell its interest in
Cable London to the Company. The sale or purchase by the Company as per the
Cable London Shoot-out is expected to be completed by November 1999.
Although the Company is not contractually committed to make any additional
capital contributions or advances to Cable London, it currently intends to
fund its share of the amounts necessary for capital expenditures and to
finance operating deficits. Failure to do so could dilute the Company's
ownership interest in Cable London.
7
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Summarized financial information for affiliates accounted for under the
equity method is as follows:
Birmingham Cable
Cable London Combined
(UK Pound)000 (UK Pound)000 (UK Pound)000
NINE MONTHS ENDED SEPTEMBER 30, 1998
Results of operations
Service income............................................(UK Pound)57,385 (UK Pound)48,926 (UK Pound)106,311
Operating, selling, general and
administrative expenses................................. (43,690) (38,244) (81,934)
Depreciation and amortization............................. (20,717) (16,611) (37,328)
Operating loss............................................ (7,022) (5,929) (12,951)
Net loss.................................................. (25,067) (17,523) (42,590)
Company's equity in net loss.............................. (7,010) (8,906) (15,916)
THREE MONTHS ENDED SEPTEMBER 30, 1998
Results of operations
Service income............................................ 19,410 16,748 36,158
Operating, selling, general and
administrative expenses................................. (14,414) (13,037) (27,451)
Depreciation and amortization............................. (6,975) (5,635) (12,610)
Operating loss............................................ (1,979) (1,924) (3,903)
Net loss.................................................. (5,989) (5,993) (11,982)
Company's equity in net loss.............................. (1,686) (3,045) (4,731)
AT SEPTEMBER 30, 1998
Financial position
Current assets............................................ 14,858 8,774 23,632
Noncurrent assets......................................... 244,384 190,803 435,187
Current liabilities....................................... 26,570 19,899 46,469
Noncurrent liabilities.................................... 185,410 197,448 382,858
NINE MONTHS ENDED SEPTEMBER 30, 1997
Results of operations
Service income............................................ 49,146 38,162 87,308
Operating, selling, general and
administrative expenses................................. (42,411) (34,007) (76,418)
Depreciation and amortization............................. (18,031) (13,930) (31,961)
Operating loss............................................ (11,296) (9,775) (21,071)
Net loss.................................................. (21,715) (18,625) (40,340)
Company's equity in net loss.............................. (6,077) (9,432) (15,509)
THREE MONTHS ENDED SEPTEMBER 30, 1997
Results of operations
Service income............................................ 17,346 13,469 30,815
Operating, selling, general and
administrative expenses................................. (14,766) (11,713) (26,479)
Depreciation and amortization............................. (4,996) (5,040) (10,036)
Operating loss............................................ (2,416) (3,284) (5,700)
Net loss.................................................. (6,351) (6,746) (13,097)
Company's equity in net loss.............................. (1,782) (3,413) (5,195)
8
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
5. LONG-TERM DEBT
UK Holdings Credit Facility
In December 1997, Comcast UK Holdings Limited ("UK Holdings"), a wholly
owned subsidiary of the Company, entered into a loan agreement (the "UK
Holdings Agreement") with a consortium of banks to provide financing under
a credit facility (the "UK Holdings Credit Facility") up to a maximum of
(UK Pound)200.0 million. Under the terms of the UK Holdings Agreement,
borrowings under the UK Holdings Credit Facility are guaranteed by
Cambridge Holding Company Limited ("Cambridge Cable") and two companies
holding the franchises for Darlington and Teesside, England ("Teesside").
Cambridge Cable and Teesside are wholly owned subsidiaries of the Company.
Final maturity of the UK Holdings Credit Facility is January 31, 2001. The
UK Holdings Credit Facility bears interest at a rate per annum equal to the
London Interbank Offered Rate ("LIBOR") plus 1/2% to 2 1/4%. As of
September 30, 1998 the Company's effective weighted average interest rate
on the UK Holdings Credit Facility was 9.33%.
The consummation of the Amalgamation resulted in a change in control, as
defined in the UK Holdings Credit Facility, and all amounts outstanding
thereunder became immediately due and payable. The Company repaid the
approximately (UK Pound)100 million outstanding on October 29, 1998 using
proceeds from the sale of the Birmingham Cable interest. The banks have
agreed to suspend the UK Holdings Credit Facility for 90 days pending the
renegotiation of the facility. The amount outstanding under the UK Holdings
Credit Facility of (UK Pound)93 million as of September 30, 1998 is
classified as current on the Company's condensed consolidated balance sheet
as of that date.
6. RELATED PARTY TRANSACTIONS
Comcast U.K. Consulting, Inc., a wholly owned subsidiary of the Company,
earned consulting fee income under consulting agreements with the Equity
Investees. The consulting fee income was generally based on a percentage of
gross revenues or a fixed amount per dwelling unit in the Equity Investees'
franchise areas. The consulting agreements were terminated pursuant to the
Telewest Agreement.
The Company's right to receive consulting fee payments from the Equity
Investees was subordinated to the banks under their credit facilities.
Accordingly, these fees have been classified as long-term receivables and
are included in investments in affiliates in the Company's condensed
consolidated balance sheet. In addition, the Company's shares in Cable
London have been pledged to secure amounts outstanding under Cable London's
revolving credit facility.
Management fee expense was incurred under agreements between the Company on
the one hand, and Comcast Corporation ("Comcast"), the Company's former
controlling shareholder, and Comcast UK Cable Partners Consulting, Inc.
("Comcast Consulting"), an indirect wholly owned subsidiary of Comcast, on
the other, whereby Comcast and Comcast Consulting provided consulting
services to the Equity Investees on behalf of the Company and management
services to the Company. Such management fees were based on Comcast's and
Comcast Consulting's cost of providing such services. As of September 30,
1998 and December 31, 1997, other current liabilities consists primarily of
this management fee and operating expenses paid by Comcast and its
affiliates on behalf of the Company.
For the nine and three months ended September 30, 1998 and 1997, investment
income includes (UK Pound)2.2 million, (UK Pound)1.8 million, (UK
Pound)754,000 and (UK Pound)676,000 of interest income, respectively,
relating to the loans to the Equity Investees.
9
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
Long-term debt due to shareholder consists of 9% Subordinated Notes payable
to Comcast U.K. Holdings, Inc. which are due in September 1999. For the
nine and three months ended September 30, 1998 and 1997, the Company
recorded (UK Pound)765,000, (UK Pound)700,000, (UK Pound)262,000 and (UK
Pound)239,000, respectively, of interest expense relating to such notes.
In management's opinion, the foregoing transactions were entered into on
terms no more or less favorable than those with non-affiliated parties.
7. CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially
affect the financial position, results of operations or liquidity of the
Company.
8. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of (UK Pound)6.3 million, (UK
Pound)406,000, (UK Pound)2.5 million and (UK Pound)136,000 during the nine
and three months ended September 30, 1998 and 1997, respectively.
The Company's wholly owned subsidiaries incurred capital lease obligations
of (UK Pound)2.2 million, (UK Pound)1.5 million, (UK Pound)486,000 and (UK
Pound)852,000 during the nine and three months ended September 30, 1998 and
1997, respectively.
10
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
NTL (Bermuda) Limited (formerly Comcast UK Cable Partners Limited) and its
subsidiaries (the "Company") are principally engaged in the development,
construction, management and operation of companies in the United Kingdom ("UK")
cable and telecommunications industry. As of September 30, 1998, the Company had
interests in four operations (the "Operating Companies"): Birmingham Cable
Corporation Limited ("Birmingham Cable"), in which the Company owned a 27.5%
interest, Cable London PLC ("Cable London"), in which the Company owns a 50.0%
interest, Cambridge Holding Company Limited ("Cambridge Cable"), in which the
Company owns a 100% interest and two companies holding the franchises for
Darlington and Teesside, England ("Teesside"), in which the Company owns a 100%
interest. The Company accounts for its interests in Birmingham Cable and Cable
London (together, the "Equity Investees") under the equity method.
When build-out of the Operating Companies' systems is complete, these systems
are expected to have the potential to serve approximately 1.6 million homes and
the businesses within their franchise areas. As of September 30, 1998, the
Operating Companies' systems passed more than 1,280,000 homes or approximately
80% of the homes in their franchise areas and served more than 320,000 cable
subscribers, 410,000 residential telephony subscribers and 14,000 business
telephony subscribers.
General Developments of Business
Amalgamation with NTL, Sale of Birmingham Cable Interest and Cable London
Shoot-out
See Note 3 to the Company's Condensed Consolidated Financial Statements included
in Item 1.
Liquidity and Capital Resources
The Company
Historically, the Company has financed its cash requirements, including its
investments in the Equity Investees, through capital contributions from its
former shareholders, as well as proceeds from the Company's initial public
offering of 15.0 million of its Class A Common Shares (net proceeds of $209.4
million or (UK Pound)132.6 million) in September 1994 and from the Company's
offering of its $517.3 million principal amount at maturity 11.20% Senior
Discount Debentures due 2007 (the "2007 Discount Debentures") (net proceeds of
$291.1 million or (UK Pound)186.9 million) in November 1995. Interest accretes
on the 2007 Discount Debentures at 11.20% per annum compounded semi-annually
from November 15, 1995 to November 15, 2000, after which date interest will be
paid in cash on each May 15 and November 15 through November 15, 2007. The 2007
Discount Debentures contain restrictive covenants which limit the Company's
ability to pay dividends. The Operating Companies are not expected to pay any
dividends or advances in the foreseeable future.
In December 1997, Comcast UK Holdings Limited ("UK Holdings"), a wholly owned
subsidiary of the Company, entered into a loan agreement (the "UK Holdings
Agreement") with a consortium of banks to provide financing under a credit
facility (the "UK Holdings Credit Facility") up to a maximum of (UK Pound)200.0
million. Under the terms of the UK Holdings Agreement, borrowings under the UK
Holdings Credit Facility are guaranteed by Teesside and Cambridge Cable.
Final maturity of the UK Holdings Credit Facility is January 31, 2001. The UK
Holdings Credit Facility bears interest at a rate per annum equal to the London
Interbank Offered Rate ("LIBOR") plus 1/2% to 2 1/4%. As of
11
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
September 30, 1998, the Company's effective weighted average interest rate on
the UK Holdings Credit Facility was 9.33%.
The UK Holdings Credit Facility contains restrictive covenants which limit UK
Holdings' ability to enter into arrangements for the acquisition and sale of
property and equipment, investments, mergers and the incurrence of additional
debt. Certain of these covenants require that certain financial ratios and cash
flow levels be maintained and contain certain restrictions on dividend payments.
The Company's right to receive consulting fee payments from Cambridge Cable and
Teesside has been subordinated to the banks under the UK Holdings Credit
Facility. In addition, the Company's shares in UK Holdings have been pledged to
secure the UK Holdings Credit Facility.
The consummation of the Amalgamation resulted in a change in control, as defined
in the UK Holdings Credit Facility, and all amounts outstanding thereunder
became immediately due and payable. The Company repaid the approximately (UK
Pound)100 million outstanding on October 29, 1998 using proceeds from the sale
of the Birmingham Cable interest. The banks have agreed to suspend the UK
Holdings Credit Facility for 90 days pending the renegotiation of the facility.
The amount outstanding under the UK Holdings Credit Facility of (UK Pound)93
million as of September 30, 1998 is classified as current on the Company's
condensed consolidated balance sheet as of that date.
In August 1998, the Company and NTL Incorporated entered into an agreement with
Telewest Communications plc relating to Partners' and Telewest's respective 50%
ownership interests in Cable London PLC and certain other related matters.
Pursuant to this agreement, between April 29 and July 29, 1999, the Company can
notify Telewest of the price at which it is willing to sell its 50% ownership in
Cable London to Telewest. Following such notification, Telewest at its option
will be required at that price to either purchase the Company's 50% ownership
interest in Cable London or sell its 50% ownership interest in Cable London to
the Company. If the Company fails to give notice to Telewest during the
Shoot-out period, it will be deemed to have given a notice to Telewest offering
to sell its Cable London interest for (UK Pound)100 million. The sale or
purchase by the Company as per the Cable London Shoot-out is expected to be
completed by November 1999.
Except for its working capital requirements, the Company's cash needs will
depend on management's investment decisions. Investment considerations include
(i) whether further capital contributions will be made to Cable London, (ii)
whether the Operating Companies can obtain debt financing, (iii) whether the
Operating Companies will be able to generate positive operating cash flow, (iv)
the timing of the build-out of the Operating Companies' systems, and (v) whether
there may be future acquisitions and trades funded in cash or the Company's
shares. There are no agreements or negotiations for specific material
acquisitions currently pending.
Historically, the Company has made investments in the Equity Investees in
conjunction with proportionate investments by its strategic and financial
partners. The Company made capital contributions and loans to the Operating
Companies in the aggregate of (UK Pound)1.8 million and (UK Pound)66.4 million
during the nine months ended September 30, 1998 and 1997 respectively, and (UK
Pound)16.7 million during the three months ended September 30, 1997. Of these
amounts, (UK Pound)1.8 million and (UK Pound)8.7 million relate to capital
contributions and loans to the Equity Investees during the nine months ended
September 30, 1998 and 1997, respectively and (UK Pound)9,000 relates to capital
contributions and loans to the Equity Investees during the three months ended
September 30, 1997. Although the Company is not contractually committed to make
any additional capital contributions or loans to Cable London, it currently
intends to fund its share of the amounts necessary for capital expenditures and
to finance operating deficits. Failure to do so could dilute the Company's
ownership interest in Cable London.
The Company estimates that the Operating Companies (excluding Birmingham Cable)
will require approximately (UK Pound)54.0 million from October 1, 1998 through
December 31, 1998, to continue the build-out of their systems. Management
believes that the entire (UK Pound)54.0 million required will be funded through
cash from operations or from cash on hand, and, for Cable London, through
drawdowns under currently existing credit facilities (subject to compliance with
certain financial and operating covenants). If such credit facilities are not
available for drawdown, the Company
12
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
expects that its strategic and financial partners in Cable London will provide
their pro-rata share of any required fundings, although they are not
contractually obligated to do so. Thus, no assurance of such funding can be
given. If the Company's strategic and financial partners fail to provide such
financing, Cable London will be required to seek additional funds elsewhere.
Such additional funds may come from the Company, from new strategic and
financial partners, from borrowings under new credit facilities or from other
sources, although there can be no assurance that any such financing would be
available on acceptable terms and conditions. The Company and its strategic and
financial partners generally have veto rights over Cable London's debt financing
decisions. Failure of any Operating Company to obtain financing necessary to
complete the build-out of its system could result in loss of its cable
franchises and licenses.
The Company's ability to meet its long-term liquidity and capital requirements
is contingent upon the Operating Companies' ability to generate positive
operating cash flow and obtain external financing, although there can be no
assurance that any such financing will be obtained on acceptable terms and
conditions.
The Operating Companies
The following is a discussion of the liquidity and capital resources of each of
the Operating Companies excluding Birmingham Cable. Such financial information
has not been adjusted for the Company's proportionate ownership percentages in
the Operating Companies.
Cable London. Historically, Cable London's primary sources of funding have been
capital contributions and loans from the Company and the Company's strategic and
financial partner and borrowings under Cable London's previous and current
credit facilities. The Company estimates that approximately (UK Pound)16.0
million will be required from October 1, 1998 through December 31, 1998 to
continue development and construction of Cable London's cable/telephony network.
The Company expects that such funds will be provided by borrowings under the
Cable London credit facility.
Cambridge Cable. Historically, Cambridge Cable's primary sources of funding have
been capital contributions and loans from the Company and the Company's former
strategic and financial partner. The Company estimates that approximately (UK
Pound)25.0 million will be required from October 1, 1998 through December 31,
1998 to continue development and construction of Cambridge Cable's
cable/telephony network. The Company expects that such funds will be provided by
cash from operations or capital contributions or loans from the Company.
Teesside. Historically, Teesside's primary source of funding has been capital
contributions from the Company. The Company estimates that approximately (UK
Pound)13.0 million will be required from October 1, 1998 through December 31,
1998 to continue development and construction of Teesside's cable/telephony
network. The Company expects that such funds will be provided by cash from
operations or capital contributions or loans from the Company.
Statement of Cash Flows
Cash and cash equivalents increased (UK Pound)49.0 million as of September 30,
1998 from December 31, 1997 and decreased (UK Pound)16.9 million as of September
30, 1997 from December 31, 1996. The changes in cash and cash equivalents
resulted from cash flows from operating, financing and investing activities
which are explained below.
Net cash provided by operating activities amounted to (UK Pound)9.3 million and
(UK Pound)9.0 million for the nine months ended September 30, 1998 and 1997,
respectively. The increase in net cash provided by operating activities as
compared to the prior period is principally due to the increase in the Company's
operating income before depreciation and amortization.
13
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
Net cash provided by (used in) financing activities amounted to (UK Pound)88.8
million and ((UK Pound)2.6) million for the nine months ended September 30, 1998
and 1997, respectively. During the nine months ended September 30, 1998, net
cash provided by financing activities includes (UK Pound)93.0 million of
borrowings under the UK Holdings Credit Facility.
Net cash used in investing activities was (UK Pound)49.1 million and (UK
Pound)23.3 million for the nine months ended September 30, 1998 and 1997,
respectively. During the nine months ended September 30, 1998, net cash used in
investing activities includes capital expenditures of (UK Pound)47.0 million and
capital contributions and loans to affiliates of (UK Pound)1.8 million. During
the nine months ended September 30, 1997, net cash used in investing activities
includes capital expenditures of (UK Pound)59.7 million and capital
contributions and loans to affiliates of (UK Pound)8.7 million, offset, in part,
by proceeds from the sales of short-term investments of (UK Pound)45.8 million.
Year 2000 Issues
Strategy
The Company's operations are conducted through its Operating Companies, each of
which has different configurations of hardware and software. The Company itself
is a holding company with very limited activities. The Company uses personal
computers and software that will be Year 2000 ready in the near future at a
nominal cost. Each of the Operating Companies is conducting its own program for
Year 2000 compliance. Each of the Operating Companies has appointed a senior
manager to be responsible for achieving Year 2000 readiness, and has set up an
internal progress and review process. This includes assessing the progress of
significant vendors in achieving Year 2000 readiness.
Status to Date
The Operating Companies utilize hardware and software from vendors for
substantially all of their activities, including billing, customer service and
the operation of the network. The Operating Companies, therefore, are working
with these third-party vendors to ensure Year 2000 readiness. It is possible
that one or more suppliers will not be able to provide the Operating Companies
with reasonable assurances that they will be ready for the Year 2000, in which
case the Company expects the Operating Companies will seek another vendor. No
assurance, however, can be given that such alternative will be available.
The Operating Companies have already received assurances from vendors of its
main service platforms, including vendors of its telephony switches, cable TV
subsystems, and customer management systems ("CMS"), with the exception of
Cambridge Cable's CMS, that they expect to be Year 2000 ready. The cost of the
necessary software upgrades is generally included in the Operating Companies
maintenance contracts with its vendors.
Costs
There are few major costs directly attributable to the Year 2000 issues, as
suppliers will include any remedial software in their normal upgrade process.
For the smaller systems, such as PCs, there has or will be some acceleration of
routine replacement and upgrades to ensure all systems are Year 2000 ready. The
Company estimates that this acceleration will result in approximately $500,000
per Operating Company incurred in 1999.
14
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
Risks
The primary risks of a serious business-affecting Year 2000 problem arise from
two separate external sources:
First, a major utility (such as power, water, major telecommunications company
or public sector entity) fails to operate at or after the Year 2000. This risk,
which is beyond the Company's control or ability to monitor, could significantly
adversely affect the Company's financial condition and results of operations.
Second, a supplier of mission critical software fails to timely deliver suitable
Year 2000 software, despite its written assurances. Any such failure could
significantly adversely affect the Company's financial condition and results of
operations. The Operating Companies' Year 2000 project managers' primary task is
to prevent such a failure.
Contingency Plans
The Operating Companies will be included in NTL's contingency planning, which is
in process.
15
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
Results of Operations
The Company
Summarized consolidated financial information for the Company for the nine and
three months ended September 30, 1998 and 1997 is as follows (in thousands, "NM"
denotes percentage is not meaningful):
Nine Months Ended
September 30, Increase/(Decrease)
1998 1997 (UK Pound) %
Revenues.................................................... (UK Pound)56,532 (UK Pound)39,942 (UK Pound)16,590 41.5%
Operating, selling, general and administrative expenses 44,236 37,204 7,032 18.9
Management fees............................................. 2,174 2,494 (320) (12.8)
----------------- -----------------
Operating income before depreciation and
amortization (1)......................................... 10,122 244 9,878 NM
Depreciation and amortization............................... 22,952 18,830 4,122 21.9
----------------- -----------------
Operating loss.............................................. (12,830) (18,586) (5,756) (31.0)
----------------- -----------------
Interest expense............................................ 26,751 18,706 8,045 43.0
Investment income........................................... (6,752) (5,807) 945 16.3
Equity in net losses of affiliates.......................... 15,916 15,509 407 2.6
Exchange (gains) losses and other........................... (4,238) 7,336 (11,574) NM
----------------- -----------------
Net loss.................................................... ((UK Pound)44,507) ((UK Pound)54,330) ((UK Pound)9,823) (18.1%)
================= =================
Three Months Ended
September 30, Increase/(Decrease)
1998 1997 (UK Pound) %
Revenues.................................................... (UK Pound)19,944 (UK Pound)14,241 (UK Pound)5,703 40.0%
Operating, selling, general and administrative expenses .... 15,278 12,492 2,786 22.3
Management fees............................................. 704 787 (83) (10.5)
----------------- -----------------
Operating income before depreciation and
amortization (1) ........................................ 3,962 962 3,000 NM
Depreciation and amortization............................... 8,268 6,641 1,627 24.5
----------------- -----------------
Operating loss.............................................. (4,306) (5,679) (1,373) (24.2)
----------------- -----------------
Interest expense............................................ 9,344 6,421 2,923 45.5
Investment income........................................... (2,263) (1,781) 482 27.1
Equity in net losses of affiliates.......................... 4,731 5,195 (464) (8.9)
Exchange (gains) losses and other........................... (3,388) 5,168 (8,556) NM
----------------- -----------------
Net loss.................................................... ((UK Pound)12,730) ((UK Pound)20,682) ((UK Pound)7,952) (38.4%)
================= =================
<FN>
- ------------
(1) Operating income before depreciation and amortization is commonly referred
to in the Company's businesses as "EBITDA". EBITDA is a measure of a
company's ability to generate cash to service its obligations, including
debt service obligations, and to finance capital and other expenditures. In
part due to the capital intensive nature of the Company's businesses and
the resulting significant level of non-cash depreciation expense and
amortization expense, EBITDA is frequently used as one of the bases for
comparing businesses in the Company's industries, although the Company's
measure of EBITDA may not be comparable to similarly titled measures of
other companies. EBITDA does not purport to represent net income or net
cash provided by operating activities, as those terms are defined under
generally accepted accounting principles, and should not
16
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
be considered as an alternative to such measurements as an indicator of the
Company's performance. See "Statement of Cash Flows" above for a discussion
of net cash provided by operating activities.
</FN>
Substantially all of the increases in service income, operating expenses,
selling, general and administrative expenses and depreciation and amortization
expense for the nine and three months ended September 30, 1998, as compared to
the same periods in 1997, are attributable to the effects of the continued
development of Teesside's and Cambridge Cable's operations and increased
business activity resulting from the growth in the number of subscribers in
their respective franchise areas. These trends are expected to continue for the
foreseeable future.
Comcast U.K. Consulting, Inc., a wholly owned subsidiary of the Company, earned
consulting fee income under consulting agreements with the Equity Investees. The
consulting fee income was generally based on a percentage of gross revenues or a
fixed amount per dwelling unit in the Equity Investees' franchise areas.
Consulting fee income for the nine and three months ended September 30, 1998 and
1997 was (UK Pound)840,000, (UK Pound)776,000, (UK Pound)279,000 and (UK
Pound)280,000, respectively. The consulting agreements were terminated pursuant
to the Telewest Agreement.
Management fee expense is incurred under agreements between the Company on the
one hand, and Comcast Corporation ("Comcast") and Comcast UK Cable Partners
Consulting, Inc. ("Comcast Consulting"), an indirect wholly owned subsidiary of
Comcast, on the other, whereby Comcast and Comcast Consulting provided
consulting services to the Equity Investees on behalf of the Company and
management services to the Company. Such management fees were based on Comcast's
and Comcast Consulting's cost of providing such services.
Interest expense for the nine and three months ended September 30, 1998 and 1997
was (UK Pound)26.8 million, (UK Pound)18.7 million, (UK Pound)9.3 million and
(UK Pound)6.4 million, respectively, representing increases of (UK Pound)8.1
million and (UK Pound)2.9 million from 1997 as compared to the same periods in
1998. The increases are primarily attributable to interest on borrowings under
the UK Holdings Credit Facility and the compounding of interest on the 2007
Discount Debentures.
Investment income for the nine and three months ended September 30, 1998 and
1997 was (UK Pound)6.8 million, (UK Pound)5.8 million, (UK Pound)2.3 million and
(UK Pound)1.8 million, respectively, representing increases of (UK Pound)1.0
million and (UK Pound)500,000 from 1997 as compared to the same periods in 1998.
The increases are primarily due to increases in the average loan balances to
Birmingham Cable in 1998 as compared to the same periods in 1997.
Equity in net losses of affiliates for the nine and three months ended September
30, 1998 and 1997 was (UK Pound)15.9 million, (UK Pound)15.5 million, (UK
Pound)4.7 million and (UK Pound)5.2 million, respectively, representing an
increase of (UK Pound)400,000 and a decrease of (UK Pound)500,000 from 1997 as
compared to the same periods in 1998. The increase for the nine month period
ended September 30, 1997 is attributable to the increase in the net loss for
Birmingham Cable. The decrease from the three month period ended September 30,
1997 is attributable to a decrease in the net loss of Cable London and
Birmingham Cable.
Exchange (gains) losses and other for the nine and three months ended September
30, 1998 and 1997 were ((UK Pound)4.2) million, (UK Pound)7.3 million, ((UK
Pound)3.4) million and (UK Pound)5.2 million, respectively, representing changes
of (UK Pound)11.5 million and (UK Pound)8.6 million from 1997 as compared to the
same periods in 1998. These changes primarily results from the impact of
fluctuations in the valuation of the UK Pound Sterling on the 2007 Discount
Debentures, which are denominated in United States ("US") dollars, on the
Company's foreign exchange call option contracts and on cash held in US dollars.
The Company's results of operations will continue to be affected by exchange
rate fluctuations.
17
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and the Operating Companies are not party to litigation which, in
the opinion of the Company's management, will have a material adverse effect on
the Company's financial position, results of operations or liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
2.1 Agreement dated August 14, 1998 among Telewest
Communications PLC, Telewest Communications Holdings
Limited, Comcast UK Cable Partners Limited and NTL
Incorporated (incorporated by reference to Exhibit 2.1 to
the Company's current report on Form 8-K filed on August 19,
1998).
2.2 Amendment No. 2 dated August 14, 1998 to Agreement and Plan
of Amalgamation dated as of February 4, 1998 among NTL
Incorporated, NTL (Bermuda) Limited and Comcast UK Cable
Partners Limited (incorporated by reference to Exhibit 2.2
to the Company's Current Report on Form 8-K filed on August
19, 1998).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
(i) Comcast UK Cable Partners Limited filed a Current Report on
Form 8-K under Item 5 on August 19, 1998 relating to an
agreement with Telewest Communications plc and NTL
Incorporated relating to the Company's ownership interest in
Birmingham Cable Corporation Limited, the Company's and
Telewest's respective ownership interests in Cable London
plc and certain other related matter. There were no
financial statements filed with this report.
18
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NTL (BERMUDA) LIMITED
------------------------------------------
Date: November 11, 1998 By: /s/ J. Barclay Knapp
--------------------------------------
J. Barclay Knapp
President, Chief Executive Officer and
Chief Financial Officer
Date: November 11, 1998 By: /s/ Gregg Gorelick
--------------------------------------
Gregg Gorelick
Vice President - Controller
(Principal Accounting Officer)
19