-----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, OKaqFxrdp+f8HUx0pMYMx+0P/pfNcCaECZfCV5qQ8RiWIn+F/4R2j+N30/dn/RU/ 9scY0S6YZ/w0RG9To1/aKQ== 0000950130-96-001966.txt : 19960525 0000950130-96-001966.hdr.sgml : 19960525 ACCESSION NUMBER: 0000950130-96-001966 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960524 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL CABLETEL INC CENTRAL INDEX KEY: 0000906347 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 521822078 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-22616 FILM NUMBER: 96572098 BUSINESS ADDRESS: STREET 1: 110 E 59TH ST STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 110 EAST 59TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 10-Q/A 1 FORM 10-Q/A FORM 10-Q/A-1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-22616 ------------------------------------------- INTERNATIONAL CABLETEL INCORPORATED ----------------------------------- (Exact name of registrant as specified in its charter) Delaware 52-1822078 --------------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 East 59th Street, New York, New York 10022 ---------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (212) 371-3714 ------------------------------------------------------------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of the issuer's common stock as of March 31, 1996 was 30,294,255. INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page - ------------------------------- ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets-- March 31, 1996 and December 31, 1995 2 Condensed Consolidated Statements of Operations-- Three months ended March 31, 1996 and 1995 4 Condensed Consolidated Statement of Shareholders' Equity-- Three months ended March 31, 1996 5 Condensed Consolidated Statements of Cash Flows-- Three months ended March 31, 1996 and 1995 6 Notes to Condensed Consolidated Financial Statements 7 SIGNATURES 11 - ---------- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1996 1995 --------------- --------------- (Unaudited) (See Note) ASSETS CURRENT ASSETS Cash and cash equivalents $ 661,945,000 $ 175,283,000 Accounts receivable-trade, less allowance for doubtful accounts of $1,143,000 (1996) and $767,000 (1995) 9,786,000 7,340,000 VAT receivable 10,268,000 17,464,000 Prepaid expenses and other 6,516,000 5,050,000 -------------- -------------- TOTAL CURRENT ASSETS 688,515,000 205,137,000 CASH HELD IN ESCROW 1,204,000 1,598,000 FIXED ASSETS, net 716,084,000 639,674,000 LICENSE ACQUISITION COSTS, net of accumulated amortization of $25,450,000 (1996) and $22,789,000 (1995) 134,917,000 137,578,000 DEFERRED FINANCING COSTS, net of accumulated amortization of $3,115,000 (1996) and $2,044,000 (1995) 42,002,000 18,510,000 OTHER ASSETS, net of accumulated amortization of $8,321,000 (1996) and $7,493,000 (1995) 9,971,000 8,172,000 -------------- -------------- $1,592,693,000 $1,010,669,000 ============== ==============
2 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS -- Continued
March 31, December 31, 1996 1995 --------------- -------------- (Unaudited) (See Note) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 27,063,000 $ 50,848,000 Accrued expenses and other 44,713,000 37,102,000 Accrued construction costs 23,669,000 14,543,000 Current portion of long-term debt 44,351,000 26,516,000 -------------- -------------- TOTAL CURRENT LIABILITIES 139,796,000 129,009,000 LONG-TERM DEBT 1,134,122,000 513,026,000 REGIONAL DEVELOPMENT GRANT, net 630,000 661,000 COMMITMENTS AND CONTINGENT LIABILITIES MINORITY INTERESTS 25,768,000 28,716,000 SHAREHOLDERS' EQUITY Series preferred stock - $.01 par value; authorized 2,500,000 shares; none outstanding -- -- Common stock - $.01 par value; authorized 50,000,000 shares; issued and outstanding 30,294,000 (1996) and 30,202,000 (1995) shares 303,000 302,000 Additional paid-in capital 464,126,000 462,223,000 Cumulative translation adjustment 213,000 6,273,000 (Deficit) (172,265,000) (129,541,000) -------------- -------------- 292,377,000 339,257,000 -------------- -------------- $1,592,693,000 $1,010,669,000 ============== ==============
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. 3 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, ----------------------------- 1996 1995 -------------- ------------- Revenues: Cable television revenues $ 8,051,000 $ 1,830,000 Telephone and telecommunications revenues 7,762,000 542,000 Toll revenues 1,309,000 951,000 Microwave transmission revenues from the Joint Venture 1,312,000 1,310,000 ------------ ------------ 18,434,000 4,633,000 Costs and expenses: Operating expenses 12,629,000 3,296,000 Selling, general and administrative expenses 21,798,000 10,514,000 Depreciation and amortization 12,190,000 5,532,000 ------------ ------------ 46,617,000 19,342,000 ------------ ------------ OPERATING LOSS (28,183,000) (14,709,000) Other income (expense): Interest and other income 7,763,000 3,714,000 Interest expense (24,711,000) (4,242,000) Foreign currency transaction gains (losses) (123,000) 196,000 ------------ ------------ LOSS BEFORE INCOME TAXES AND MINORITY INTERESTS (45,254,000) (15,041,000) Income tax benefit (provision) (42,000) 448,000 ------------ ------------ LOSS BEFORE MINORITY INTERESTS (45,296,000) (14,593,000) Minority interests 2,572,000 1,127,000 ------------ ------------ NET LOSS $(42,724,000) $(13,466,000) ============ ============ Net loss per common share $(1.41) $(.45) ============ ============ Weighted average number of common shares used in computation of net loss per share 30,211,000 30,181,000 ============ ============
See notes to condensed consolidated financial statements. 4 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
Common Stock $.01 Par Value Additional Cumulative --------------------- Paid-In Translation Shares Par Capital Adjustment (Deficit) ----------- -------- ------------ ------------ -------------- Balance, December 31, 1995 30,202,000 $302,000 $462,223,000 $ 6,273,000 $(129,541,000) Exercise of stock options 84,000 1,000 211,000 Exercise of warrants 8,000 51,000 Issuance of warrants in connection with consent solicitations 1,641,000 Net loss for the three months ended March 31, 1996 (42,724,000) Currency translation adjustment (6,060,000) ----------- -------- ------------ ----------- ------------- Balance, March 31, 1996 30,294,000 $303,000 $464,126,000 $ 213,000 $(172,265,000) =========== ======== ============ =========== =============
See notes to condensed consolidated financial statements. 5 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ---------------------------------- 1996 1995 ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,541,000 $ 5,434,000 INVESTING ACTIVITIES Purchase of fixed assets (112,210,000) (83,908,000) Proceeds from sale of fixed assets -- 16,000 Increase in other assets (231,000) (205,000) ------------- ------------ NET CASH (USED IN) INVESTING ACTIVITIES (112,441,000) (84,097,000) FINANCING ACTIVITIES Proceeds from borrowings, net of financing costs 577,484,000 -- Cash held in escrow 367,000 -- Capital contribution from minority partner -- 6,329,000 Proceeds from borrowings from minority partner 18,367,000 -- Proceeds from exercise of stock options and warrants 263,000 6,000 ------------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 596,481,000 6,335,000 EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,081,000 4,720,000 ------------- ------------ INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS 486,662,000 (67,608,000) Cash and cash equivalents at beginning of period 175,283,000 294,602,000 ------------- ------------ Cash and cash equivalents at end of period $ 661,945,000 $226,994,000 ============= ============ Supplemental disclosure of cash flow information Cash paid during the period for interest exclusive of amounts capitalized $ 307,000 $ 359,000 Income taxes paid -- 153,000 Supplemental schedule of noncash financing activities Warrants issued in connection with consent solicitations 1,641,000 --
See notes to condensed consolidated financial statements. 6 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A--BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. Net loss per share is computed based on the weighted average number of common shares outstanding during the periods. Common stock equivalents are excluded from the net loss per share computations because they are antidilutive. NOTE B--ACCOUNTING CHANGE In October 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 defines a fair value based method of accounting for stock-based employee compensation plans (including stock option plans). As permitted by SFAS No. 123, the Company expects to continue to measure compensation costs for its plans as prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees." NOTE C--FIXED ASSETS Fixed assets consists of:
March 31, December 31, 1996 1995 ------------ ------------ (Unaudited) Cable television, telephone and telecommunications equipment $453,580,000 $395,754,000 Microwave equipment 28,978,000 28,265,000 Other equipment 57,974,000 39,717,000 Construction-in-progress 225,736,000 218,044,000 ------------ ------------ 766,268,000 681,780,000 Allowance for depreciation (50,184,000) (42,106,000) ------------ ------------ $716,084,000 $639,674,000 ============ ============
7 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued NOTE D--LONG-TERM DEBT Long-term debt consists of:
March 31, December 31, 1996 1995 -------------- -------------- (Unaudited) 10-7/8% Senior Deferred Coupon Notes $ 161,941,000 $157,748,000 12-3/4% Series A Senior Deferred Coupon Notes 168,606,000 163,528,000 11-1/2% Series A Senior Deferred Coupon Notes 611,825,000 -- 7-1/4% Convertible Subordinated Notes 191,750,000 191,750,000 Subsidiary bank loan 1,549,000 1,576,000 Subsidiary notes payable 42,802,000 24,940,000 -------------- ------------ 1,178,473,000 539,542,000 Less current portion 44,351,000 26,516,000 -------------- ------------ $1,134,122,000 $513,026,000 ============== ============
In January 1996, the Company issued $1,050,000,000 aggregate principal amount of 11-1/2% Series A Senior Deferred Coupon Notes due 2006. The 11-1/2% Senior Deferred Coupon Notes were issued at a price to investors of 57.155% of the aggregate principal amount at maturity or $600,127,500. The Company received net proceeds of $582,000,000 after discounts and commissions from the issuance of the 11-1/2% Senior Deferred Coupon Notes. The original issue discount accretes at a rate of 11-1/2%, compounded semiannually, to an aggregate principal amount of $1,050,000,000 by February 1, 2001. Interest will thereafter accrue at 11-1/2% per annum, payable semiannually beginning on August 1, 2001. The 11-1/2% Senior Deferred Coupon Notes may be redeemed at the Company's option, in whole or in part, at any time on or after February 1, 2001 at 105.75% the first year, 102.875% the second year and 100% thereafter, plus accrued and unpaid interest to the date of redemption. The 11-1/2% Senior Deferred Coupon Notes are effectively subordinated to all existing and future indebtedness and other liabilities and commitments of the Company's subsidiaries. The indenture governing the 11-1/2% Senior Deferred Coupon Notes contains restrictions relating to, among other things: (i) incurrence of additional indebtedness and issuance of preferred stock; (ii) dividend and other payment restrictions; and (iii) mergers, consolidations and sales of assets. Pursuant to the terms of the consent solicitations to the holders of the 10-7/8% Senior Deferred Coupon Notes and to the holders of the 12-3/4% Series A Senior Deferred Coupon Notes to gain consent to modify certain indenture provisions, the Company paid an aggregate of $3,592,000 in consent payments and issued warrants to purchase 164,000 shares of common stock at an exercise price of $23.78 per share in lieu of additional consent payments of $1,641,000. The warrants expire in 2006. 8 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued NOTE E--SUBSEQUENT EVENT In May 1996, an indirect wholly-owned subsidiary of the Company (the "Purchaser") acquired NTL Group Limited ("NTL"), an English limited liability company, for payments of approximately (Pounds)200 million at closing, (Pounds)35 million, subject to adjustments, on the first anniversary of closing and (Pounds)17.1 million (which corresponds to the tax credit expected by NTL by October 1, 1996) in October 1996. NTL provides television and radio transmission services and a range of other services in the broadcasting and telecommunications industries. To finance the acquisition of NTL, the Purchaser entered into an agreement dated March 28, 1996 with a syndicate of lenders (the "Lenders") pursuant to which the Lenders made available to the Purchaser senior secured loan facilities (the "A Facilities") of a maximum principal amount of (Pounds)165 million comprised of (i) a short term loan facility of (Pounds)50 million (the "Short Term Facility"), (ii) a long term loan facility of (Pounds)90 million (the "Long Term Facility," and, together with the Short Term Facility, the "Term Loan Facilities") and (iii) a revolving credit facility of (Pounds)25 million (the "Revolving Facility"). One of the Lenders also agreed to make available to the Purchaser a secured loan facility of (Pounds)60 million (the "B Facility") to finance the remainder of the payment due at closing and acquisition costs and expenses due at closing. The Term Loan Facilities and the B Facility were used to finance the acquisition of NTL including related acquisition expenses. The Revolving Facility is available until December 31, 1997 for capital expenditure and working capital purposes of NTL's group. At the end of the availability period, any amount outstanding under the Revolving Facility will be converted to term debt and be aggregated with the Long Term Facility. The Short Term Facility is repayable in full on December 31, 1996 unless certain conditions are fulfilled on or prior to that date, in which case the amounts outstanding under the Short Term Facility will automatically be converted into, and shall be deemed to be, amounts outstanding under the Long Term Facility. The Company anticipates that such conditions will be met and that the amounts outstanding under the Short Term Facility will be so converted. All amounts outstanding under the Long Term Facility are scheduled to be repaid in quarterly installments from 1998 to 2002 inclusive. The amount of the installments will be based upon an agreed percentage of the loan and will increase year to year. Final repayment of the Long Term Facility is due on December 31, 2002. Loans under the A Facilities bear interest at an annual rate equal to LIBOR plus a margin that varies from 0.75% per annum to 1.75% per annum, based on certain financial ratios of the Purchaser and certain of its subsidiaries. The A Facilities are secured by guarantees from NTL and each of its subsidiaries and by first ranking fixed and floating charges over all the present and future assets of the Purchaser, NTL and its subsidiaries. The A Facilities do not, therefore, provide for the lenders to have recourse to assets of the Company other than to the assets of the Purchaser and its subsidiaries. The A Facilities contain various financial and other covenants, including covenants with respect to the Purchaser and certain of its subsidiaries relating to minimum total debt to operating cash flow (as defined in the "A Facilities"), 9 INTERNATIONAL CABLETEL INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued NOTE E--SUBSEQUENT EVENT-Continued fixed charge coverage, net worth and pro-forma debt service ratios. The A Facilities also include restrictions on dividends and distributions by the Purchaser to its shareholders. The B Facility is secured by cash of (pounds) 62,500,000 on deposit with the lender and guarantees from the Company, OCOM Corporation, OCOM Sub I Inc., OCOM Sub III Inc., CableTel (UK) Group, Inc. and CableTel (UK) Limited and by second ranking fixed and floating charges over all the present and future assets of the Purchaser, NTL and its subsidiaries, subject to certain subordination arrangements. The B Facility must be repaid in full by December 31, 1996. Loans under the B Facility bear interest at an annual rate equal to LIBOR plus a margin of 3%, which margin shall be increased by an additional 1.25% on each of the "Applicable Margin Step-Up Dates" falling three, four, five, six and seven months after the advance of any loans under the B Facility. The Purchaser may repay all, but not less than all, of the amount outstanding under the B Facility at any time without penalty. The B Facility contains covenants similar to those of the A Facilities. NOTE F--COMMITMENTS AND CONTINGENT LIABILITIES As of March 31, 1996, the Company was committed to pay approximately $26,900,000 for equipment and services. The Company has licenses issued by the United Kingdom Department of Trade and Industry ("DTI") and the United Kingdom Independent Television Commission ("ITC") for its cable television, telephone and telecommunications business and the Federal Communications Commission ("FCC") for its microwave transmission business. The initial terms of the Company's licenses was 23 years for the DTI licenses, 15 years for the ITC licenses and 10 years for the FCC licenses. The Company's licenses expire in 2008 to 2017 for the DTI licenses, 1999 to 2005 for the ITC licenses and 2001 for the FCC licenses. The DTI requires a fixed annual renewal fee of (Pounds)2,500 ($4,000) per license. The ITC requires an annual license fee ranging from (Pounds)1,300 ($2,000) to (Pounds)7,900 ($12,000) per license based on the number of homes in the licensed area, which is subject to adjustment annually. The FCC requires an annual license fee of $140 per license, which is subject to adjustment annually. The Company's license fees in 1996 were $ 19,000. In addition, the Company was awarded certain newly issued licenses by the ITC in 1995. Pursuant to the terms of the local delivery license ("LDL") for Northern Ireland granted to a wholly-owned subsidiary of the Company, the Company is required to make annual cash payments to the ITC for fifteen years, commencing the earlier of the first full calendar year after the start of operations or May 1997, in the amount of approximately (Pounds)14,400,000 ($21,900,000) (subject to adjustments for inflation). Such payments are in addition to the percentages of qualifying revenue already set by the ITC of 0% for the first ten years and 2% for the last five years of the fifteen year license. Pursuant to the terms of the LDL for Glamorgan and Gwent, Wales granted to one of the Company's joint ventures, the joint venture is required to make annual cash payments to the ITC for fifteen years, commencing in the first full calendar year after the start of operations, in the amount of (Pounds)104,188 ($159,000). Such payments are in addition to the percentages of qualifying revenue already set by the ITC of 0% for the first five years, 2% for the second five years and 4% for the last five years of the fifteen-year license. 10 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. INTERNATIONAL CABLETEL INCORPORATED Date: May 24, 1996 By: /s/ George S. Blumenthal ----------------------------- George S. Blumenthal Chairman and Chief Executive Officer 11 -----END PRIVACY-ENHANCED MESSAGE-----