-----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, QgrzuzVEltCrwVUKpfU2PChzTeUEMT0kl10QqaOn3gxYSX17JKh+x87txiMwXwdT pXFBNIE4piWhr7yUeg29hw== 0000950172-03-001562.txt : 20030514 0000950172-03-001562.hdr.sgml : 20030514 20030514081334 ACCESSION NUMBER: 0000950172-03-001562 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030514 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NTL INC CENTRAL INDEX KEY: 0000906347 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 521822078 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22616 FILM NUMBER: 03696872 BUSINESS ADDRESS: STREET 1: 110 E 59TH ST STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129068440 MAIL ADDRESS: STREET 1: 110 EAST 59TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: NTL COMMUNICATIONS CORP DATE OF NAME CHANGE: 19990401 FORMER COMPANY: FORMER CONFORMED NAME: NTL INC /DE/ DATE OF NAME CHANGE: 19970326 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL CABLETEL INC DATE OF NAME CHANGE: 19930601 8-K 1 s416493.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) May 14, 2003 (May 14, 2003) --------------- NTL INCORPORATED ------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-22616 52-1822078 - ------------------------------------------------------------------------------- (State or Other (Commission (IRS Employer Jurisdiction of File Number) Identification No.) Incorporation) 110 East 59th Street, New York, New York 10022 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including area code (212) 906-8440 -------------- ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. - ------- --------------------------------- Exhibits 99.1 Press Release, dated May 14, 2003 99.2 Presentation, dated May 14, 2003 ITEM 9. REGULATION FD DISCLOSURE. - ------- ------------------------- The following disclosure is being made under Item 12 of this Form 8-K: On May 14, 2003, NTL Incorporated issued a press release announcing results for the quarter ended March 31, 2003 and made a presentation regarding such results. The press release, dated May 14, 2003, is attached to this report as Exhibit 99.1 and is incorporated by reference in its entirety herein. The presentation is attached to this report as Exhibit 99.2 and is incorporated by reference in its entirety herein. 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 hereunto duly authorized. NTL INCORPORATED (Registrant) By: /s/ Scott Schubert --------------------------------- Name: Scott Schubert Title: Chief Financial Officer Dated: May 14, 2003 EXHIBIT INDEX ------------- Exhibit - ------- 99.1 Press Release, dated May 14, 2003 99.2 Presentation, dated May 14, 2003 EX-99 3 sq103press.txt EXHIBIT 99.1 Exhibit 99.1 [GRAPHIC LOGO OMITTED] NTL: New York, New York, May 14, 2003 (NASDAQ: NTLI) NTL Incorporated announces results for three months ended March 31, 2003 HIGHLIGHTS o Revenues of (pound)546.5 million and EBITDA of (pound)156.5 million, Capital Expenditures of (pound)82.5 million and Operating Cash Flow of (pound)74.0 million o UK Revenue Generating Units now exceed 5 million o NTL Home adds 141,400 RGUs and 27,100 net customers in the quarter o UK annualized churn down to 13.0% o Exceptional income of (pound)4.2 billion ($6.8b) related to emergence from Chapter 11
Financial Highlights * Quarterly Results (In (pound)millions) Q1-2003 Q1-2002 - ------------------------------------------------------------------------------- ----------------- ------------------ Continuing Operations Revenues Home (pound)362.1 (pound)362.0 Business 75.0 83.0 Broadcast 64.3 64.4 Carriers 27.6 33.0 Ireland 17.5 13.7 ------------- -------------- Total Revenues (pound)546.5 (pound)556.1 ============= ============== Total EBITDA (pound)156.5 (pound)154.2 ============= ============== EBITDA Margin % 28.6% 27.7% Capital Expenditures (pound) 82.5 (pound)103.5 Operating Cash Flow (pound) 74.0 (pound) 50.7 ============= ============== - ------------------------------------------------------------------------------- ------------- ---- -------------- -
* The components of EBITDA as defined by the Company are set forth in the results summarized under the heading "Financial Results for the three months ended March 31, 2003". Corporate expenses are now included in selling, general and administrative expenses and have therefore been deducted from EBITDA. This definition is consistent across the periods referred to in this release. Capital Expenditures is defined as the purchase of fixed assets as measured on an accrual basis. Operating Cash Flow is defined as EBITDA less Capital Expenditures. Q1 2002 EBITDA and Capital Expenditures are presented prior to the effect of changes in certain assumptions relating to allocation of costs between capital and operating expense that were made in Q4 2002. These changes would have reduced Q1 2002 EBITDA by approximately (pound)10.8 million ($15.4m) to (pound)143.4 million ($204.5m) and reduced EBITDA margin from 27.7% to 25.8% had they been applied in Q1 2002. These changes also would have reduced Q1 2002 Capital Expenditures by (pound)10.8 million ($15.4m) to (pound)92.7 million ($132.2m) had they been applied in Q1 2002. New York, New York (May 14, 2003) - NTL Incorporated (NASDAQ: NTLI) announced today its first quarter 2003 results. Commenting on the results, Barclay Knapp, President and Chief Executive Officer of NTL, said: "We are very pleased to get this fast start following the completion of our reorganization in January. Our financial performance of (pound)546.5 million ($875.9m) in Revenues, (pound)156.5 million ($250.8m) in EBITDA, and (pound)74.0 million ($118.6m) in Operating Cash Flow exceeded the metrics contained in our 8-K filing of January 10, 2003. In addition, Q1 2003 ending cash, cash equivalents and marketable securities were approximately (pound)303.2 million ($478.8m), approximately (pound)26 million ($41.1m) higher than anticipated in this 8-K filing. Our Home division is growing again and the customer service improvements we have been making since last year have dramatically reduced our churn rate to an annualized 13%. Broadband continues to be a leader with approximately 144,000 new customers, but our telephone products are showing good growth too with a better-than-expected 15,200 new additions. We're turning the curve on television with digital showing good growth, and our overall rate of decline slowing. Our Business division has completed its organizational restructuring and is now right-sized to deliver profitable growth in quarters to come. Broadcast can always be relied upon for steady performance, and this year we are continuing that trend with the addition of several impressive contract wins in a difficult environment. In the last year, our central teams in Networks, IT, HR, Finance, and other areas have done a remarkable job in cutting costs, improving service levels and redirecting essential services to the direct control of the business units. Thanks to them we have a much leaner and focused company today. I am also pleased to welcome Jim Mooney (Chairman), Simon Duffy (COO) and Scott Schubert (CFO) to the NTL team and together with our new board we are continuing to drive best practice throughout the organization. And thanks again to all of our associates, suppliers, customers and stakeholders for the support you've given NTL." Business Review During Q1 2003, our first post-restructuring quarter, NTL continued to show improvement in several key operating metrics. NTL has successfully returned to growth in its Home division with the addition in the quarter of 27,100 net new customers and 141,400 net new revenue generating units, or RGUs. Total RGUs passed the 5 million mark, ending at approximately 5,125,000 for the quarter. Churn declined to 13% annualized, the lowest figure in four years. The Company reported Revenues of (pound)546.5 million ($875.9m) and EBITDA of (pound)156.5 million ($250.8m) in Q1 2003. Adjusted for changes in accounting estimates, Q1 2002 figures would have been (pound)556.1 million ($792.9m) in Revenues and (pound)143.4 million ($204.5m) in EBITDA. The decline in revenue can be attributed mainly to the challenging conditions related to the Company's restructuring, while the improvement in EBITDA is a result of the Company's concerted efforts to cut costs. In Q1 2003, NTL met or exceeded the financial targets provided in its January 10, 2003 Form 8-K filing, and generated its fifth consecutive quarter of positive Operating Cash Flow (defined as EBITDA less Capital Expenditures). At March 31, 2003, NTL had cash, cash equivalents and marketable securities of approximately (pound)303.2 million ($478.8m). NTL adopted fresh-start reporting to reflect the Company's emergence from Chapter 11 as of January 1, 2003. As a result of the adoption of fresh-start reporting and the gain associated with the discharge of a portion of the Company's debt, NTL's predecessor company (NTL Communications Corp.) recognized approximately (pound)4.2 billion ($6.8b) of exceptional income in Q1 2003. In Q1 2003, NTL implemented a reorganization of certain of its business units. The associated changes included moving the Company's Wholesale Internet division from NTL Business to NTL Home, its Public Safety division from NTL Business to NTL Broadcast and creating NTL Carriers by merging its carriers division with its mobile division and removing both from NTL Business. These changes better align the expertise in the divisions with the needs of NTL's customers. In addition, the allocation of certain costs from NTL Networks and Shared Services to the various business divisions and the allocation of costs between NTL Home and NTL Business have changed. Finally, Corporate Expenses are now included in Central Support. The commentary throughout this release reflects the new divisional structure and prior financial periods have been restated accordingly. NTL Home NTL Home successfully returned to growth in the first quarter of 2003. RGUs increased by approximately 141,400, led by 143,800 broadband additions and 15,200 new telephone additions. Although TV services in total declined by 17,600 in the quarter, digital services increased, and the overall rate of loss of TV services slowed to its lowest level in over a year. Overall, the division recorded 27,100 net new customer connections for the quarter, reversing five consecutive quarters of decline. Triple play customers (taking telephone, TV and Internet services) now represent approximately 17% of our customer base, up from approximately 5% in Q1 2002. In Q1 2003, NTL Home reported Revenues of (pound)362.1 million ($580.3m), which is materially unchanged from Q1 2002, and EBITDA of (pound)152.7 million ($244.7m), which represents a 7% increase in EBITDA compared to Q1 2002. Revenue in Q1 2003 was effectively flat versus Q1 2002 in part due to the decline in the on-net customer base that the Company witnessed throughout 2002. However, this has been offset by the addition of approximately 478,000 broadband RGUs as well as growth in the Company's wholesale Internet services business. Taking into account the changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 2002 (which would have reduced Q1 2002 EBITDA by approximately (pound)4.0 million ($5.7m) had these changes occurred in Q1 2002), Q1 2003 EBITDA increased by approximately 11% over Q1 2002. ARPU (Average Revenue Per Unit) increased 4% to approximately (pound)40.65 in Q1 2003. As highlighted in the Company's Q4 2002 results, ARPU now reflects the inclusion of all of the Company's on-net customers, including Master Antenna Television (MATV) customers and the former customers of BT cable. ARPU growth continues to be driven by the increased number of broadband customers, approximately 68% of whom subscribe to three services provided by NTL. Annualized churn declined from approximately 17.9% in Q1 2002 to approximately 13.0% in Q1 2003, which reflects improvements made in customer services and the intrinsic value of NTL Home's bundled proposition. NTL continued to increase the number of gross customer additions in the quarter, with approximately 116,100 gross customer additions in Q1 2003 compared to 54,000 gross customer additions in Q1 2002. Customer disconnects in Q1 2003 were at their lowest level since Q4 2000, at approximately 89,000. Total RGUs grew to approximately 5.1 million in Q1 2003, a gain of approximately 141,400 in the quarter and a gain of approximately 232,000 over Q1 2002. NTL ended Q1 2003 with approximately 661,000 broadband customers. On April 30, NTL and Telewest announced that over one million homes across the UK are enjoying the benefits of Internet access via cable (of which approximately 691,000 are NTL customers). On May 1, the speed of NTL's 128K broadband product was increased to 150K and its price raised to (pound)17.99 per month (just (pound)2 more than most 56K dial-up services in the United Kingdom). Broadband growth was unusually high in the first quarter due to special circumstances such as carry-over sales from the holiday period and better than expected conversions from our dial-up customer base. Therefore, although broadband growth should remain strong for the remainder of the year, the absolute number of quarterly additions going forward is likely to be lower than the rate experienced in the first quarter. Telephony customers increased by approximately 15,200 customers in the first quarter compared to a loss of approximately 65,000 customers in Q1 2002. NTL's digital television base increased by approximately 20,000 customers over Q1 2002 from approximately 1,235,000 to approximately 1,255,000 subscribers. Approximately 62% of NTL's cable television customer base is now subscribing to digital television as compared to approximately 57% in Q1 2002. Customer service improvements continue in NTL Home, contributing to a 6% decline in the average number of calls per customer made to call centers compared to Q1 2002, and the corresponding improvements in the number of calls answered (95%) and the average speed of answer (72 seconds). Provided below are some key customer statistics for NTL Home: NTL Home - Summary Customer Statistics:
Q1-2003 Q4-2002 Q3-2002 Q2-2002 Q1-2002 Total Customers* 2,713,500 2,686,400 2,667,000 2,696,200 2,766,600 Customer additions 116,100 105,800 84,000 49,000 54,000 Customer disconnects 89,000 108,100 113,000 119,000 127,000 Net customer movement 27,100 (2,300) (29,000) (70,000) (73,000) Churn (annualized) 13.0% 15.9% 16.4% 17.1% 17.9% Revenue Generating Units** 5,125,300 4,983,900 4,870,900 4,837,600 4,893,300 Television 2,037,700 2,055,300 2,065,300 2,109,100 2,186,000 Telephone 2,426,700 2,411,500 2,425,000 2,452,900 2,524,000 Broadband 660,900 517,100 380,600 275,600 183,300 Service Units 5,561,600 5,454,100 5,528,500 5,535,900 5,612,800 Internet dial-up and DTV access 436,300 470,200 486,600 496,800 337,700 Internet dial-up free use*** 0 0 171,000 201,500 381,800 Average Revenue Per User **** (pound)40.65 (pound)40.03 (pound)38.89 (pound)39.60 (pound)39.13
* Total customers in Q4 2002 include 21,700 MATV customers. Excluding the addition of the MATV subscribers, the customer number was 2.66 million. ** The recent National Cable & Telecommunications Association (NCTA) reporting guidelines for the US Cable industry do not recognize dial-up internet customers as RGUs, although they are now revenue generating for NTL. *** Service to these free use customers was discontinued in October 2002. **** ARPU includes the former customers of BT Cable and MATV subscribers. NTL Business In Q1 2003, NTL Business reported Revenues of (pound)75.0 million ($120.2m) and EBITDA of (pound)21.1 million ($33.8m), which represent a decline of approximately 10% and an increase of approximately 6%, respectively, compared to Q1 2002. Taking into account the changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 2002 (which would have reduced Q1 2002 EBITDA by approximately (pound)1.7 million ($2.4m) had they occurred in Q1 2002), Q1 2003 EBITDA has increased by approximately 16% over Q1 2002. The recapitalization process and the general climate for competitive telecoms service providers has had a larger impact on the financial performance of NTL Business than on any other operating division of NTL. In the first quarter 2003, NTL Business narrowed its focus in order to concentrate on providing services to the Retail and Enterprise sectors. The division's main strategy is to sell a core, simplified set of profitable products to those business customers that are on the network and that are economically connectable. NTL Broadcast In Q1 2003, NTL Broadcast reported Revenues of (pound)64.3 million ($103.1m), materially unchanged from Q1 2002, and EBITDA of (pound)28.6 million ($45.8m), which represents a slight increase in EBITDA compared to Q1 2002. The Media Services group's latest contracts include a digital radio network contract for the MXR group, worth almost (pound)8 million ($12.8m) over 12 years, and a (pound)10 million ($16.0m) contract renewal for transmission of the broadcast text service Teletext. In the Wireless group, average sharers per tower rose year-on-year from approximately 2.71 to approximately 2.97. NTL's Public Safety group has been selected by the Metropolitan Police Authority to supply, install and maintain an Integrated Communications Platform. This will serve 31 police control rooms across Greater London for the Metropolitan Police Service and the City of London Police. The seven-year contract will be worth approximately (pound)25 million ($37.6m). The formal contract for this arrangement is being finalized. NTL Carriers In Q1 2003, we inaugurated the new NTL Carriers division. NTL Carriers is responsible for transporting telecommunications traffic of other telecommunications service providers over its 13,500 km national network in the UK, 10,800 km of which is owned by NTL and 2,700 km is leased. The network connects 100 telephone switches and 400 hub sites, points of presence and other network sites. NTL Carriers reported Revenues of (pound)27.6 million ($44.2m) and EBITDA of (pound)22.2 million ($35.6m) in Q1 2003, which represent a decline of approximately 16% and a decline of approximately 18%, respectively, compared to Q1 2002. The decline in NTL Carriers' EBITDA was principally the result of the Q1 2002 benefit associated with the release of approximately (pound)7.1 million ($10.1m) of deferred revenue related to the financial distress of one of the division's customers. NTL Ireland NTL Ireland reported Revenues of (pound)17.5 million ($28.1m) and EBITDA of (pound)4.9 million ($7.8m) in Q1 2003, which represent an increase of approximately 28% and an increase of approximately 88%, respectively, compared to Q1 2002. Residential revenues benefited from the growth in Digital TV customers and a price increase that became effective in January 2003, while business sector revenues rose by approximately 50% to (pound)2.8 million ($4.5m). Growth in revenues, together with improved operating cost efficiencies, contributed to the growth in EBITDA. NTL Ireland ended the quarter with approximately 366,500 customers. Digital TV customers grew by approximately 7,000 to 44,800. As noted in prior results, NTL Ireland has now introduced a more rigorous credit policy that will lead to the involuntary disconnection of certain customers. As a result of this, NTL Ireland anticipates that its residential customer base will continue to decline by approximately 25,000 customers during the remainder of 2003. ARPU increased 24% year-on-year to (pound)13.38 in the first quarter of 2003. Cable TV churn was reduced to 8.1% in Q1 2003, down slightly from 8.3% in the previous quarter. NTL Ireland has completed technical trials, two months ahead of schedule, for the planned launch of its Multi-channel Multi-point Distribution System (MMDS) Digital product. Commercial introduction has commenced during April 2003. Shared Services In prior periods, corporate expenses were excluded from the definition of EBITDA. Shared Service expenses have been restated for 2002 to include corporate expenses of (pound)12.4 million ($18.7m). Shared Services reported negative EBITDA of (pound)73.0 million ($117.0m) in Q1 2003, which represents an increase of approximately 11% compared to Q1 2002. Taking into account the changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 2002 (which would have increased Q1 2002 negative EBITDA by approximately (pound)5.1 million ($7.3m) had they occurred in Q1 2002), Q1 2003 negative EBITDA has increased by approximately 3.1% over Q1 2002. Capital Expenditures Capital Expenditures were (pound)82.5 million ($132.2m) in Q1 2003. Taking into account the changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 2002 (which would have resulted in a reduction of Q1 2002 Capital Expenditures of approximately (pound)10.8 million ($15.4m) had they occurred in Q1 2002), Q1 2003 Capital Expenditures have declined by approximately 23% over Q1 2002. Capital Expenditures continue to be primarily related to customer premises equipment (CPE) and scaleable infrastructure. Support capital includes (pound)6.3 million ($10.1m) relating to billing systems integration. In order to provide comparable data to the US Cable industry, and in accordance with NCTA (National Cable & Telecommunications Association) reporting guidelines, NTL has allocated capital expenditures to the standard reporting categories as follows:* (figures in millions)
As of March 31, 2003 -------------------------------------- UK Capital Expenditures NCTA Capital Expenditures CPE (pound) 37.1 $ 59.5 Scaleable Infrastructure 12.2 19.5 Commercial 3.8 6.1 Line Extensions 0.0 0.0 Upgrade/Rebuild 2.7 4.3 Support Capital 16.2 26.0 ------------ -------------- Total NCTA Capital Expenditures 72.0 115.4 Non NCTA Capital Expenditures Broadcast 3.2 5.1 Other 4.0 6.4 ------------ -------------- Total UK Capital Expenditures 79.2 126.9 Ireland 3.3 5.3 ------------ -------------- Total Capital Expenditures (pound)82.5 $132.2 ============ ==============
* NTL is not a member of the NCTA and is providing this information solely for comparative purposes. Exceptional Income and Charges Related to the Emergence from Chapter 11 In Q1 2003, NTL's predecessor company (NTL Communications Corp.) recorded (pound)4.2 billion ($6.8b) of exceptional income related to the emergence from Chapter 11. The Effective Date of the emergence from Chapter 11 was January 10, 2003. The write-up and write-down of assets to their fair values upon the adoption of fresh-start reporting is in accordance with SOP 90-7 and has been applied as of January 1, 2003. These items are detailed below. Income / (charges) in millions for the Quarter ended March 31, 2003 Gain on debt discharge $8,452 Fresh-start adoption - intangible assets 1,522 Fresh-start adoption - long term debt 221 Fresh-start adoption - fixed assets (3,195) Fresh-start adoption - accrued expenses (120) Fresh-start adoption - deferred tax liability (69) Recapitalization expense (8) --------------- TOTAL $6,803 =============== Subsequent Events Brett Wyard joined the NTL Board of Directors effective May 7, 2003. Mr. Wyard is a Managing Director at Oaktree Capital Management, LLC. With Mr. Wyard's election, Edwin M. Banks also joined the NTL Board of Directors. Mr. Banks is a senior portfolio manager at W.R. Huff Asset Management. Financial Review* Revenue Summary (in (pound) millions)
- ---------------------------------------------------------------------------------------------------------------------- Q1-2003 Q4-2002 Q3-2002 Q2-2002 Q1-2002 - ---------------------------------------------------------------------------------------------------------------------- HOME On-Net (pound)328.9 (pound)322.4 (pound)314.6 (pound)325.8 (pound)332.0 Wholesale & Off-Net 33.2 33.4 35.8 32.8 30.0 -------------- -------------- -------------- --------------- -------------- Total 362.1 355.8 350.4 358.6 362.0 BUSINESS 75.0 74.9 76.7 78.1 83.0 BROADCAST Media 39.7 39.5 40.4 43.3 41.2 Wireless 11.0 11.2 11.1 10.3 10.4 Public Safety 13.6 12.5 11.9 12.7 12.8 -------------- -------------- -------------- --------------- -------------- Total 64.3 63.2 63.4 66.3 64.4 CARRIERS 27.6 26.8 28.5 31.3 33.0 IRELAND 17.5 15.4 15.7 14.7 13.7 -------------- -------------- -------------- --------------- -------------- Revenues (pound)546.5 (pound)536.1 (pound)534.7 (pound)549.0 (pound)556.1 Accounting Adjustments - (2.7) - - - -------------- -------------- -------------- --------------- -------------- TOTAL REVENUES (pound)546.5 (pound)533.4 (pound)534.7 (pound)549.0 (pound)556.1 - ----------------------------------------------------------------------------------------------------------------------
* In Q1 2003, NTL implemented a reorganization of certain of its business units. The associated changes included moving the Company's Wholesale Internet division from NTL Business to NTL Home, its Public Safety division from NTL Business to NTL Broadcast and creating NTL Carriers by merging its carriers division with its mobile division and removing both from NTL Business. In addition, the allocation of certain costs from Shared Services to the various business units and the allocation of costs between NTL Home and NTL Business have changed. Finally, Corporate Expenses are now included in Central Support. The Revenue and EBITDA analysis in the Financial Review is presented in the revised structure and prior periods have been restated accordingly. EBITDA Summary (in (pound) millions)*
- ---------------------------------------------------------------------------------------------------------------------- Q1-2003 Q4-2002 Q3-2002 Q2-2002 Q1-2002 - ---------------------------------------------------------------------------------------------------------------------- HOME On-Net (pound)143.7 (pound)147.8 (pound)138.1 (pound)139.0 (pound)133.7 Wholesale & Off-Net 9.0 11.8 13.4 13.1 8.5 -------------- -------------- -------------- --------------- -------------- Total 152.7 159.6 151.5 152.1 142.2 BUSINESS 21.1 21.6 18.0 21.1 19.9 BROADCAST Media 20.6 18.1 20.2 23.5 22.3 Wireless 5.7 4.7 6.0 5.0 4.0 Public Safety 2.3 1.1 1.9 1.9 1.9 -------------- -------------- -------------- --------------- -------------- Total 28.6 23.9 28.1 30.4 28.2 CARRIERS 22.2 22.4 24.5 25.0 27.0 SHARED SERVICES Networks (16.9) (13.0) (14.0) (16.8) (15.3) Central Support/IT (56.1) (51.0) (48.9) (48.6) (50.4) -------------- -------------- -------------- --------------- -------------- Total (73.0) (64.0) (62.9) (65.4) (65.7) IRELAND 4.9 3.5 4.5 4.2 2.6 -------------- -------------- -------------- --------------- -------------- EBITDA (pound)156.5 (pound)167.0 (pound)163.7 (pound)167.4 (pound) 154.2 Accounting Adjustments - (4.0) - - - -------------- -------------- -------------- --------------- -------------- TOTAL EBITDA (pound)156.5 (pound)163.0 (pound)163.7 (pound)167.4 (pound) 154.2 - ----------------------------------------------------------------------------------------------------------------------
* Q4 2002 includes the net effect of the Q4 2002 Accounting Adjustments of (pound)4.0 million. This amount includes an adjustment for the reallocation of certain expenditures from capital to expense of approximately (pound)41.2 million and an adjustment for the release of certain provisions, and the related increase in EBITDA, in the amount of approximately (pound)43.4 million. These two adjustments relate principally to prior periods. Q1, Q2 and Q3 2002 EBITDA would be reduced by approximately (pound)10 million per quarter if the reallocation of the (pound)41.2 million from capital to expense was reflected in the appropriate quarters. The (pound)43.4 million increase in EBITDA would not be reallocated to Q1, Q2 and Q3 2002 because these provisions relate to periods prior to 2002. Corporate expenses are now included in Central Support. Prior periods have been restated accordingly. Financial Results for the three months ended March 31, 2003 (in $ millions except per share data)
Three Months Ended March 31, 2003 2002 ------------------ ------------------ Revenues $875.9 $792.9 Costs and expenses Operating expenses 408.6 380.9 Selling, general and administrative expenses 216.5 192.0 ------------------ ------------------ 625.1 572.9 ------------------ ------------------ EBITDA 250.8 220.0 Other charges 2.9 1.6 Depreciation and amortization 309.0 337.4 ------------------ ------------------ Operating (loss) (61.1) (119.0) Other income (expense) Interest income and other, net 2.7 9.4 Interest expense (176.5) (324.8) Recapitalization expense - (32.1) Share of income from equity investments 0.1 0.3 Foreign currency transaction (losses) (3.4) (5.0) ------------------ ------------------ (Loss) before income taxes (238.2) (471.2) Income tax (expense) benefit (16.2) 11.3 ------------------ ------------------ Net (loss) $(254.4) $(459.9) ================== ================== Basic and diluted net (loss) per common share $(5.04) $(9.11) ================== ================== Weighted average shares 50.5 50.5 ================== ==================
Discussion of Three Months Ended March 31, 2003 Results We implemented a reorganization of certain of our business units in the three months ended March 31, 2003. The associated changes included moving our Wholesale Internet division from NTL Business to NTL Home, our Public Safety division from NTL Business to NTL Broadcast and the creation of NTL Carriers by merging our carriers division with our mobile division and removing both from NTL Business. These changes better align the expertise in the divisions with the needs of our customers. In addition, the allocation of certain costs from Shared Services to the various business units and the allocation of costs between NTL Home and NTL Business have changed. Corporate Expenses are now included in the Central Support business unit and are grouped with selling, general and administrative expenses in our statement of operations. Finally, NTL Ireland is a separate business unit for financial reporting purposes effective January 1, 2003. We have reclassified amounts in prior periods to conform to the current period presentation. We provide a broad range of communication services, including: (1) consumer telecommunications and television, (2) business telecommunications, (3) broadcast transmission and other related services and (4) carrier telecommunications services. Our consumer telecommunications and television services comprise broadband services to consumer markets including residential telephone, analog and digital cable television, Internet access and interactive services, as well as wholesale Internet access solutions to UK Internet service providers. Our business telecommunications services include business data, voice and Internet services. Our broadcast transmission and other services include digital and analog television and radio broadcast transmission services, tower site rental, satellite and media services for programmers, news agencies, sports broadcasters and production companies, and radio communications services to the public safety sector. Our carrier services division provides transmission, fiber and voice services for other telecommunications service providers over the NTL national network in the UK and Ireland. In our consumer telecommunications and television segment, known as NTL Home, we derive revenues principally from monthly fees and usage charges for (1) telephone service, (2) cable television service and (3) Internet access. Our packaging and pricing are designed to encourage our customers to use multiple services such as dual telephone and broadband, dual telephone and TV or triple telephone, TV and Internet access. In our business telecommunications segment, known as NTL Business, we derive revenues principally from monthly fees and usage charges for inbound and outbound voice, data and Internet services. In our broadcast transmission and other services segment, known as NTL Broadcast, we derive revenues principally from charges for (1) site leasing services, (2) national and regional television broadcasting, (3) national, regional and local radio broadcasting, (4) satellite up-linking for program and content distribution and (5) charges for various outstanding arrangements provided to public safety customers. In our carrier services segment, known as NTL Carriers, we derive revenues principally from charges for transmission, fiber and voice services provided to other telecommunications service providers over our national network in the UK and Ireland. The principal components of our expenses include (1) costs to connect our network to other networks (referred to as interconnection), (2) television programming costs, (3) payroll and other employee related costs, (4) repairs and maintenance, (5) facility related costs, such as rent, utilities and rates, (6) marketing and selling costs and (7) provisions for bad debts. As expected, our growth in 2002 was curtailed by funding constraints. Cash constraints present many challenges to the successful execution of our business plan. We are conserving cash by minimizing capital expenditures including expenditures to connect new customers to our network. In order to maintain revenues and cash from operations, we must reduce and limit customer churn. We continue to focus on improving our customer service and increasing our service offering to customers in an effort to curtail and reduce churn. We are in the process of integrating our various billing systems and customer databases in an effort to improve one of the main tools we use to provide customer service. This effort is at a relatively early stage although we have continued to make progress through March 31, 2003. Although the new system does not yet support our full suite of services, we expect to substantially complete the project by the third quarter of 2004. The total project cost is estimated to be approximately (pound)75.0 million, of which we have incurred approximately (pound)30.1 million through March 31, 2003. We cannot be certain that this project will be successful. If the full integration is not successful, we could experience an adverse effect on customer service, our churn rate and our costs of maintaining these systems going forward. We could also experience operational failures related to billing and collecting revenue from our customers, which, depending upon on the severity of the failure, could have a material adverse effect on our business. Moreover, the integration process has involved a number of internal reorganizations of our business as we continue to strive for better performance. These reorganizations have typically involved, among other things, the termination of employees made redundant as a result of the process. Although we cannot predict precisely the effect that this has had, it is likely these internal reorganizations have negatively impacted employee morale. If we undertake additional internal reorganizations they will similarly likely negatively impact employee morale. Negative effects on employee morale can have a negative effect on our operations generally. Our plan to reduce churn and to increase average revenue per unit (referred to as ARPU) includes an increase in broadband services to our existing customers. We believe that our triple play offering of telephony, broadband access to the Internet and digital television will continue to prove attractive to our existing customer base, which will result in higher ARPU as revenues per existing customer increase. However, there is still significant competition in our markets, through digital satellite and digital terrestrial television and through alternative Internet access media, such as DSL offered by BT. If in the future we are unable to charge the prices for these services that we anticipate in our business plan in response to competition or if our competition is able to attract our customers, our results of operations will be adversely affected. The wholesale national and international telecommunications market saw the reorganization or bankruptcy of many of the new entrant operators in 2002, especially those companies whose focus had been on serving carriers. As a result of this, several customers that had signed contracts with us running through 2003 are no longer in business. While this will have some effect on our revenue for 2003, most of our existing contracts are now with telecommunications companies with high volumes of retail traffic. Furthermore, our sales focus is on UK telecommunications companies who service the retail rather than the wholesale markets. We attempt to structure commercial arrangements to minimize any financial exposure to another operator. Media speculation regarding our recent Chapter 11 reorganization and financial condition could have an adverse effect on parts of our business. Similarly, negative press about the financial condition of alternative telecom carriers in general may adversely affect our reputation. One of the key strategies in our business plan is to increase our penetration of higher value small to medium size enterprises (or SMEs) and provide increased retail services of bundled voice, data and Internet services for SMEs. However, due to the negative publicity surrounding our recent Chapter 11 reorganization and financial condition and the potential effect of that publicity on our brand name, we may find it difficult to increase market share. We believe our recapitalization process and the general unfavorable climate for alternative telecom carriers affected our revenues in 2002 as prospective customers began deferring orders beginning in the fourth quarter of 2001. Even though we have successfully completed the recapitalization process, there is no assurance that such negative publicity will not adversely impact our results of operations or have a long-term effect on our brand. In addition, this uncertainty may adversely affect our relationships with suppliers. If suppliers become increasingly concerned about our financial condition, they may demand faster payments or refuse to extend normal trade credit, both of which could further adversely affect our cash conservation measures and our results of operations. However, this did not have a significant effect on results of operations or cash flows in 2002 or in the three months ended March 31, 2003. On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.), NTL Europe, Inc. (then known as NTL Incorporated) and certain of NTL Incorporated and NTL Europe, Inc.'s subsidiaries filed a pre-arranged joint reorganization plan (the "Plan") under Chapter 11 of the U.S. Bankruptcy Code. Our operating subsidiaries and those of NTL Europe, Inc. were not included in the Chapter 11 filing. The Plan became effective on January 10, 2003, at which time we emerged from Chapter 11 reorganization. We operated our business as a debtor-in-possession subject to the jurisdiction of the U.S. Bankruptcy Court during the period from May 8, 2002 until January 10, 2003. Accordingly, our consolidated financial statements for periods prior to our emergence from Chapter 11 reorganization were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). In addition, we adopted fresh-start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the effects of the consummation of the Plan as well as adjustments for fresh-start reporting have been recorded in our consolidated financial statements as of January 1, 2003. Pursuant to fresh-start reporting, a new entity was deemed created for financial reporting purposes and the carrying value of assets and liabilities was adjusted. The carrying value of assets was adjusted to their reorganization value that was equivalent to their estimated fair value. The carrying value of liabilities was adjusted to their present value. Consolidated revenues increased by 10.5% to $875.9 million in the three months ended March 31, 2003, as compared to $792.9 million in the three months ended March 31, 2002. Consolidated revenues in UK pounds decreased by 1.7% to (pound)546.5 million from (pound)556.1 million. In the three months ended March 31, 2003 and 2002, the United Kingdom accounted for 96.8% and 97.5%, respectively, and Ireland accounted for 3.2% and 2.5%, respectively, of total consolidated revenues. Consolidated revenues in dollars and UK pounds were comprised of the following:
Three Months Ended March 31, ------------------ ------------------ 2003 2002 ------------------ ------------------ (in millions) Consumer $580.3 $516.2 Business 120.2 118.3 Broadcast 103.1 91.8 Carriers 44.2 47.1 Ireland 28.1 19.5 ------------------ ------------------ Total Revenues $875.9 $792.9 ================== ================== Consumer (pound)362.1 (pound)362.0 Business 75.0 83.0 Broadcast 64.3 64.4 Carriers 27.6 33.0 Ireland 17.5 13.7 ------------------ ------------------ Total Revenues (pound)546.5 (pound)556.1 ================== ==================
In the three months ended March 31, 2003 and 2002, consumer telecommunications and television revenues were 66.3% and 65.1%, respectively, business telecommunications revenues were 13.7% and 14.9%, respectively, broadcast transmission and other revenues were 11.8% and 11.6%, respectively, carriers revenues were 5.0% and 5.9%, respectively, and Ireland revenues were 3.2% and 2.5%, respectively, of total consolidated revenues. Consumer telecommunications and television revenues increased by 12.4% to $580.3 million from $516.2 million as a result of changes in foreign currency exchange rates. These revenues in UK pounds increased by less than 1.0% to (pound)362.1 million from (pound)362.0 million. Consumer telecommunications and television revenues were effectively unchanged reflecting the decline in the customer base due to disconnects, which was offset by an increase in broadband Internet services, the impact of price increases and growth in our wholesale Internet services business. Business telecommunications revenues increased by 1.6% to $120.2 million from $118.3 million as a result of changes in foreign currency exchange rates. These revenues in UK pounds decreased by 9.6% to (pound)75.0 million from (pound)83.0 million. Business telecommunications revenues decreased principally as a result of uncertainties arising from our Chapter 11 reorganization and the general climate for competitive telecoms service providers. Broadcast transmission and other revenues increased by 12.3% to $103.1 million from $91.8 million as a result of changes in foreign currency exchange rates. These revenues in UK pounds decreased by less than 1.0% to (pound)64.3 million from (pound)64.4 million due to modest increases in site sharing and public safety revenues offset by modest decreases in other revenues. Carriers revenues decreased 6.2% to $44.2 million from $47.1 million. These revenues in UK pounds decreased by 16.4% to (pound)27.6 million from (pound)33.0 million. The primary reason for this decline was the recognition of (pound)7.1 million ($10.1 million) of deferred revenue in the three months ended March 31, 2002 related to the termination of a long-term contract upon the financial distress of one of the division's customers. NTL Ireland revenues increased 44.1% to $28.1 million from $19.5 million. These revenues in UK pounds increased 27.7% to (pound)17.5 million from (pound)13.7 million. The primary reasons for the increase were growth in digital television customers, a price increase that became effective in January 2003 and an increase in business sector revenues. Operating expenses (including network expenses) increased 7.3% to $408.6 million from $380.9 million as a result of changes in foreign currency exchange rates. These expenses in UK pounds decreased 4.5% to (pound)255.0 million from (pound)267.1 million primarily as a result of decreases in telephony interconnection and television programming costs. Operating expenses as a percentage of revenues declined to 46.6% in 2003 from 48.0% in 2002. Selling, general and administrative expenses increased 12.8% to $216.5 million from $192.0 million primarily as a result of changes in foreign currency exchange rates. These expenses in UK pounds increased less than 1.0% to (pound)135.1 million from (pound)134.7 million. Selling, general and administrative expenses as a percentage of revenues increased to 24.7% in 2003 from 24.2% in 2002. The small change in these expenses in 2003 as compared to 2002 reflects an increase in marketing and selling costs offset by various cost savings efforts including restructurings announced in the fourth quarter of 2002. Other charges of $2.9 million and $1.6 million in the three months ended March 31, 2003 and 2002, respectively, were restructuring charges for employee severance and related costs. These costs were incurred for approximately 125 employees and approximately 55 employees in the three months ended March 31, 2003 and 2002, respectively. Depreciation and amortization decreased to $309.0 million from $337.4 million. Depreciation expense decreased to $259.2 million from $322.5 million primarily due to the $2,498.0 million decrease in the carrying value of fixed assets subject to depreciation effective January 1, 2003 due to the adoption of fresh-start reporting. Amortization expense increased to $49.8 million from $14.9 million due to the $1,222.6 million increase in customer lists that are subject to amortization effective January 1, 2003 due to the adoption of fresh-start reporting. Interest expense decreased to $176.5 million from $324.8 million primarily as a result of the $9,486.9 million cancellation of debt on January 10, 2003 in connection with our emergence from Chapter 11 reorganization. Interest of $220.7 million and $199.7 million was paid in cash in the three months ended March 31, 2003 and 2002, respectively. Recapitalization expense was $32.1 million in the three months ended March 31, 2002. Recapitalization expense includes all transactions incurred as a result of our Chapter 11 reorganization. Recapitalization expense in the three months ended March 31, 2002 included $8.8 million for employee retention related to substantially all of our UK employees and $23.3 million for financial advisor, legal, accounting and consulting costs. Foreign currency transaction losses were $3.4 million and $5.0 million in the three months ended March 31, 2003 and 2002, respectively. These losses in 2003 are primarily due to the effect of changes in exchange rates on U.S. dollar denominated debt of our subsidiaries Diamond Holdings Limited and NTL (Triangle) LLC whose functional currency is not the U.S. dollar. Our results of operations will continue to be affected by foreign exchange rate fluctuations. Income tax (expense) benefit was expense of $16.2 million in the three months ended March 31, 2003 and benefit of $11.3 million in the three months ended March 31, 2002. The 2003 expense is composed of $10.5 million U.S. income tax expense and $5.7 million of deferred foreign income tax expense. None of the 2003 income tax is expected to be payable in the next year. Net loss was $254.4 million in the three months ended March 31, 2003 and $459.9 million in the three months ended March 31, 2002. This change was the result of the factors discussed above, particularly the reduction in interest expense of $148.3 million in 2003. Basic and diluted net loss per common share in the three months ended March 31, 2002 is computed as if the 50.5 million shares issued in connection with our emergence from Chapter 11 reorganization on January 10, 2003 were outstanding as of January 1, 2002.
Reconciliation of Revenue and EBITDA to US GAAP (in millions) March 31, 2003 December 31, September 30, June 30, March 31, 2002 2002 2002 2002 ----------------- ----------------- ----------------- ----------------- ---------------- Revenue (in(pound)'s) (pound)546.5 (pound)533.4 (pound)534.7 (pound)549.0 (pound)556.1 Effective exchange rate 1.60 1.57 1.55 1.46 1.43 ----------------- ----------------- ----------------- ----------------- ---------------- US GAAP Revenue (in US$'s) $875.9 $839.1 $830.3 $802.8 $792.9 EBITDA (in(pound)'s) (pound)156.5 (pound)163.0 (pound)163.7 (pound)167.4 (pound)154.2 Effective exchange rate 1.60 1.57 1.55 1.46 1.43 ----------------- ----------------- ----------------- ----------------- ---------------- EBITDA (in US$'s) $250.8 $256.0 $253.6 $244.5 $220.0 Other expenses: Asset impairments - 418.5 26.6 - - Other charges 2.9 95.9 289.6 2.1 1.6 Depreciation and amortization 309.0 444.7 402.1 357.4 337.4 ----------------- ----------------- ----------------- ----------------- ---------------- Subtotal 311.9 959.1 718.3 359.5 339.0 US GAAP Operating (loss) (in US$'s) ($61.1) ($703.1) ($464.7) ($115.0) ($119.0) ================= ================= ================= ================= ================
Reconciliation of Capital Expenditures to US GAAP (in millions) For the Three Months Ended March 31, 2003 2002 ------------- -------------- Capital Expenditures (in(pound)'s) (pound)82.5 (pound)103.5 Effective exchange rate 1.60 1.43 ------------- -------------- Capital Expenditures (in US$'s) $132.2 $147.6 Other items: Changes in liabilities related to Capital Expenditures 49.4 54.4 Capitalized interest 3.6 12.5 ------------- -------------- Subtotal 53.0 66.9 Purchase of fixed assets (in US$'s) $185.2 $214.5 ============= ==============
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Certain statements contained herein constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. When used herein, the words, "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by such forward-looking statements. Such factors include, among others, the "Risk Factors" set forth in Amendment No. 1 on Form 10-K/A to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, as such filings may be amended from time to time, as well as: the impact of our organizational restructuring and integration actions; our ability to maintain contracts that are critical to our operations; potential adverse developments with respect to our liquidity or results of operations; our ability to fund and execute our business plan; our ability to attract, retain and compensate key executives and associates; our ability to attract and retain customers; general economic and business conditions; technological developments; our ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and development, all in a timely manner at reasonable costs and on satisfactory terms and conditions; assumptions about customer acceptance, churn rates, overall market penetration and competition from providers of alternative services; the impact of new business opportunities requiring significant up-front investment; and interest rate and currency exchange rate fluctuations. We assume no obligation to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting such statements. Use of Non-GAAP (Generally Accepted Accounting Principles) Terms To supplement our consolidated financial statements presented on a GAAP basis, NTL uses certain non-GAAP measures (such as EBITDA and Capital Expenditures) that it believes may be useful to enhance investors' overall understanding of NTL's past financial performance and prospects for the future. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP accepted in the United States. For more information contact: In the US: Investor Relations: Tamar Gerber, Director - Investor Relations Tel: (+1) 212 906 8451, or via e-mail at investor_relations@ntli.com In the UK: Investor Relations: Virginia Ramsden, +44 (0) 207 746 6826, or via e-mail at investorrelations@ntl.com Media: Alison Kirkwood, Media Relations, +44 (0)1256 752 662 / 07788 186154 Justine Parrish, Media Relations, +44 (0)20 746 4096 / (0)7966 421 991 There will be a conference call to analysts and investors today at 08.30 ET/ 13.30 GMT. Analysts and investors can dial in to the presentation by calling in the United States 1-877-505-5130 or 1-706-634-1305 for international access or via a live webcast of the conference call and presentation on the Company's website, www.ntl.com/investors. The replay will be available for one week beginning approximately two hours after the end of the call until Wednesday May 21, 2003. The dial-in number is as follows: US Replay Dial-in Number: 1-800-642-1687 and the International Replay Dial-in Number is 1-706-645-9291, Conference ID: 223651. APPENDIX - Residential Operating Statistics as of March 31, 2003
(subscriber totals in 000s) UK Ireland Total ----------------- ---------------- ----------------- Homes in Franchise 11,411.2 475.2 11,886.4 Homes Passed 8,404.1 475.2 8,879.3 Homes Marketable 7,749.7 475.2 8,224.9 ----------------- ---------------- ----------------- Telco 7,530.8 475.2 8,006.0 ATV 7,749.7 475.2 8,224.9 DTV 7,259.7 408.7 7,668.4 Broadband 6,712.2 23.0 6,735.2 Customers 2,713.5 366.5 3,080.0 ----------------- ---------------- ----------------- Single RGU 756.5 359.0 1,115.5 Dual RGU 1,503.6 7.5 1,511.1 Triple RGU 453.4 - 453.4 Telephone 2,426.7 5.6 2,432.3 ----------------- ---------------- ----------------- Talk Plan Subs 360.3 - 360.3 Television 2,037.7 366.5 2,404.2 ----------------- ---------------- ----------------- DTV 1,255.2 44.8 1,300.0 ATV 760.8 302.8 1,063.6 MATV 21.7 18.9 40.6 Internet 1,097.2 3.6 1,100.8 ----------------- ---------------- ----------------- Dial-Up (metered) 133.4 - 133.4 Dial-Up (unmetered) 283.5 1.7 285.2 DTV Access 19.4 - 19.4 Broadband 660.9 1.9 662.8 RGUs (1) 5,125.3 374.0 5,499.3 ----------------- ---------------- ----------------- Telephone 2,426.7 5.6 2,432.3 Television 2,037.7 366.5 2,404.2 Broadband Internet 660.9 1.9 662.8 Service Units (2) 5,561.6 375.7 5,937.3 RGUs/Customer 1.89x 1.02x 1.79x Service Units/Customer 2.05x 1.03x 1.93x Penetration: Telephone 32.2% 1.2% 30.4% Television 26.3% 77.1% 29.2% Broadband Internet 9.8% 8.3% 9.8% Customer 35.0% 77.1% 37.5% RGU 66.1% 78.7% 66.9% Service Unit 71.8% 79.1% 72.2% Q4 Customer/RGU Movement Opening Subs 2,686.4 368.0 3,054.4 Gross Adds 116.1 6.0 122.1 Disconnects (3) (89.0) (7.5) (96.5) ----------------- ---------------- ----------------- Closing Customers 2,713.5 366.5 3,080.0 Quarterly Customer Adds 27.1 (1.5) 25.6 Quarterly RGU Adds 141.4 (1.9) 139.5 % Customer Churn (4) 13.0% 8.1% 12.4% Off-Net Telephony 91.4 3.9 95.3 ----------------- ---------------- ----------------- Telephone 22.7 2.4 25.1 Telephone + Internet 68.7 1.5 70.2
(1) RGUs are defined as all on-net telephone, television and Broadband Internet subscribers. (2) Service units are defined as all on-net telephone, television and Internet subscribers. (3) Disconnects include customers which cancel service due to moving premise. (4) Annualized churn is defined as: (Quarterly disconnects x 4) / (opening customers + 50% quarterly gross adds) EX-99 4 ntl99_2.txt EXHIBIT 99.2 Slide 1 ntl: NTL Incorporated Q1 2003 Results May 14, 2003 Slide 2 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Certain statements contained herein constitute "forwardlooking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. When used herein, the words, "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions identify such forwardlooking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by such forwardlooking statements. Such factors include, among others, the "Risk Factors" set forth in Amendment No. 1 on Form 10-K/A to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, as such filings may be amended from time to time, as well as: the impact of our organizational restructuring and integration actions; our ability to maintain contracts that are critical to our operations; potential adverse developments with respect to our liquidity or results of operations; our ability to fund and execute our business plan; our ability to attract, retain and compensate key executives and associates; our ability to attract and retain customers; general economic and business conditions; technological developments; our ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and development, all in a timely manner at reasonable costs and on satisfactory terms and conditions; assumptions about customer acceptance, churn rates, overall market penetration and competition from providers of alternative services; the impact of new business opportunities requiring significant up-front investment; and interest rate and currency exchange rate fluctuations. We assume no obligation to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting such statements. Slide 3 Use of non-GAAP (Generally Accepted Accounting Principles) terms All US Securities and Exchange Commission Regulation G reconciliations are available in our three months ended March 31, 2003 press release on our website www.ntl.com/investors. To supplement our consolidated financial statements presented on a GAAP basis, NTL uses certain non-GAAP measures (such as EBITDA and Capital Expenditures) that we believe may be useful to enhance investor's overall understanding of our past financial performance and also our prospects for the future. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP accepted in the United States. Slide 4 ntl: Barclay Knapp Chief Executive Officer Slide 5 Agenda o Introduction and Q1 03 Summary o Divisional Review o Financial Review o Questions and Answers Slide 6 First Quarter Highlights o Revenue of (pound)546.5 million and EBITDA of (pound)156.5 million, Capital Expenditures of (pound)82.5 million and Operating Cash Flow of (pound)74.0 million o UK Revenue Generating Units now exceed 5 million o NTL Home adds over 141,400 services (RGUs) and 27,100 net customers o UK annualized churn down to 13.0% o Exceptional income of(pound)4.2 billion ($6.8b) related to emergence from Chapter 11 Slide 7 Financial Summary Year over Year ((pound) millions) Q1 2003 Q1 2002* Q1 2002 ------- ------- ------- Revenue Home (pound)362 (pound)362 Business 75 83 Broadcast 64 64 Carrier 28 33 Ireland 18 14 --------- ---------- Total Revenues (pound)547 (pound)556 (pound)556 Underlying EBITDA (pound)157 (pound)143 (pound)154 EBITDA Margin 29% 26% 28% Capital Expenditures (pound) 83 (pound) 92 (pound)103 Operating Cash Flow (pound) 74 (pound) 51 (pound) 51 * Q1 2002 restated to deduct Corporate Expenses in line with treatment in Q1 2003. Accounts for changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 02, reducing Q1 02 EBITDA and Capital Expenditures by (pound)10.8m. Slide 8 Financial Summary Actual Q4-02 and Q1-03 vs January 10th 8-K 8-K ((pound)millions) Q1 2003 Q1 2003* Q4 2002 ------- ------- ------- Revenue (pound)547 (pound)539 (pound)533 EBITDA 157 155 158** Corporate Expenses (3) (3) Underlying EBITDA (pound)157 (pound)152 (pound)155 Underlying Capital Expenditures (pound) 83 (pound)103 (pound)133*** * As reported in 8-K filed January 10, 2003. ** Underlying Q4 2002 EBITDA, as reported in Q4 and Year-End 2002 press release. *** Underlying Q4 2002 Capital Expenditure as described in the Q4 and Year-End 2002 presentation. Slide 9 New Management and Board o Chairman - Jim Mooney, ex-Nextel o CEO - Barclay Knapp o COO - Simon Duffy, ex-Orange o CFO - Scott Schubert, ex-WilTel o Board of Directors Jeffrey D. Benjamin, James E. Bolin, David Elstein, William R. Huff, Barclay Knapp, Jim Mooney, George R. Zoffinger, Brett Wyard, Ed Banks Slide 10 [GRAPHICS OMITTED] ntl:home Slide 11 Q1 2003 Summary o 141,400 net new services (RGUs) and 27,100 net new customers added o Revenue growth continued o Second successive quarterly increase in revenue o 661k Broadband customers at March 2003, over 691k today o Increase of 144k in the Q1-03 o Telephone customer growth restarted o Margin improvement continues o Product mix, cost reductions, efficiencies Slide 12 Operating Results - Home Year over Year Adjusted ((pound)millions) Q1 2003 Q1 2002* Q1 2002 ------- ---------------------- Revenue (pound)362 (pound)362 (pound)362 EBITDA (pound)153 (pound)138 (pound)142 EBITDA Margin % 42% 38% 39% * Accounts for changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 02, reducing Q1 02 EBITDA by (pound)4 million. Slide 13 Home Customer Base Q1 2003 vs Q4 2002 (in thousands) Q1 2003 Q4 2002 Change ------- ------- ------ Total Customers 2,713 2,686 27 Total RGUs 5,125 4,984 141 RGUs per customer 1.89 1.86 Telephone 2,427 2,412 15 Broadband 661 517 144 Television 2,038 2,055 (17) of which Digital TV 1,255 1,229 26 Slide 14
Customers and ARPU Net customers and ARPU up... Gross Adds Disconnects (Quarterly, 000s) (Quarterly, 000s) 157 | | 154 | | 116 144 | | | | 112 | | | | | | | | | | 106 | | | | | | 127 | | | | | | | | | | | | | | 119 | | | | 84 | | | | | | | | | | | | 113 | | | | 54 49 | | | | | | | | | | | | | | | | 108 | | | | | | | | | | | | | | | | | | | | | | | | | | 89 | | | | | | | | | | | | | | | | | | | | | | | | | | | | - -------------------------------------------- ------------------------------------------------ Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Net Customer ARPU Movement (Average of quarter(pound)) (Quarterly, 000s) 27 | | 13 | | | | | | | | | | 40.7 - -------------------------------------------- | Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 40.0 | | | | | | | | | | | | 39.6 | 40.0| | | | | | | | | (2) | | | | | | | | | | | | 38.8| | 39.1 | | | | | | | | | (29) | | | | | 38.9| | (37) | | | | | | | | | | | | | | | | | | | | | | | | (70) ------------------------------------------ (73) Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
Slide 15
Net RGUs Broadband (Quarterly Change, 000s) (Quarterly Change, 000s) 144.0 141 137.0 | | 113 | | | | | | | | | | 105.2 | | | | 64 | | | | | | | | | | | | | | | | 92.0 | | | | | | | | | | | | | | | | | | | | | | 34 | | | | 65.0 | | | | | | | | | | | | | | | | 38.9 | | | | | | | | | | | | | | | | | | 33.4 | | | | | | | | | | | | - -------------------------------------------- | | | | | | | | | | | | | | Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |_| | | |_| -------------------------------------------- (52) |_| (56) Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 (76) Telco Television (Quarterly Change, 000s) (Quarterly Change, 000s) 20 | | 15 | | | | 11 | | | | | | - -------------------------------------------- -------------------------------------------- Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (14) | | | | | | | | | | | | (26) | | | | | | | | | | | | | | | | (18) | | | | (28) | | | | | | | | | | | | | | | | | | | | | | (32) | | | | | | | | | | (44) | | | | | | | | | | (65) | | (65) | | | | (71) | | | | (76) | | (77)
Slide 16 Churn & Low Bad Debt 21.3% | | 19.5% | | | | | | 17.9% | | | | | | 17.1% | | | | | | | | 16.4% | | | | | | | | | | 15.9% 13.0% | | | | 2.8%* | | | | | | | | 2.7%* | | | | | | | | | | | | | | 2.2%* | | | | 1.7%* | | | | | | | | | | 1.6%* | | 1.0%* | | | | | | | | | | | | | | 1.1%* - ------------------------------------------------ Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Key *Bad Debt Churn% Slide 17 Customer Service Performance Calls Answered, Average Speed of Answer, Accessibility Index, Calls per Customer % Calls Answered 97% | | 95% | | | | | | 93% | | | | | | | | | | 90% 90% | | | | | | | | | | 89% 89% | | | | | | | | | | | | | | | | | | | | 88% | | | | | | | | | | | | | | | | | | 87% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 (continued) Avg. Speed of Answer 151 144 | | | | 141 | | | | | | | | | | | | | | 123 | | | | 123 | | 111 | | | | | | | | | | | | | | | | | | | | | | 103 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 64 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 50 | | | | | | | | | | | | | | | | | | Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 (continued) Accessibility Index % Calls answered in 20 seconds or less 71% | | 62% | | | | | | 54% | | | | 48% | | | | | | | | | | | | | | | | 46% | | | | | | 41% 41% | | | | | | | | | | 39% 39% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 (continued) Calls per Customer 0.74x | | | | 0.73x | | | | | | | | 0.70x 0.68x | | | | | | | | | | | | 0.65x 0.65x | | | | | | | | | | 0.64x | | | | 0.63x | | | | | | | | | | | | 0.63x | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Slide 18 [GRAPHIC OMITTED] ntl:business Slide 19 Operating Results - Business Year over Year Adjusted ((pound)millions) Q1 2003 Q1 2002* Q1 2002 ------- ------- ------- Revenue (pound)75 (pound)83 (pound)83 EBITDA (pound)21 (pound)18 (pound)20 EBITDA Margin % 28% 22% 24% * Accounts for changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 02, reducing Q1 02 EBITDA by (pound)2m. Slide 20 Q1 2003 Summary o Restructure of Business segments complete - VISP (Wholesale Internet) to Home - Public Safety to Broadcast - Mobile/Carrier to Carriers o New NTL Business merger of Retail and Enterprise segments - Focus on selling standard on-net voice and data products - Regional organizational structure o Strategic Focus on - Churn reduction - Cross sell and up-sell to profitable customers - Driving cost out of business Slide 21 Operating Results - Commentary o Revenue - Revenues stable despite reorganization of the business - Focus on higher margin products/customers o Gross Margin - Gross margin improvement reflects new revenue strategy o Operating Costs - Recurring costs lower as the business drives out operational inefficiencies - Significant further efficiencies identified Slide 22 ntl: Carriers Slide 23 Operating Results - Carrier Year Over Year ((pound)millions) Q1 2003 Q1 2002 Revenue Carrier (pound)10 (pound)21 Mobile 18 12 -- -- Total Revenue (pound)28 (pound)33 EBITDA (pound)22 (pound)27 EBITDA Margin % 79% 82% Slide 24 Carrier Division - Profile (Previously reported under NTL: Business) o Manage relationships with other Operators for Interconnect cost base o Voice o IP o Leased lines o Sales and Service relationships with Carriers and Mobile customers for network based products and services o Managed networks o Bandwidth (DWDM/SDH) o Voice minutes o Co-location and maintenance o Integrated with Networks Division o Exploits network design, build and management capability o Integrated within end to end processes o Exploits networks assets Slide 25 [GRAPHIC OMITTED] ntl:broadcast Slide 26 Broadcast Profile o Long term cash-generative contracts o Key assets: towers, teleports & technical facilities o Strong customer relationships & customer service reputation o Long track record of service in our major markets o Financially self-contained: customer-driven capex, near vertically integrated, free cash positive [GRAPHIC REFLECTING COMPOSITION OF BROADCAST BUSINESS (WIRELESS 17%, PUBLIC SAFETY 21% AND MEDIA 62%) AND BREAKDOWN OF MEDIA (TV & RADIO TRANSMISSION 73% AND SATELLITE & MEDIA SERVICES 27%) OMITTED] Slide 27 Operating Results - Broadcast Year over Year ((pound)millions) Q1 2003 Q1 2002 ------------------------ Revenue Media (pound)39 (pound)41 Wireless 11 10 Public Safety 14 13 -- -- Total Revenue (pound)64 (pound)64 EBITDA (pound)29 (pound)28 EBITDA Margin % 45% 44% Slide 28 o Media: o Teletext transmission renewal ((pound)10m over 10 yrs) o Digital radio network win in Yorkshire with MXR group ((pound)7.7m over 12 years) o Wireless: o Average Sharers per tower rose from 2.71 to 2.97 o Public Safety: o Metropolitan Police Integrated Communications Platform ((pound)25m over seven yrs, subject to contract) o Managing digital transition for Thames Valley Police consortium of 5 police forces ((pound)13m, up to 6 yrs) Slide 29 ntl: Financial Overview Slide 30 Financial Summary Quarter over Quarter ((pound)millions) Q1 2003 Q4 2002 Q1 2002* ------- ------- -------- Revenue Home (pound)362 (pound)356 (pound)362 Business 75 75 83 Broadcast 64 63 64 Carrier 28 27 33 Ireland 18 15 14 Q4 2002 Accounting Adjustment - (3) - -- -- -- Total Revenues (pound)547 (pound)533 (pound)556 Underlying EBITDA* (pound)157 (pound)155 (pound)143 EBITDA Margin 29% 29% 26% Capital Expenditures (pound) 83 (pound)133 (pound) 92 Operating Cash Flow (pound) 74 (pound) 22 (pound) 51 * Q1 2002 and Q4 2002 EBITDA are restated to deduct Corporate Expenses in line with treatment in Q1 2003. Q1 2002 figures account for changes in assumptions relating to the allocation of certain costs from capital to operating expense that occurred in Q4 02, reducing Q1 02 EBITDA and Capital Expenditures by (pound)10.8m. Q4 2002 Underlying EBITDA and Capital Expenditures are as reported in the Q4 2002 Year-End presentation and press release. Slide 31 Luquidity ((pound) millions) Q1 2003 ------- Cash per 8-K (pound)277 Q1 2003 Cash Improvements - Operating efficiencies - Working capital improvements + 26 - Lower capital spend ----- Actual Q1 2003 Ending Cash (pound)303 o Capital Expenditures improvement partly due to efficiencies and partly due to timing o Cash utilization across the company better than expected Slide 32 NCTA Standard Reporting: Capex o Customer Premise Equipment o Commercial o Scaleable Infrastructure o Line Extensions o Upgrade/Rebuild o Support Capital Slide 33 Q1 2003 ------- UK Customer Premise Equipment (pound)37 Commercial 4 Scaleable Infrastructure 12 Line Extensions 0 Upgrade/Rebuild 3 Support Capital 16 --- Total 72 Non-NCTA category capex Broadcast 3 Other 5 Ireland 3 --- Total Capital Expenditure (pound)83 Slide 34 Fresh Start Reporting o SOP 90-7 requires NTL to adopt 'fresh start reporting' on emergence from Chapter 11 o Professional valuation specialists performed the valuation exercise o 'Reorganization value' (the Company's fair value) is the basis of NTL's new opening balance sheet as of January 1, 2003 Slide 35 ntl: -----END PRIVACY-ENHANCED MESSAGE-----