-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HfNOc+JJfC1D9OO4MlLqGAEFQ6LuW6LnleUgjeW6T14aHWTlsx9j0DwkgLpFQ3bq oVcWeoHG0BeazR4+mL++EQ== 0000927356-97-000026.txt : 19970115 0000927356-97-000026.hdr.sgml : 19970115 ACCESSION NUMBER: 0000927356-97-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INTERNATIONAL HOLDINGS INC CENTRAL INDEX KEY: 0000887949 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841116217 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21974 FILM NUMBER: 97505869 BUSINESS ADDRESS: STREET 1: 4643 S ULSTER ST STREET 2: STE 1300 CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037704001 MAIL ADDRESS: STREET 1: 4643 S ULSTER ST STREET 2: STE 1300 CITY: DENVER STATE: CO ZIP: 80237 10-Q 1 FORM 10-Q - UNITED INTERNATIONAL HOLDINGS, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended November 30, 1996 ---------------------------------------------------------- [ ] 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: 0-21974 United International Holdings, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1116217 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4643 South Ulster St. #1300 Denver, CO 80237 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (303)770-4001 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No The number of shares outstanding of the registrant's common stock as of January 8, 1997 was: Class A Common Stock -- 26,057,610 shares Class B Common Stock -- 13,006,553 shares UNITED INTERNATIONAL HOLDINGS, INC. PART I - FINANCIAL INFORMATION ------------------------------
Page Number ------ Item 1 - Financial Statements - ------ Condensed Consolidated Balance Sheets as of November 30, 1996 and February 29, 1996 (Unaudited)........... 2 Condensed Consolidated Statements of Operations For the Three and Nine Months Ended November 30, 1996 and 1995 (Unaudited).............................................. 3 Condensed Consolidated Statement of Stockholders' Equity For the Nine Months Ended November 30, 1996 (Unaudited)....... 4 Condensed Consolidated Statements of Cash Flows For the Nine Months Ended November 30, 1996 and 1995 (Unaudited)................................................... 5 Notes to Condensed Consolidated Financial Statements (Unaudited)................................................... 6 Item 2 - Management's Discussion and Analysis of Financial Condition - ------ and Results of Operations..................................... 11 PART II - OTHER INFORMATION --------------------------- Item 1 - Legal Proceedings............................................. 25 - ------ Item 5 - Other Information............................................. 19 - ------ Item 6 - Exhibits and Reports on Form 8-K.............................. 25 - ------
UNITED INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share data) (Unaudited)
November 30, February 29, 1996 1996 -------------- ------------- ASSETS Cash and cash equivalents............... $ 137,706 $ 112,218 Restricted cash and short-term investments............................ 11,600 14,073 Short-term investments.................. 86,954 35,692 Management fee receivables.............. 1,277 498 Costs to be reimbursed by affiliated companies, net......................... 3,959 7,972 Notes receivable........................ 8,174 7,581 Property, plant and equipment, net of accumulated depreciation of $14,734 and $2,097, respectively............... 146,964 31,102 Acquisition, transaction and development costs, net................. 7,385 4,541 Investments in and advances to affiliated companies, accounted for under the equity method, net........... 322,236 272,205 Other investments in affiliated companies, including marketable equity securities...................... 2,653 3,273 Goodwill, net........................... 56,060 45,629 Other assets, net....................... 58,312 45,422 --------- --------- Total assets............................ $ 843,280 $ 580,206 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities............................ $ 33,484 $ 11,068 Accrued funding obligations............. 34,604 2,163 Senior secured notes and other debt..... 643,470 371,251 --------- --------- Total liabilities....................... 711,558 384,482 --------- --------- Minority interest in subsidiaries....... 1,907 2,509 --------- --------- Warrants to purchase Class A Common Stock.................................. -- 11,167 --------- --------- Preferred stock, $.01 par value, 3,000,000 shares authorized, 170,513 shares of Convertible Preferred Stock, Series A issued and outstanding, stated at liquidation value................... 30,983 30,072 --------- --------- Commitments (Note 4) Stockholders' Equity: Class A Common Stock, $.01 par value, 60,000,000 shares authorized, 25,928,554 and 25,732,154 issued and outstanding, respectively.......... 258 257 Class B Common Stock, $.01 par value, 30,000,000 shares authorized, 13,130,168 and 13,274,685 issued and outstanding, respectively.......... 132 133 Additional paid-in capital.............. 340,959 325,716 Deferred compensation................... (864) (842) Unrealized loss on investments.......... (2,593) (1,189) Cumulative translation adjustments...... (15,088) (7,371) Accumulated deficit..................... (223,972) (164,728) --------- --------- Total stockholders' equity.............. 98,832 151,976 --------- --------- Total liabilities and stockholders' equity................................. $ 843,280 $ 580,206 ========= =========
The accompanying notes are an integral part of these condensed consolidated balance sheets. 2 UNITED INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data) (Unaudited)
For the Three For the Nine Months Ended Months Ended November 30, November 30, ---------------------------- -------------------------- 1996 1995 1996 1995 ------------ -------------- ------------ ------------ Management fee income from related parties................................ $ 126 $ 37 $ 756 $ 100 Service revenue......................... 7,450 599 13,877 1,631 System operating expense................ (6,693) (455) (19,563) (2,592) System, selling, general and administrative expense................. (9,733) (452) (14,947) (2,678) Corporate general and administrative expense................................ (2,765) (4,612) (11,507) (14,813) Depreciation and amortization........... (8,142) (423) (16,773) (1,891) ----------- ----------- ----------- ----------- Net operating loss.................... (19,757) (5,306) (48,157) (20,243) Equity in losses of affiliated companies, net......................... (11,483) (12,433) (33,224) (25,743) Interest income......................... 4,346 1,030 10,061 5,927 Interest income related parties, net.... 131 40 12 298 Other interest expense.................. (23,414) (8,732) (55,308) (24,327) Provision for losses on investment related costs.......................... (776) (325) (1,600) (1,141) Gain on sale of investment in affiliated company..................... -- -- 65,260 -- Other................................... 341 (133) 745 199 ----------- ----------- ----------- ----------- Net loss before minority interest..... (50,612) (25,859) (62,211) (65,030) Minority interest in subsidiaries....... 1,216 -- 2,967 713 ----------- ----------- ----------- ----------- Net loss.............................. $ (49,396) $ (25,859) $ (59,244) $ (64,317) =========== =========== =========== =========== Net loss per common share............... $ (1.27) $ (0.76) $ (1.52) $ (1.99) =========== =========== =========== =========== Weighted average number of common shares outstanding..................... 39,046,462 34,249,055 39,025,768 32,374,229 =========== =========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated statements. 3 UNITED INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Dollars in thousands, except share data) (Unaudited)
Class A Class B Common Stock Common Stock Additional ---------------------- ------------------------ Paid-In Shares Amount Shares Amount Capital ------ ------ ------ ------ ------- Balances, February 29, 1996..................... 25,732,154 $257 13,274,685 $133 $325,716 Issuance of Class A Common Stock in connection with Company's 401 (k) Plan...... 17,008 -- -- -- 243 Issuance of Class A Common Stock in connection with Company's Stock Option Plan............ 34,875 -- -- -- 311 Amortization of deferred compensation........... -- -- -- -- -- Exchange of Class B Common Stock for Class A Common Stock........................ 144,517 1 (144,517) (1) -- Accretion of dividends on convertible preferred stock............................. -- -- -- -- (911) Gain on sale of stock by subsidiary............. -- -- -- -- 5,898 Expiration of warrants not tendered to the Company..................................... -- -- -- -- 9,011 Repricing of stock options...................... -- -- -- -- 691 Unrealized loss on investments.................. -- -- -- -- -- Cumulative translation adjustments.............. -- -- -- -- -- Net loss........................................ -- -- -- -- -- ---------- --- ------------ --- ------- Balances, November 30, 1996..................... 25,928,554 $258 13,130,168 $132 $340,959 ========== === ============ === ======= Unrealized Cumulative Deferred Loss Translation Accumulated Compensation on Investments Adjustments Deficit Total ------------ -------------- ----------- ----------- ----- Balances, February 29, 1996..................... $( 842) $(1,189) $ (7,371) $(164,728) $151,976 Issuance of Class A Common Stock in connection with Company's 401 (k) Plan...... -- -- -- -- 243 Issuance of Class A Common Stock in connection with Company's Stock Option Plan............. -- -- -- -- 311 Amortization of deferred compensation........... 669 -- -- -- 669 Exchange of Class B Common Stock for Class A Common Stock........................ -- -- -- -- -- Accretion of dividends on convertible preferred stock............................. -- -- -- -- (911) Gain on sale of stock by subsidiary............. -- -- -- -- 5,898 Expiration of warrants not tendered to the Company..................................... -- -- -- -- 9,011 Repricing of stock options...................... (691) -- -- -- -- Unrealized loss on investments.................. -- (1,404) -- -- (1,404) Cumulative translation adjustments.............. -- -- (7,717) -- (7,717) Net loss........................................ -- -- -- (59,244) (59,244) ---- ------ ------- -------- ------- Balances, November 30, 1996..................... $(864) $(2,593) $(15,088) $(223,972) $ 98,832 ==== ====== ======= ======== =======
The accompanying notes are an integral part of these condensed consolidated statements. 4 UNITED INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
For the Nine Months Ended November 30, -------------------------------- 1996 1995 ------------------ ------------- Cash flows from operating activities Net loss................................................................................. $(59,244) $(64,317) Adjustments to reconcile net loss to net cash flows from operating activities: Equity in losses of affiliated companies, net............................................ 33,523 25,887 Gain on sale of investment in affiliated company......................................... (65,260) -- Minority interest share of losses........................................................ (2,967) (713) Depreciation and amortization............................................................ 16,773 1,891 Amortization of deferred compensation.................................................... 669 528 Accretion of interest on senior secured notes............................................ 53,574 23,603 Issuance of common stock in connection with Company's 401(k) Plan........................ 243 186 Acceleration of vesting of stock options................................................. -- 1,575 Provision for losses on investment related costs......................................... 1,600 1,141 Increase in management fee receivables................................................... (564) (111) Increase in other assets................................................................. (5,579) (2,604) Increase (decrease) in accounts payable, accrued liabilities and other................... 2,849 (2,470) -------- -------- Net cash flows from operating activities................................................. (24,383) (15,404) -------- -------- Cash flows from investing activities Purchase of short-term investments....................................................... (274,934) (90,541) Proceeds from sale of short-term investments............................................. 223,672 157,681 Restricted cash and short-term investments............................................... (11,600) 71,780 Restricted cash and short-term investments released...................................... 14,073 -- Investments in and advances to affiliated companies and other investments................ (94,214) (155,856) Increase in notes receivable............................................................. (40,022) (8,568) Reimbursement of note receivable......................................................... 42,264 -- Reimbursement of advance to related party................................................ 307 100 Proceeds from sale of affiliated company................................................. 84,098 1,190 Decrease (increase) in costs to be reimbursed by affiliated companies, net............... 3,907 (208) Acquisition, transaction and development costs incurred.................................. (5,639) (4,150) Increase in accounts payable for capital expenditures.................................... 19,795 -- Purchase of property, plant and equipment................................................ (118,749) (7,127) -------- -------- Net cash flows from investing activities................................................. (157,042) (35,699) -------- -------- Cash flows from financing activities Issuance of common stock in connection with public offering, net of offering expenses.... -- 62,107 Issuance of common stock in connection with Company's Stock Option Plan ................. 311 205 Proceeds from offering of senior notes................................................... 225,115 75,860 Deferred debt offering costs............................................................. (9,727) (11,688) Payment of warrants tendered to the Company.............................................. (2,156) -- Borrowing of other debt.................................................................. 7,276 9,820 Repayment of other debt.................................................................. (14,812) (1,000) -------- -------- Net cash flows from financing activities................................................. 206,007 135,304 -------- -------- Effect of exchange rates on cash............................................................ 906 743 -------- -------- Increase in cash and cash equivalents....................................................... 25,488 84,944 Cash and cash equivalents, beginning of period.............................................. 112,218 30,717 -------- -------- Cash and cash equivalents, end of period.................................................... $137,706 $115,661 ======== ======== Supplemental cash flow disclosures: Cash paid for interest...................................................................... $ 732 $ 759 ======== ======== Cash received for interest.................................................................. $ 10,299 $ 7,131 ======== ======== Non cash stock issuance utilized in purchase of 50% interest in Saturn, net of $1,902 allocated to minority interest........................................................... $ 5,898 $ -- ======== ========
The accompanying notes are an integral part of these condensed consolidated statements. 5 UNITED INTERNATIONAL HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF NOVEMBER 30, 1996 (Monetary amounts stated in thousands) (Unaudited) 1. Organization and Basis of Presentation United International Holdings, Inc. (the "Company" or "UIHI") was formed as a Delaware corporation in 1989, for the purpose of developing, acquiring and managing multi-channel television operations and related businesses. The following chart presents a summary of the Company's significant investments in multi-channel television, programming distribution and telephony operations as of November 30, 1996.
---------------------- ---------------------- Philips Media B.V. United International Holdings, Inc. ---------------------- ---------------------- 50% 50% 100% ------------------------------ ------------------------- United and Philips United International Communications B.V. ("UPC")(1) Properties, Inc. ------------------------------ ------------------------- - ---------------------------------------- -------------------------------------- Europe UIH Latin America, Inc. - ------ ----------------------- Radio Public (Belgium) 100.0% VTR Hipercable S.A (Chile)(6) 34.0% Kabel Net (Czech Rep.) 100.0 Cable Star (Peru) 94.0 KTE (Eindhoven, the Netherlands) 100.0 TV Cable SRL (Peru) 100.0 Marne la Vallee (France) 100.0 Megapo (Mexico) 49.0 Telekable Group (Austria) 95.0 Jundiai TV (Brazil) 46.3 Transvatel SRO (Slovak Republic) 75.0 TV Show Brasil A2000 (Amsterdam, the Netherlands) 50.0 (Fortaleza, Brazil) 40.0 Citecable (France) 30.0 Bahia Blanca (Argentina)(7) 100.0 RKS Hamburg (Germany) 29.0 United Family Communications Santander (Spain) 25.0 (Latin America Progrmming) 50.0 Portugal 100.0 -------------------------------------- Romania 51.0-90.0 Melita Cable (Malta) 42.5 -------------------------------------- Tevel (Israel) 23.3 Other PHL (Ireland) 20.0 ----- Kabelkom (Hungary) 47.0 ITN 76.9% Norkabel (Norway) 100.0 Monor Communications (Hungary) 48.6 - --------------------------------------- Iberian Programming Services 33.8 Teleport (St. Petersburg) 30.0 -------------------------------------- -------------------------------------- UIH Asia/Pacific, Inc. ---------------------- HITV (China) 49.0% SCS (Philippines)(5) 40.0 97.4% UIH Australia/Pacific, Inc. ("UIH AP") -------------------------------------- Austar (Australia)(2) 100.0% Saturn (New Zealand)(3) 100.0 United Wireless (Australia) 100.0 Telefenua(Tahiti)(4) 90.0 XYZ (Australia) 25.0 --------------------------------------
(1) In September 1996 UPC acquired 100% of UCI, a partnership which held interests in Norkabel, Kabelkom and Swedish Cable. UPC sold Swedish Cable in October 1996. (2) During the third quarter, UIH AP acquired the remaining 6% interest in Austar. (3) In July 1996, UIH AP increased its ownership interest in Saturn to 100%. In exchange for acquiring the additional 50% interest, the Company gave Saturn's other shareholder a 2.6% interest in UIH AP. (4) UIH AP owns an effective 90% economic interest in the Tahiti project. UIH AP's economic interest will decrease to 75% and 64% once UIH AP has received a 20% and 40% internal rate of return on its investment in Tahiti, respectively. (5) The Company currently holds a convertible loan, which upon full conversion would provide the Company with a 40% equity ownership interest in the Philippines operating company. (6) In September 1996, the Company completed an agreement with VTR S.A. ("VTR"), a leading Chilean conglomerate with interests in telecommunications and natural resources, under which the parties formed a joint venture. The Company and VTR contributed their respective Chilean multi-channel television assets to the joint venture of which the Company owns 34%. In early 1998, the Company will have the option to increase its interest to 50% after a revaluation of the properties subject to minimum and maximum values. Prior to formation of the joint venture, the Company held 100% interests in Cablevision and STX, both of which are Chilean multi-channel television operators. (7) The Company owns 100% of two subsidiaries and 80% of a third subsidiary that serve the Bahia Blanca and Punta Alta areas and, has agreed, subject to certain conditions, to acquire the remaining 20% of the subsidiary in 1998. 6 UNITED INTERNATIONAL HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) In October 1996, the Company acquired a 100% interest in TV Cable S.R.L., which currently owns and operates a cable television system in Tacna, Peru. The total purchase price was $550. In November 1996, the Company acquired a 100% ownership interest in two cable television companies and 80% of a third cable company serving the Bahia Blanca and Punta Alta, Argentina areas. The Company has a call option and the shareholders have a put option, in each case first exercisable in 18 months, on the remaining 20% of the third cable company. The total purchase price is $52,800 (which is subject to adjustment based upon completion of post closing adjustments by the Company), of which $26,000 was paid at closing and the balance will be paid over an 18-month period. The purchase price for the put/call option is estimated to be approximately $4,400. In November 1996, the Company and International Family Entertainment entered into an agreement to form United Family Communications LLC, which will launch a 3-channel package of family-themed entertainment programming for the Spanish and Portuguese markets worldwide. The accompanying interim condensed consolidated financial statements are unaudited and include the accounts of the Company and all majority-owned subsidiaries except Cablevision S.A. and Red de Television y Servicios por Cable S.A. ("STX") due to a joint venture in Chile which, in September 1996, reduced the Company's interest in Cablevision S.A. and STX below 50%. All affiliated companies are accounted for on a calendar year basis, versus the Company which has a fiscal yearend of February 28 (February 29 in leap years). The Company records its share of equity in income (losses) of affiliated companies or consolidates the affiliated companies based on the affiliated companies' calendar yearend results. Exchange rates used are as of November 30, 1996, unless otherwise noted. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (of a normal recurring nature) have been made which are necessary to present fairly the financial position of the Company as of November 30, 1996, and the results of its operations for the three and nine months ended November 30, 1996 and 1995. For a more complete understanding of the Company's financial position and results of operations, reference is made to the consolidated financial statements of the Company included in the Company's annual report on Form 10-K for the year ended February 29, 1996. Certain prior year amounts have been reclassified for comparability with the current year presentation. 2. Summary of Significant Accounting Policies Costs to be Reimbursed by Affiliated Companies The Company incurs costs on behalf of affiliated companies, such as expatriate salaries and benefits, travel and professional services. These costs are reimbursed by the affiliated companies. Investments in and Advances to Affiliated Companies, Accounted for Under the Equity Method All affiliated companies are accounted for on a calendar year basis, versus the Company which has a fiscal yearend of February 28 (February 29 in leap years). The Company records its share of equity in income (losses) of affiliated companies based on the affiliated companies' calendar yearend results. Investments in and advances to affiliated companies are as follows: 7
As of November 30, 1996 ---------------------------------------------------------------------------------- Investments in Cumulative Equity Cumulative and Advances to in Losses of Translation Valuation Affiliated Companies Affiliated Companies(1) Adjustments Allowance Total -------------------- ------------------------ ------------ ---------- -------- Europe - ------ UPC................... $150,446 $(31,786) $ (9,509) $ -- $109,151 Monor Communications.. 27,182 (7,022) (3,663) -- 16,497 Latin America - ------------- VTR Hipercable S.A.... 83,225 (1,965) (2,386) -- 78,874 Bahia Blanca(2)....... 57,277 (318) -- -- 56,959 TV Show Brasil........ 6,160 (2,665) -- -- 3,495 Megapo................ 32,497 (333) (1,139) -- 31,025 Asia/Pacific - ------------ XYZ................... 15,288 (15,398) 110 -- -- SCS................... 8,616 (366) 165 -- 8,415 Other - ----- Teleport.............. 3,078 (1,051) -- (2,027) -- Other................. 22,355 (4,535) -- -- 17,820 ------- ------- ------- ------ ------- $406,124 $(65,439) $(16,422) $(2,027) $322,236 ======= ======= ======= ====== =======
(1) Does not include cumulative equity in losses of $9,979 of Net Sao Paulo as the Company sold its investment in August 1996 realizing a gain of $65,260. Does not include cumulative equity in losses of $1,641 of ITN as ITN is now consolidated. Does not include cumulative equity in losses of $2,469 of Cablevision and STX as these properties were contributed to VTR Hipercable S.A. Also, does not include cumulative equity in losses of $2,733 of Saturn as the Company now owns 100%. (2) The Company acquired Bahia Blanca in November 1996 and will begin consolidating it during the fourth quarter.
As of February 29, 1996 -------------------------------------------------------------------------------- Investments in Cumulative Equity Cumulative and Advances to in Income (Losses) of Translation Valuation Affiliated Companies Affiliated Companies Adjustments Allowance Total -------------------- ---------------------- ------------ ---------- -------- Europe - ------ UPC................... $150,442 $(15,559) $(3,758) $ -- $131,125 Monor Communications.. 24,632 (5,573) (2,654) -- 16,405 Latin America - ------------- STX................... 29,423 205 (671) -- 28,957 Cablevision S.A....... 30,939 (1,037) (125) -- 29,777 Net Sao Paulo......... 16,054 (8,290) -- -- 7,764 TV Show Brasil........ 6,118 (1,582) -- -- 4,536 Megapo................ 32,491 (48) (1,257) -- 31,186 Asia/Pacific - ------------ Saturn................ 6,014 (1,802) 112 -- 4,324 XYZ................... 11,718 (11,737) 111 -- 92 SCS................... 6,346 (148) 183 -- 6,381 Other - ----- Teleport.............. 2,961 (1,051) -- (1,910) -- ITN................... 3,862 (1,032) -- -- 2,830 Other................. 10,008 (1,180) -- -- 8,828 ------- ------- ------ ------ ------- $331,008 $(48,834) $(8,059) $(1,910) $272,205 ======= ======= ====== ====== =======
SAB 51 Accounting Policy Under Staff Accounting Bulletin Number 51 ("SAB 51"), the "gain" ($5,898) recognized by the Company upon the issuance by UIH AP of a 2.6% interest in UIH AP for a 50% interest in Saturn was credited directly to equity. The Company has adopted a SAB 51 policy to record all gains as a result of stock sales by its subsidiaries in the statement of operations except for any transactions which must be credited directly to equity in accordance with the provisions of SAB 51. Foreign Operations The functional currency for the Company's foreign operations is the applicable local currency for each affiliate company, except for countries which have experienced hyper-inflationary economies. For countries which have hyper- inflationary economies, the financial statements are presented in United States dollars. Assets and liabilities of foreign subsidiaries are translated at the exchange rates in effect at period end and the statements of operations are translated at the average exchange rates during the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. dollars result in unrealized gains or losses referred to as translation adjustments. Cumulative translation adjustments are recorded as a separate component of stockholders' equity. Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses which are reflected in income as unrealized (based on period end translations) or realized upon settlement of the transactions. 8 UNITED INTERNATIONAL HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows", cash flows from the Company's operations in foreign countries are translated based on average exchange rates for the period while balance sheet amounts are translated at period end exchange rates. As a result, amounts related to assets and liabilities reported on the Condensed Consolidated Statements of Cash Flows will not agree to changes in the corresponding balances on the Condensed Consolidated Balance Sheets. The effect of exchange rate changes on cash balances held in foreign currencies is reported as a separate line below cash flows from financing activities. 3. Senior Secured Notes and Other Debt Senior secured notes and other debt consists of the following as of November 30, 1996 and February 29, 1996:
As of As of November 30, February 29, 1996 1996 ------------ ------------ November 1994 14% senior secured notes, net of unamortized discount............................... $255,330 $228,828 November 1995 14% senior secured notes, net of unamortized discount............................... 87,130 78,745 February 1996 14% senior secured notes, net of unamortized discount............................... 53,609 49,140 May 1996 14% UIH AP senior notes, net of unamortized discount (1)................................. 237,024 -- Note payable to a company, interest at 1.5% above the rate published by a certain Chilean bank, principal and interest due quarterly until June 1998, secured by shares of STX................ 6,355 -- Note payable to a bank, interest at 7.5%.......................................................... -- 9,820 Note payable to a bank, interest at LIBOR plus 1.75%.............................................. -- 3,828 Note payable to a bank............................................................................ 7 -- Capitalized lease obligation...................................................................... 4,015 890 -------- -------- Total senior secured notes and other debt......................................................... $643,470 $371,251 ======== ========
(1) Balance is as of September 30, 1996. The $255,330 of 14% senior secured notes were issued in November 1994 at a discount from their principal amount of $394,000 and accrete interest at a rate of 15.24% compounded semi-annually. No cash interest payments will be made prior to maturity on November 15, 1999. The $87,130 of 14% senior secured notes were issued in November 1995 at a discount from their principal amount of $130,000 and accrete interest at a rate of 14% compounded semi-annually. No cash interest payments will be made prior to maturity on November 15, 1999. The $53,609 of 14% senior secured notes were issued in February 1996 at a discount from their principal amount of $75,350 and accrete interest at a rate of 11.875% compounded semi-annually. No cash interest payments will be made prior to maturity on November 15, 1999. The $237,024 of 14% UIH AP senior notes were issued in May 1996 at a discount from their principal amount of $443,000 and accrete interest at a rate of 14% compounded semi-annually. Cash interest will not be paid prior to May 15, 2001. Thereafter, cash interest will be payable semi-annually on each May 15 and November 15, commencing November 15, 2001. The senior notes mature May 15, 2006. 4. Commitments A summary of the Company's guarantees as of November 30, 1996 is as follows: Guarantees ---------- Teleport St. Petersburg............................. $ 2,109(1) Monor Communications................................ 10,000(2) Australis Media Limited............................. 10,000(3) ------ $22,109 ====== 9 UNITED INTERNATIONAL HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) (1) Amount represents Company guarantee of affiliate debt. (2) The Company has entered into an arrangement with the lender to the Monor project that calls for a commitment of up to $10,000. The commitment can be used to pay project indebtedness of up to $5,000 for a specified period of time and up to $5,000 to be invested directly into the business. (3) In May 1996, a wholly-owned subsidiary of UIH AP guaranteed $10,000 of obligations of Australis Media Limited ("Australis"), a principal supplier of Austar's programming. In connection with the guarantee, the wholly- owned subsidiary received warrants to purchase approximately 4.2 million ordinary shares of Australis. This guarantee is secured by a cash deposit of $10,000 by the wholly-owned subsidiary. Of this guarantee, approximately $4,000 was converted to equity of Australis in UIH AP's fourth quarter and the remainder was returned to UIH AP. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" for projected fundings. 10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Monetary Amounts Stated in Thousands) The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's condensed consolidated financial statements and related notes thereto included elsewhere herein. Such condensed consolidated financial statements provide additional information regarding the Company's financial activities and condition. Liquidity and Capital Resources The Company's expenditures to date have been made in developing multi-channel television, programming distribution and telephony operations in foreign countries. Except for the Company's working capital requirements, the Company's future cash needs will depend on management's acquisition and development decisions. The Company does not expect any operating company to pay dividends in the foreseeable future and accordingly does not expect any distributions to be made by any affiliates. The indenture governing UIH AP's senior notes prohibits UIH AP from paying dividends during the period such notes are outstanding. During the nine months ended November 30, 1996, the Company incurred net losses of $59,244 of which $33,523 was from non-cash equity in losses of affiliated companies. The Company also recorded accretion of non-cash interest expense on the senior secured notes totaling $53,574. The Company recognized a gain on sale of an affiliated company of $65,260 and received proceeds from the sale of $79,098. For the nine months ended November 30, 1996 the Company purchased $118,749 of property, plant and equipment, the majority of which was purchased by the Company's majority owned subsidiaries in Australia and Tahiti as those entities continued to construct their systems. This increase is offset by a related increase of $19,795 in accounts payable for capital expenditures. The Company incurred $5,639 of acquisition, transaction and development costs, primarily with respect to its Latin America and Asia/Pacific regions. The Company's notes receivable decreased by $2,242, which includes an increase of $35,000 from the sale of Sao Paulo offset by the pay-off of the note receivable of $35,000 received for the sale of Sao Paulo. The Company invested $94,214 of cash in its affiliated companies and other investments due to expected additional investments to the existing systems. The Company purchased short-term investments of $274,934 and sold short-term investments of $223,672 as part of its cash management activities. The Company also paid $2,156 for warrants tendered to the Company. UIH AP received proceeds from the sale of its senior notes of $225,115 and incurred offering costs of $9,727. The Company borrowed additional debt of $7,276 and repaid two loans totaling $14,812. During the nine months ended November 30, 1995, the Company incurred net losses of $64,317 of which $25,743 was from non-cash equity in losses of affiliated companies. The Company also recorded accretion of non-cash interest expense on the senior secured notes totaling $23,603. During the nine months ended November 30, 1995, the Company purchased $7,127 of property, plant and equipment, the majority of which was purchased by the Company's majority owned subsidiaries in Tahiti and the Czech Republic as those entities continued to construct their MMDS systems. The Company incurred $4,150 of acquisition, transaction and development costs, primarily with respect to its Latin America and Asia/Pacific regions. The Company's notes receivable increased by $8,568 due to advances under a bridge loan to the other owners of SCS to meet their funding commitments to the project, for which the Company was repaid a portion in August 1996 and will be repaid the remaining portion in August 1997 pursuant to the terms of the bridge loans. The Company's restricted cash decreased $71,780 due to the release of funds in connection with the Company's formation of UPC. The Company invested $155,856 of cash in its affiliated companies and other investments due to expected additional investments to the existing systems. The Company purchased short-term investments of $90,541 and sold short-term investments of $157,681 as part of its cash management activities. The Company received net proceeds from an equity offering of $62,107 and net proceeds from an issuance of senior notes of $64,172. The Company borrowed $9,820 to fund a portion of its acquisition in STX. The amount currently estimated by the Company for future fundings and capital commitments, as described in the following paragraphs, is intended to be funded using the Company's existing cash. In addition, UIH AP intends to raise additional funds through the sale of equity securities and/or further issuances of debt either by UIH AP, its immediate parent corporation or its operating companies. While the Company currently anticipates funding the projects summarized below, there can be no assurance that the Company's actual expenditures will equal the currently anticipated amounts. If the Company's actual expenditures are less than the amounts indicated, the Company intends to use such remaining cash to pursue additional development and acquisition opportunities. 11 The following table summarizes the Company's remaining projected funding requirements for its projects other than UIH AP:
Projected Fundings -------------------------------------------------------- Total Portion Remaining Expected Funded as of as of Location Type of Project Fundings November 30, 1996 November 30, 1996 - -------- --------------- -------- ----------------- ----------------- Europe: UPC Cable systems $171,059 $171,059 $ -- Monor Communications Telephony/cable systems 26,580 26,580 -- Spain Programming Programming 11,613 9,430 2,183 Irish Programming Programming 9,743 1,943 7,800 -------- -------- ------- 218,995 209,012 9,983 -------- -------- ------- UIH Latin America, Inc.: Chile Cable system 84,862 77,754 7,108 Argentina Cable system 57,200 26,382 30,818 Mexico Cable system 32,033 32,033 -- Fortaleza, Brazil MMDS system 8,402 6,087 2,315 Jundiai, Brazil Cable system 4,733 4,398 335 Arequipa, Peru Cable system 3,811 3,169 642 Tacna, Peru Cable system 2,750 550 2,200 Venezuela Cable system 9,955 5,325 4,630 United Family Communications Programming 5,245 1,300 3,945 -------- -------- ------- 208,991 156,998 51,993 -------- -------- ------- UIH Asia/Pacific Communications, Inc.: UIH AP (1) -- 102,035 102,035 -- Hunan Province, China Microwave transmission network 6,600 5,980 620 Philippines Cable system 17,400 12,438 4,962 -------- -------- ------- 126,035 120,453 5,582 -------- -------- ------- Other: Teleport St. Petersburg Telephony 4,491 2,491 2,000 ITN, Inc. -- 6,000 5,542 458 -------- -------- ------- 10,491 8,033 2,458 -------- -------- ------- Grand Total $564,512 $494,496 $70,016 ======== ======== =======
(1) Amount represents what the Company funded to UIH AP. See the table below for UIH AP's projected fundings. The Company may also invest additional amounts in its existing operating systems and early stage projects or acquire interests from its partners in these systems. For example, the Company completed an agreement with VTR S.A. in Chile to form a joint venture to which each party contributed its respective multi- channel television assets in Chile and of which the Company owns 34%. The Company has an option in early 1998 to increase its ownership interest in the new joint venture to 50% based upon a revaluation of the properties contributed. Thus, the Company could fund additional amounts to increase its ownership percentage (subject to maximum and minimum values) of the joint venture. The portion funded as of November 30, 1996, as described below, has been funded using the proceeds of $225,100 from the sale of the 1996 UIH AP senior notes, of which $48,240 is remaining as of November 30, 1996, and UIHI's fundings prior to the offering. In addition, UIH AP intends to raise additional funds through the sale of equity securities and/or further issuances of debt either by UIH AP, its immediate parent corporation, or its operating companies. The following table summarizes UIH AP's remaining projected funding requirements for its projects (based on UIH AP's November 30, 1996 ownership interest):
Projected Fundings -------------------------------------------------------- Total Portion Remaining Expected Funded as of as of Location Type of Project Fundings November 30, 1996 November 30, 1996 - -------- --------------- -------- ----------------- ----------------- UIH AP: New Zealand Cable system $ 92,822 $ 19,997 $ 72,825 Australia (Austar)(1) MMDS/DTH systems 355,315 156,639 198,676 Australia (XYZ) Programming 14,328 10,819 3,509 Tahiti MMDS system 17,399 16,738 661 United Wireless Mobile data services 8,200 4,286 3,914 -------- -------- -------- $488,064 $208,479 $279,585 ======== ======== ========
(1) Does not include the $58,600 paid by the Company to other shareholders of Austar to increase its ownership interest. 12 The Company currently does not expect to contribute additional capital to UPC, as UPC will finance its operating systems and development opportunities with its operating cash flow and cash on hand, as well as possible equity and debt financings. At this time, the Company does not know which acquisition or other development projects UPC will pursue and is unable to estimate the amount of funds that will be necessary for UPC to develop the projects it chooses to pursue. In connection with the UPC transaction, UPC issued to Philips $133,600 of UPC PIK Notes in two tranches, both of which become due and payable on January 1, 2005. The first tranche ($53,400) becomes convertible into equity of UPC in July 1999 and the second tranche ($80,200) becomes convertible into equity of UPC in July 2001. The Company has the option to purchase one-half of the UPC PIK Notes at any time they become convertible. While the Company and Philips currently intend that the UPC PIK Notes will be redeemed by UPC prior to conversion through an equity or debt financing at the UPC level, if the UPC PIK Notes are not redeemed prior to conversion, the Company must either purchase one-half of the UPC PIK Notes or face dilution of its interest in UPC. Because the Company and UIH AP do not currently have any cash flow, their ability to repay their obligations on the senior notes at maturity will be dependent on developing one or more sources of cash prior to the maturities of their respective senior notes. The Company may (i) seek to refinance all or a portion of the senior notes at maturity though sales of additional debt or equity securities of the Company, (ii) seek to sell all or a portion of its interests in one or more of its affiliated companies, (iii) negotiate with its current financial and strategic partners to permit the cash produced by its affiliated companies, such as UPC, to be distributed to equity holders rather than reinvested in the businesses of such affiliated companies, and/or (iv) seek to invest in companies that will make substantial cash distributions on or before the maturity of the senior notes. The Company continues to be actively engaged in the development and acquisition of additional investment opportunities in multi-channel television services and related businesses in Asia/Pacific and Latin America and incurs expenses in identifying and pursuing these opportunities before any investment decision is made. The Company anticipates making investments supplemented by capital raised from local financial and strategic partners as well as local debt financing to the extent available and appropriate for each project, subject to the provisions of the Company's and UIH AP's senior secured notes indentures. See Note 4 of the Company's Condensed Consolidated Financial Statements for additional information regarding the Company's commitments subject to the provisions of the Company's and UIH AP's senior secured notes indentures. Results of Operations The Company's Management Fee Income from Related Parties. Management fee income, as compared to the corresponding prior year amounts, increased approximately $89 (240.5%) and $656 (656.0%) during the three and nine months ended November 30, 1996 and 1995, respectively. The detail of management fee income is as follows:
For the Three Months For the Nine Months Ended November 30, Ended November 30, -------------------- ------------------- 1996 1995 1996 1995 --------- --------- ---------- ------- UIH Asia/Pacific Communications, Inc.(1)............................ $ (11) $ 37 $ 152 $ 37 UIH Latin America, Inc............... 52 -- 408 -- Other................................ 85 -- 196 63 ----- ----- ------ ----- Total management fee income $ 126 $ 37 $ 756 $ 100 from related parties........... ===== ===== ====== =====
(1) The decrease during the three months ended November 30, 1996 is due to intercompany eliminations and the two month lag with consolidated foreign subsidiaries. 13 Service Revenue. Service revenue, as compared to the corresponding prior year amounts, increased approximately $6,851 (1,143.7%) and $12,246 (750.8%) during the three and nine months ended November 30, 1996 and 1995, respectively, as follows:
For the Three Months For the Nine Months Ended November 30, Ended November 30, --------------------- ------------------- 1996 1995 1996 1995 ----------- -------- --------- -------- UIH Asia/Pacific Communications, Inc. (1)... $7,350 $ 599 $13,220 $1,151 UIH Latin America, Inc. (2).. 89 -- 573 -- Other (3).................... 11 -- 84 480 ----- ---- ------ ----- Total service revenue..... $7,450 $ 599 $13,877 $1,631 ===== ==== ====== =====
(1) Austar Service revenues at Austar were $10,500 in the nine months ended September 30, 1996 (the "1996 Nine Months"). Revenues consisted primarily of service and installation fees from basic subscribers of $6,700 and $3,800, respectively. The Company began consolidating the results of Austar on March 1, 1996. As a result, the Company reported no service revenues from Austar in the nine months ended September 30, 1995 (the "1995 Nine Months"). Austar's actual service revenues for the 1995 Nine Months were $100. The increase in service revenues in the 1996 Nine Months was primarily attributable to an increase in subscribers (60,276 at September 30, 1996 versus 1,019 at September 30, 1995). Such increase was the result of the rapid roll-out of Austar's services initially launched August 1995. Telefenua Telefenua's service revenues increased to $2,600 for the 1996 Nine Months from $1,200 in the 1995 Nine Months, primarily attributable to an increase in subscribers (4,678 at September 30, 1996 compared to 2,684 at September 30, 1995). Saturn The Company began consolidating Saturn on September 1, 1996. Accordingly, reported service revenues for the 1996 and 1995 results were not meaningful. In addition, because Saturn has only recently launched basic services in the Wellington area in September 1996, Saturn's actual results for the 1996 Nine Months and the 1995 Nine Months were not significant or meaningful. (2) The Company acquired 94% of Cablestar in February 1996. (3) Other amounts have varied for the following reasons: - The Company's previously owned 66.7% subsidiary, Kabel Net, initiated MMDS operations during the fall of 1994. Beginning June 1, 1995, the activity of Kabel Net and certain of the programming assets are recorded through the Company's 50% equity pick-up from UPC. - The Company began consolidating ITN effective June 1, 1996. System Operating Expense. During the three and nine months ended November 30, 1996 and 1995, respectively, the Company experienced an increase in operating expense, as compared to the corresponding prior year amounts, of approximately $6,238 (1,371.0%) and $16,971 (654.7%), as follows:
For the Three Months For the Nine Months Ended November 30, Ended November 30, -------------------- ------------------- 1996 1995 1996 1995 ---------- -------- --------- -------- UIH Asia/Pacific Communications, Inc. (1)... $6,316 $ 455 $18,621 $1,870 UIH Latin America, Inc. (2).. 173 -- 392 -- Other (3).................... 204 -- 550 722 ----- ---- ------ ----- Total operating expense... $6,693 $ 455 $19,563 $2,592 ===== ==== ====== =====
Footnotes (2) and (3): see discussion under "The Company's Service Revenue" above. 14 (1) Austar Operating expenses consolidated by the Company from Austar were $15,600 in the 1996 Nine Months. Operating expenses consisted primarily of payroll ($6,700), satellite programming fees ($2,600) and annual MMDS spectrum license fees ($1,300), with the remainder consisting primarily of warehouse rent, system travel/recruitment and national customer operations center ("NCOC") start-up costs. The Company began consolidating the results of Austar on March 1, 1996. As a result, the Company reported no operating expenses from Austar in the Company's consolidated statement of operations for the 1995 Nine Months. Austar's actual operating expenses for the 1995 Nine Months were $700. The increase in operating expenses in the 1996 Nine Months was primarily attributable to the rapid roll-out of Austar's services initially launched in August 1995 and the corresponding increase in subscribers. Austar is experiencing high operating expenses relative to service revenues due to certain fixed operating expenses (such as management overhead, license fees and certain marketing costs) as well as non-recurring start up costs (such as initial market research, NCOC establishment costs and additional one-time expenses due to the name change to "Austar") associated with the launch of its service. Austar expects operating expenses as a percent of service revenues to decline as start-up costs are reduced and as certain fixed operating expenses are spread over expected increases in service revenues. Telefenua Operating expenses consolidated by the Company from Telefenua decreased to $1,500 in the 1996 Nine Months from $1,900 in the 1995 Nine Months, primarily due to a decrease in technical related repairs and maintenance and tape production costs, partially offset by an increase in the subscribers in the 1996 Nine Months. Telefenua's operating expenses for the 1996 Nine Months consisted primarily of satellite programming fees ($500) and tape production costs ($400), with the remainder consisting of payroll related costs and technical related costs. Saturn The Company began consolidating Saturn on September 1, 1996. Accordingly, while the Company reported operating expenses of $600 for Saturn in its consolidated statement of operations for the 1996 Nine Months, Saturn's actual operating expenses were $1,200 for the 1996 Nine Months, consisting primarily of payroll and office expenses related to the start-up activities, including system design and engineering work, for launching Saturn's Wellington system in September 1996. Saturn's operating expenses for the 1995 Nine Months were not significant or meaningful. System Selling, General and Administrative Expense. During the three and nine months ended November 30, 1996 and 1995, respectively, the Company experienced an increase in system selling, general and administrative expense over the corresponding prior year amounts of approximately $9,281 (2,053.3%) and $12,269 (458.1%), as follows:
For the Three Months For the Nine Months Ended November 30, Ended November 30, -------------------- ------------------- 1996 1995 1996 1995 ---------- -------- --------- -------- UIH Asia/Pacific Communications, Inc. (1).... $9,306 $ 452 $13,987 $1,636 UIH Latin America, Inc. (2).. 146 -- 403 -- Other (3).................... 281 -- 557 1,042 ----- ---- ------ ----- Total operating expense... $9,733 $ 452 $14,947 $2,678 ===== ==== ====== =====
Footnotes (2) and (3): see discussion under "The Company's Service Revenue" above. (1) Austar System selling, general and administrative expenses consolidated by the Company from Austar were $10,700 in the 1996 Nine Months and consisted primarily of $3,100 in marketing costs related to print, radio and television advertisements utilized in the launch of Austar services throughout its service areas during 1996, direct sales commissions ($2,100) and for general and administrative expenses at Austar's Sydney corporate headquarters ($5,500). The company began consolidating the results of Austar on March 1, 1996. As a result, the Company reported no system selling, general and administrative expenses from Austar in its consolidated statement of operations for the 1995 Nine Months. Austar's system selling, general and administrative expenses were primarily attributable to marketing expenses related to the increased roll-out of MMDS operating systems and the initiation of DTH service in 1996. 15 Telefenua System selling, general and administrative expenses consolidated by the Company from Telefenua increased to $2,000 in the 1996 Nine Months compared to $1,600 in the 1995 Nine Months. This increase was primarily attributable to an increase in marketing expenses during the 1996 Nine Months. Saturn The Company began consolidating Saturn on September 1, 1996. Accordingly, reported system selling, general and administrative expenses for the 1996 and 1995 results were not meaningful. In addition, because Saturn has only recently launched basic services in the Wellington area and had not conducted a significant marketing effort in either period, Saturn's system selling, general and administrative expenses for the 1996 Nine Months and the 1995 Nine Months were not significant or meaningful. Corporate General and Administrative Expense. During the three and nine months ended November 30, 1996 and 1995, respectively, the Company experienced a decrease in general and administrative expense over the corresponding prior year amounts of approximately $1,847 (40.0%) and $3,306 (22.3%), as follows:
For the Three Months For the Nine Months Ended November 30, Ended November 30, -------------------- ------------------- 1996 1995 1996 1995 --------- --------- --------- -------- Other (3) (4)........................ $2,765 $3,687 $11,507 $11,574 Non-recurring charges (5)............ -- 925 -- 3,239 ----- ----- ------ ------ Total general and administrative $2,765 $4,612 $11,507 $14,813 expense.......................... ===== ===== ====== ======
Footnotes (3): see discussion under "The Company's Service Revenue" above. (4) The decrease during the three months ended November 30, 1996 as compared to 1995 is due to certain costs previously expensed being billed to affiliates. (5) Included in non-recurring charges are costs which are currently incurred by UPC. Depreciation and Amortization. Depreciation and amortization increased $7,719 (1,824.8%) and $14,882 (787.0%) during the three and nine months ended November 30, 1996 relative to the same period in the prior year, respectively. The increase is due to the launch of the system in Tahiti in March of 1995 and Australia in September 1995. The Company began consolidating Austar effective March 1, 1996, and began consolidating Saturn effective September 1, 1996. As noted above under "The Company's Service Revenue," the activity of Kabel Net and certain programming assets are currently recorded as an equity pick-up and in fiscal 1996 such investments were consolidated for the first quarter. The Company's Equity in Losses of Affiliated Companies, Net. The Company recognized equity in losses of affiliated companies of $11,483 and $12,433 for the three months ended November 30, 1996 and 1995, respectively, and $33,224 and $25,743 for the nine months ended November 30, 1996 and 1995, as follows:
Three Months Ended November 30, 1996 Three Months Ended November 30, 1995 -------------------------------------- ------------------------------------- Company/UPC Equity in Company/UPC Equity in Ownership Income (Losses) of Ownership Income (Losses) of Interest (1) Affiliated Companies Interest (1) Affiliated Companies -------------- ---------------------- ------------ ---------------------- Europe UPC.......................... 50.0% $ (5,058) 50.0% $ (4,003) Monor........................ 48.6% (237) 48.2% (1,549) UIH Latin America, Inc. VTR Hipercable S.A. (12)..... 34.0% (1,965) -- -- STX(12)...................... 100.0% 520 65.0% 234 Megapo....................... 49.0% (50) 49.0% (11) Net Sao Paulo(2)............. -- -- 34.0% (293) Cablevision S.A.(12)......... 100.0% (1,073) 70.9% (516) TV Show Brasil............... 40.0% (306) 40.0% (433) UIH Asia/Pacific Communications, Inc. Austar (3)................... -- -- 50.0% (1,049) XYZ.......................... 25.0% (1,932) 25.0% (3,554) Saturn (4)................... -- -- 50.0% (276) Other.......................... 33.8-46.3% (1,382) 25.0-46.3% (983) ------ ------- Total equity in losses of affiliated companies, net... $(11,483) $(12,433) ====== =======
See footnotes on page 17. 16
Nine Months Ended November 30, 1996 Nine Months Ended November 30, 1995 ----------------------------------------- ---------------------------------------- Company/UPC Equity in Company/UPC Equity in Ownership Income (Losses) of Ownership Income (Losses) of Interest (1) Affiliated Companies Interest (1) Affiliated Companies ---------------- ---------------------- --------------- ---------------------- Europe UPC.................... 50.0% $(16,226) 50.0% $ (4,003) UCI (5)(6): -- Norkabel............. -- -- 8.3% 651 SCD.................. -- -- 2.2% (61) Kabelkom............. -- -- 3.9% 64 UCI.................. -- -- 8.3% (6) ------- 648 Suspended loss (7)... -- -- (648) ------- Loss recognized...... -- -- -- ------- UII(6): Tevel................ -- -- 23.3% 1,054 PHL.................. -- -- 20.0%(8) (925) Melita(5)............ -- -- 41.6%(8) (598) UII.................. -- -- 50.0% 267 ------- (202) ------- UII Management(6)...... -- -- 50.0% 468 Monor.................. 48.6% (1,424) 47.6% (3,310) Santander(6)........... -- -- 25.0% (213) Kabel Net(6)(9)........ -- -- 66.7% (1,217) Programming(6)(9)...... -- -- 100.0% (247) UIH Latin America, Inc. VTR Hipercable S.A. 34.0% (1,965) -- -- (12).................. STX(12)................ 100.0% 1,050 65.0% 234 Megapo................. 49.0% (258) 49.0% (19) Net Sao Paulo(2)....... 34.0% (1,649) 34.0% (3,811) Cablevision S.A.(12)... 100.0% (2,687) 70.9% (507) TV Show Brasil......... 40.0% (1,083) 40.0% (900) UIH Asia/Pacific Communications, Inc. Austar (3)............. -- -- 50.0% (1,413) XYZ.................... 25.0%(10) (3,571) 50.0% (7,943) Saturn(4).............. 100.0% (928) 50.0% (811) Other.................... 33.8-76.9%(11) (4,483) 25.0-46.3% (1,849) ------- ------- Total equity in losses of affiliated companies, net........ $(33,224) $(25,743) ======= =======
(1) On July 13, 1995, the UPC transaction was closed and the Company's interests in UCI, UII, UII Management, Santander, Kabel Net and certain programming entities were transferred to UPC. (2) In August 1996, the Company sold its interest in Net Sao Paulo for $78,098 and recognized a gain of $65,260 on the sale. (3) In December 1995, the Company increased its effective interest in Austar to majority control and began consolidating Austar's results of operations March 1, 1996. (4) In July 1996, UIH AP increased its ownership interest in Saturn to 100%. In exchange for acquiring the additional 50% interest, the Company issued to Saturn's other shareholder a 2.6% interest in UIH AP. (5) The Company's ownership interest with respect to equity in losses from UCI and Melita was calculated based on the Company's average ownership interest throughout the period. (6) These properties were contributed to UPC. (7) Represents cumulative losses in affiliate in excess of capital invested (including contractual funding commitments) or a reduction of suspended losses for equity in income. (8) The Company's ownership interest with respect to equity in losses from PHL and Melita is calculated net of minority interest. (9) Due to the determination that Kabel Net and certain programming entities would be contributed to UPC, the consolidated activity for the three months ended June 30, 1995 was calculated as an equity pick up and not consolidated. (10) In July 1995, the Company reduced its ownership percentage in XYZ to 25%. (11) The Company increased its ownership in ITN to 76.9% in April 1996. (12) The Company contributed its interests in STX and Cablevision to its new joint venture VTR Hipercable S.A. effective September 1, 1996. The Company's Interest Income. Interest income, as compared to the corresponding prior period amounts, increased by approximately $3,316 (321.9%) and $4,134 (69.7%) during the three and nine months ended November 30, 1996. Such increase is primarily due to a higher amount of cash invested in the current year as compared to the prior year and due to reduced fundings to projects in the current period. 17 The Company's Interest Expense. Interest expense, as compared to the corresponding prior period amounts, increased by approximately $14,682 (168.1%) and $30,981 (127.4%) during the three and nine months ended November 30, 1996. The increase is due to the sale of the senior secured notes in connection with the Company's debt offerings in November 1995 and February 1996 and UIH AP's debt offering in May 1996. The Company's Provision for Losses on Investment Related Costs. Provision for losses on investment related costs totaled $776 and $325 for the three months ended November 30, 1996 and 1995, respectively and $1,600 and $1,141 for the nine months ended November 30, 1996 and 1995, respectively. The Company capitalizes direct and incremental costs incurred relative to pursuing potential investments. If an investment is made, these costs are either reimbursed to the Company by the operating entity or capitalized as part of the cost basis of the investment. If the potential investment is abandoned, these costs are expensed. Gain on Sale of Affiliated Company. In August 1996, the Company sold its interest in Net Sao Paulo for $78,098 and recognized a gain of $65,260. The purchase price was satisfied with a cash payment of $43,098 and a note receivable of $35,000 which was paid in full in November 1996. 18 PART II - OTHER INFORMATION --------------------------- Item 5 - Other Information Summary Operating Data The operating data set forth below reflect the aggregate statistics of the operating systems in which the Company has an ownership interest.
As of September 30, 1996 ----------------------------------------------------------------------------------------------------- UIHI UIHI UIHI Homes in Equity in Equity in Equity in Service Homes Basic Basic UIHI Homes in Homes Basic Area Passed Subscribers Penetration Ownership Service Area Passed Subscribers ---- ------ ----------- ----------- --------- ------------ ------ ----------- Europe - ------ UPC Systems: Austria Cable................. 884,000 613,900 426,251 69.4% 47.5% 419,900 291,603 202,469 Netherlands (Amsterdam) Cable................ 562,000 553,400 521,000 94.1% 25.0% 140,500 138,350 130,250 Belgium Cable................ 134,000 133,000 126,784 95.3% 50.0% 67,000 66,500 63,392 Netherlands (Eindhoven) Cable................ 90,000 88,609 84,179 95.0% 50.0% 45,000 44,305 42,090 Israel Cable................ 333,300 330,944 227,378 68.7% 11.7% 38,996 38,720 26,603 Ireland Cable................ 99,457 78,223 50,834 65.0% 10.0% 9,946 7,822 5,083 MMDS................. 352,620 259,403 62,724 24.2% 35,262 25,940 6,272 Czech Republic Cable/MMDS........... 330,000 108,249 28,323 26.2% 50.0% 165,000 54,125 14,162 MATV................. -- 9,550 9,550 100.0% -- 4,775 4,775 Slovakia Cable................ 100,000 9,405 6,370 67.7% 37.5% 37,500 3,527 2,389 Malta Cable................ 179,000 142,638 47,053 33.0% 21.3% 38,127 30,382 10,022 Hungary (Kabelkom) Cable................ 265,000 264,808 232,556 87.8% 23.5% 62,275 62,230 54,651 Norway Cable................ 233,900 220,439 154,847 70.2% 50.0% 116,950 110,220 77,424 Germany Cable................ 300,000 66,000 53,491 81.0% 14.5% 43,500 9,570 7,756 Spain Cable................ 57,800 41,483 2,288 5.5% 12.5% 7,225 5,185 286 Portugal Cable................ 772,000 2,135 -- -- 50.0% 386,000 1,068 -- Romania Cable................ 105,000 48,435 29,086 60.1% 25.5-45.0% 32,625 16,489 8,859 France Citecable............ 250,000 12.7% 15.0% 10,461 1,330 69,740 8,868 37,500 Mediareseau.......... -- 469 -- -- 47.5% -- 223 -- --------- --------- --------- --------- ------- ------- Total........ 5,048,077 3,040,830 2,071,582 1,683,306 921,495 657,813 --------- --------- --------- --------- ------- -------
As of June 30, 1996 -------------------------------------------------------------------------- UIHI UIHI Equity in Equity in Homes Basic Basic UIHI Homes Basic Passed Subscribers Penetration Ownership Passed Subscribers ------ ----------- ----------- --------- ------ ----------- Europe - ------ UPC Systems: Austria Cable................. 612,400 423,300 69.1% 47.5% 290,890 201,068 Netherlands (Amsterdam) Cable................ 516,125 487,221 94.4% 25.0% 129,031 121,805 Belgium Cable................ 133,000 127,109 95.6% 50.0% 66,500 63,555 Netherlands (Eindhoven) Cable................ 88,440 84,018 95.0% 50.0% 44,220 42,009 Israel Cable................ 327,575 224,675 68.6% 11.7% 38,326 26,287 Ireland Cable................ 77,706 49,571 63.8% 10.0% 7,771 4,957 MMDS................. 257,000 60,752 23.6% 25,700 6,075 Czech Republic Cable/MMDS........... 99,579 30,197 30.3% 50.0% 49,790 15,099 MATV................. 9,610 9,610 100.0% 4,805 4,805 Slovakia Cable................ 7,865 6,166 78.4% 37.5% 2,949 2,312 Malta Cable................ 139,070 42,556 30.6% 21.3% 29,622 9,064 Hungary (Kabelkom) Cable................ 235,646 216,209 91.8% 2.0% 4,713 4,324 Norway Cable................ 219,091 154,093 70.3% 4.2% 9,202 6,472 Germany Cable................ 150,000 53,491 35.7% 14.5% 21,750 7,756 Spain Cable................ 17,186 1,790 10.4% 12.5% 2,148 224 Portugal Cable................ -- -- -- 50.0% -- -- Romania Cable................ 47,562 28,240 59.4% 25.5-45.0% 16,224 8,602 France Citecable............ 69,740 6,868 9.8% 15.0% 10,461 1,030 Mediareseau.......... -- -- -- -- -- --------- --------- ------- ------- Total........ 3,007,595 2,005,866 754,102 525,444 --------- --------- ------- -------
19
As of September 30, 1996 -------------------------------------------------------------------------------------------------------- UIHI UIHI UIHI Homes in Equity in Equity in Equity in Service Homes Basic Basic UIHI Homes in Homes Basic Area Passed Subscribers Penetration Ownership Service Area Passed Subscribers ---- ------ ----------- ----------- --------- ------------ -------- ----------- UIHI Systems: Hungary (Monor)(2) Telephony............ 75,000 75,000 49,723 66.3% 43.3% 32,475 32,475 21,530 Cable................ -- 34,324 10,368 30.2% -- 14,862 4,489 UIH Latin America, Inc. - ----------------------- Chile(3) Cable................ 1,630,000 1,444,145 309,943 21.5% 34.0% 554,200 491,009 105,381 Mexico Cable................ 331,149 166,745 53,447 32.1% 49.0% 162,263 81,705 26,189 Fortaleza, Brazil MMDS................. 430,000 387,000 11,230 2.9% 40.0% 172,000 154,800 4,492 Jundiai, Brazil Cable................ 50,000 35,905 8,843 24.6% 46.3% 23,150 16,624 4,094 Peru (Cablestar) Cable................ 115,000 10,000 2,619 26.2% 94.0% 108,100 9,400 2,462 Peru (Tacna) Cable............... 30,000 875 300 34.3% 100.0% 30,000 875 300 Argentina (Bahia Blanca)(4) Cable.............. 125,000 116,000 61,000 52.6% 100.0% 125,000 116,000 61,000 --------- --------- ------- --------- ------- ------- Total........... 2,711,149 2,160,670 447,382 1,174,713 870,413 203,918 --------- --------- ------- --------- ------- ------- UIH Asia/Pacific, Communications, Inc. - ------------------------- Australia (Austar) MMDS/DTH............. 1,537,000 1,371,115 60,276 4.4% 97.4% 1,497,038 1,335,466 58,709 Australia (XYZ) Programming.......... N/A N/A 258,210 N/A 24.4% N/A N/A 63,003 New Zealand Cable................ 141,000 10,468 1,235 11.8% 97.4% 137,334 10,196 1,203 Philippines(5) Cable................ 433,000 88,467 32,542 36.8% 40.0% 173,200 35,387 13,017 Tahiti MMDS................. 31,000 18,633 4,678 25.1% 87.7% 27,187 16,341 4,103 China (HITV)(6) Microwave Relay Nwt.. N/A N/A N/A N/A 49.0% N/A N/A N/A --------- --------- --------- --------- --------- --------- Total........... 2,142,000 1,488,683 356,941 1,834,759 1,397,390 140,035 --------- --------- --------- --------- --------- --------- Grand Total..... 9,976,226 6,799,507 2,935,996 4,725,253 3,236,635 1,027,785 ========= ========= ========= ========= ========= ========= As of June 30, 1996 ------------------------------------------------------------------------- UIHI UIHI Equity in Equity in Homes Basic Basic UIHI Homes Basic Passed Subscribers Penetration Ownership Passed Subscribers ------ ----------- ----------- --------- ------ ----------- UIHI Systems: Hungary (Monor)(2) Telephony............ 75,000 49,723 66.3% 43.3% 32,475 21,530 Cable................ 34,324 10,368 30.2% 14,862 4,489 UIH Latin America, Inc. Chile(3) Cable................ 330,515 101,473 30.7% 100.0% 330,515 101,473 Mexico Cable................ 165,113 53,334 32.3% 49.0% 80,905 26,134 Fortaleza, Brazil MMDS................. 387,000 10,040 2.6% 40.0% 154,800 4,016 Jundiai, Brazil Cable................ 33,199 7,124 21.5% 46.3% 15,371 3,298 Peru (Cablestar) Cable................ 10,000 2,619 26.2% 94.0% 9,400 2,462 Peru (Tacna) Cable............... -- -- -- -- -- -- Argentina (Bahia Blanca)(4) Cable.............. -- -- -- -- -- -- ------- ------- ------- ------- Total........... 925,827 174,590 590,991 137,383 ------- ------- ------- ------- UIH Asia/Pacific, Inc. - ---------------------- Australia (Austar) MMDS/DTH............. 1,171,000 34,808 3.0% 94.0% 1,100,740 32,720 Australia (XYZ) Programming.......... N/A 207,666 N/A 25.0% N/A 51,917 New Zealand Cable................ 6,000 1,125 18.8% 100.0% 6,000 1,125 Philippines(5) Cable................ 81,259 29,642 36.5% 40.0% 32,504 11,857 Tahiti MMDS................. 17,458 4,361 25.0% 90.0% 15,712 3,925 China (HITV)(6) Microwave Relay Nwt.. N/A N/A N/A 49.0% N/A N/A --------- --------- --------- ------- Total........... 1,275,717 277,602 1,154,956 101,544 --------- --------- --------- ------- Grand Total..... 5,318,463 2,518,149 2,547,386 790,390 ========= ========= ========= =======
(1) During October 1996, UPC sold its interest in the Sweden operating company. (2) The Company owns a 48.4% interest in Monor Communications Group, Inc. which holds a 89.47% interest in the operating company, Monor Telefon. (3) The Company holds a 34% interest in VTR Hipercable S.A. Prior to September 1996, the Company held a 100% interest in Cablevision (Cablevision holds a 100% interest in Cablevision Norte S.A. and a 100% interest in Pacifico TV) and a 100% interest in STX which were contributed to VTR Hipercable S.A.. (4) The Company holds an 80% interest in one operating system and 100% interest in two other operating systems in the Bahia Blanca, Argentina area. The Company is obligated, under certain conditions to acquire the remaining 20% interest in 1998. (5) The Company currently has a convertible loan with SCS, which upon conversion will allow for a 40% ownership interest. (6) The Company has a 49% interest in HITV, a joint venture that owns a microwave relay system in the Hunan Province that transmits one provincial channel to approximately 400,000 cable television homes in the region. 20 The financial information presented below has been taken from unaudited financial information of the respective operating companies that were providing service as of September 30, 1995 and 1996. Some of the information presented below has been derived from financial statements prepared in accordance with foreign generally accepted accounting principles which differ from United States generally accepted accounting principles. In addition, certain amounts for the nine months ended September 30, 1995 and 1996 have been converted to dollars using September 30, 1996 exchange rates for the convenience translation.
Revenues ------------------------------------- Convenience Translation ------------------------------------- Nine Months Ended Nine Months Ended September 30,1995 September 30, 1996 ----------------- ------------------ Europe (in thousands) Belgium(1)........................... $ -- $ 13,462 Eindhoven(1)......................... -- 7,912 Austria(1)........................... -- 68,716 Amsterdam............................ 32,982 36,723 Israel............................... 55,661 68,723 Ireland.............................. 20,224 22,349 Malta................................ 4,634 6,694 Norway............................... 25,845 25,175 Hungary (Kabelkom, cable)............ 14,234 16,234 Hungary (Monor, telephony/cable)..... 3,530 8,529 Czech Republic(1).................... -- 2,239 Spain................................ 33 -- France............................... -- -- Romania.............................. -- 565 Slovakia............................. -- 157 -------- -------- Total 157,143 277,478 -------- -------- UIH Latin America, Inc. Chile(3)............................ 3,522 -- Jundiai, Brazil...................... 507 2,208 Fortaleza, Brazil.................... 1,493 3,938 Mexico............................... -- 6,314 Peru (Cablestar)..................... -- 573 -------- -------- Total 5,522 13,033 -------- -------- UIH Asia/Pacific Communications, Inc. Australia (United Wireless)(4)....... -- 42 Australia (Austar)................... 110 10,605 New Zealand.......................... 141 151 Tahiti............................... 1,097 2,632 Philippines.......................... -- 2,744 Australia (XYZ)...................... 447 6,260 -------- -------- Total............................. 1,795 22,434 -------- -------- Grand Total....................... $164,460 $312,945 ======== ========
21
Net Income (Loss) ---------------------------------------- Convenience Translation ---------------------------------------- Nine Months Ended Nine Months Ended September 30, 1995 September 30, 1996 ------------------ ------------------ Europe (in thousands) Belgium(1)......................... $ -- $ (281) Eindhoven(1)....................... -- (846) Austria(1)......................... -- (1,341) Amsterdam(10)...................... -- (10,092) Israel............................. 6,510 10,209 Ireland............................ (8,578) (4,270) Malta.............................. (2,355) (2,275) Norway............................. (1,788) (10,922) Hungary (Kabelkom, cable).......... 1,452 2,692 Hungary (Monor, telephony/cable)... (8,180) (3,032) Czech Republic(1).................. -- (6,973) Spain.............................. (1,639) -- France............................. -- (1,419) Romania............................ -- 187 Slovakia........................... -- (174) -------- -------- Total (14,578) (28,537) -------- -------- UIH Latin America, Inc. Chile(3).......................... 87 -- Jundiai, Brazil.................... (880) (672) Fortaleza, Brazil.................. (2,476) (1,764) Mexico............................. -- 2,026 Peru (Cablestar)................... -- (453) -------- ------- Total (3,269) (863) -------- ------- UIH Asia/Pacific Communications, Inc. Australia (United Wireless)(4)..... -- (1,921) Australia (Austar)................. (3,151) (28,807) New Zealand........................ (2,289) (3,667) Tahiti............................. (2,959) (2,749) Philippines........................ -- (516) Australia (XYZ).................... -- (14,141) -------- -------- Total........................... (8,399) (51,801) -------- -------- Grand Total..................... $(26,246) $(81,201) ======== ========
22
Adjusted EBITDA (9) ---------------------------------------- Convenience Translation ---------------------------------------- Nine Months Ended Nine Months Ended September 30, 1995 September 30, 1996 ------------------ ------------------ Europe (in thousands) Belgium(1)......................... $ -- $ 6,709 Eindhoven(1)....................... -- 4,953 Austria(1)......................... -- 35,950 Amsterdam.......................... 15,848 17,234 Israel............................. 28,136 38,256 Ireland............................ 5,290 8,351 Malta.............................. 1,069 1,780 Norway............................. 11,398 10,361 Hungary (Kabelkom, cable).......... 6,274 6,959 Hungary (Monor, telephony/cable)... (940) 4,236 Czech Republic(1).................. -- (3,817) Spain.............................. (1,511) -- France............................. -- (1,323) Romania............................ -- 390 Slovakia........................... -- (145) -------- ------- Total 65,564 129,894 -------- ------- UIH Latin America, Inc. Chile(3).......................... 942 -- Jundiai, Brazil.................... (777) 60 Fortaleza, Brazil.................. (1,844) (682) Mexico............................. -- 2,166 Peru (Cablestar)................... -- (221) -------- ------- Total (1,679) 1,323 -------- ------- UIH Asia/Pacific Communications, Inc. Australia (United Wireless)(4)..... -- (1,375) Australia (Austar)................. (3,988) (16,025) New Zealand........................ (1,782) (2,923) Tahiti............................. (2,199) (654) Philippines........................ -- 729 Australia (XYZ).................... (23,116) (10,434) -------- ------- Total........................... (31,085) (30,682) -------- ------- Grand Total..................... $ 32,800 $100,535 ======== =======
23
Long-term Debt ------------------------ Convenience Translation ----------------------- As of September 30, 1996 ----------------------- Europe (in thousands) Belgium(1)........................... $114,953 Eindhoven(1)......................... 12,930 Austria(1)........................... 123,891 Amsterdam............................ 198,854 Israel............................... 12,550 Ireland.............................. -- Malta................................ 12,152 Norway(2)............................ 148,541 Hungary (Kabelkom, cable)............ -- Hungary (Monor, telephony/cable)..... -- Czech Republic(1).................... -- Spain................................ -- France............................... -- Romania.............................. -- Slovakia............................. -- -------- Total 623,871 -------- UIH Latin America, Inc. Chile(3)............................ -- Jundiai, Brazil...................... 131 Fortaleza, Brazil.................... 747 Mexico............................... 457 Peru (Cablestar)..................... -- -------- Total 1,335 -------- UIH Asia/Pacific Communications, Inc. Australia (United Wireless)(4)....... -- Australia (Austar)................... 1,508 New Zealand (5)...................... -- Tahiti (6)........................... -- Philippines (7)...................... -- Australia (XYZ) (8).................. -- -------- Total............................. 1,508 -------- Grand Total....................... $626,714 ========
(1) These systems were contributed to UPC in July 1995 at which time a new basis of accounting was adopted. Thus, there is no comparable prior year information. In addition to the debt noted above, Austria and Belgium have intercompany loans, which eliminate upon consolidation, of S1.3 billion ($123.9 million) and BF 3.6 billion ($115.0 million) and UPC has a subordinated convertible loan payable to Philips totaling NLG 213.8 million ($133.0 million). (2) Included in the long-term debt noted above, Norkabel has Nkr 447.3 million ($68.8 million), of loans payable to UCI (including accrued interest). (3) The Company contributed its Chilean assets (Cablevision and STX) to the VTR Hipercable joint venture in September, 1996. Therefore, comparable information to the prior year is not available. (4) The Company acquired its ownership in United Wireless in September 1995 and, as such, the amounts shown are using the new basis of accounting with no comparable history. United Wireless has A$ 4.2 million ($3.3 million) of loans payable to related parties at September 30, 1996. (5) Saturn has loans payable to the owners totaling N$22.1 million ($15.5 million) at September 30,1996. (6) Telefenua has loans payable to the Company of $11.8 million at September 30, 1996. (7) The Philippine system has a convertible loan payable to the Company of P 219.3 million ($8.4 million) as of September 30, 1996. (8) XYZ shows all capital contributions by shareholders as loans which totaled $41.0 million as of September 30, 1996. (9) Adjusted EBITDA represents net income (loss) as determined using generally accepted accounting principles which differ from those used in the United States for Israel, Ireland, Sweden, Chile, New Zealand, Spain, Mexico, Philippines, Belgium, France, Germany, Austria, the Netherlands, Slovakia and Romania plus net interest expense, income tax expense, depreciation, amortization, minority interest, management fee expense, currency exchange gains (losses) and other non-operating income (expense) items. Industry analysts generally consider Adjusted EBITDA to be an appropriate measure of the performance of multi-channel television operations. Adjusted EBITDA should not be considered as an alternative to net income or to cash flows or to any other generally accepted accounting principles measure of performance or liquidity as an indicator of an entitys operating performance. (10) Information not available. 24 ITEM 1 - LEGAL PROCEEDINGS On November 6, 1996, Austar filed a complaint in the Supreme Court of New South Wales, Commercial Division, seeking injunctive relief to prevent (i) Australis from transferring its satellite delivery systems and associated infrastructure to its joint venture with Optus Vision and (ii) Optus Vision from using such infrastructure to deliver DTH services in Austar's franchise area. Austar believes that the use of the infrastructure by any entity other than Austar for the provision of DTH services within Austar's franchise areas violates the terms of Austar's franchise agreement with Australis which granted Austar an exclusive license and franchise to use the infrastructure within its franchise areas. Austar is seeking injuctive relief or, in the alternative, damages associated with this violation of its franchise agreements. On December 6, 1996, Australis filed counterclaims against Austar and the Company alleging generally that Austar and the Company breached implied terms of the Australis Arrangement by seeking such injunctive relief. In addition, Optus Vision claims that the exclusive nature of Austar's franchise agreements violates Australia's Trade Practices Act. The Company intends vigorously to defend its position. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K filed during the quarter.
Date of Report Item Reported Financial Statements Filed -------------- ------------- -------------------------- September 6, 1996 Item 5 - Formation of Chilean joint venture - VTR Hipercable S.A. None September 24, 1996 Item 5 - Cautionary statement pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995 None November 1, 1996 Item 5 - Acquisition of Bahia Blanca system in Argentina None
25 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED INTERNATIONAL HOLDINGS, INC. Date: January 13, 1996 ------------------------------ By: /s/ J. Timothy Bryan -------------------------------- J. Timothy Bryan Chief Financial Officer (A Duly Authorized Officer and Principal Financial Officer) 26 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITED INTERNATIONAL HOLDINGS, INC.'S FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS FEB-28-1997 MAR-01-1996 NOV-30-1996 137,706 2,652 0 0 0 0 161,698 14,734 843,280 0 643,470 30,983 0 390 116,987 843,280 0 14,633 0 19,563 16,773 1,600 55,308 (59,244) 0 (59,244) 0 0 0 (59,244) (1.52) 0 The Company does not have a classified balance sheet. See the condensed consolidated balance sheet for more information. See the condensed consolidated balance sheet for the detail of total assets.
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