Telewest Global (NASDAQ:TLWT)
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NTL Incorporated (NASDAQ:NTLI) today announces year end
results together with summary year end results for Telewest Global,
Inc. (NASDAQ:TLWT). Both companies will file their Form 10-K filings
shortly. NTL and Telewest have agreed to a merger, which is being
presented to their stockholders for approval on March 2, 2006.
NTL Highlights
-- RGUs up 8 per cent to 6.4m vs. Q4 2004 (on-net and off-net
combined)
-- Triples up 27 per cent vs. Q4 2004; triple play penetration of
29 per cent (on-net)
-- RGUs per subscriber at 1.99, up from 1.94 in Q4 2004 (on-net)
-- Net additions of 20,600 were flat vs. Q4 2004 (on-net)
-- Consumer revenue increased modestly vs. Q3 2005 on strong RGU
growth and stabilized ARPU
-- Business revenue stabilizing driven in part by demand for
Ethernet
-- Moving forward with strong foundation for free cash flow
generation
Telewest Highlights (all on-net)
-- RGUs up 11 per cent to 4.1m vs. Q4 2004
-- Triples up 42 per cent vs. Q4 2004; triple play penetration of
37.4 per cent
-- RGUs per subscriber at 2.17, up from 2.04 in Q4 2004
-- Net additions of 20,135
-- Consumer revenue growth of 5 per cent vs. 2004
-- Business revenue remains stable with improved revenue mix from
new offerings
-0-
*T
NTL Income Statement Summary(1)
(GBP millions) Q4 2005 Q3 2005 Q4 Charges/Gains(2)
------------------------- ------------------------------------------
------------------------- ------------------------------------------
OCF 155 166 Includes a GBP 9.2m bad debt
charge increase over Q3 2005,
GBP 1.8m in Telewest related
merger costs and GBP 1.1m in
redundancy costs
------------------------- ------------------------------------------
OCF margin 31.9% 34.5%
(%)(3)
------------------------- ------------------------------------------
Operating (34) (5) Includes a charge of GBP 22.6m
income (loss) relating to an increase in the
provision for vacant leasehold
properties
------------------------- ------------------------------------------
Income (loss) (46) (65) Includes foreign currency
before income transaction gains of GBP 35.2m
taxes principally due to favorable
movements in the value of hedge
transactions
------------------------- ------------------------------------------
(Loss) from (56) (54)
continuing
operations
------------------------- ------------------------------------------
Net income (loss) (56) (52)
----------------------------------------------------------------------
(1) OCF is Operating income before depreciation, amortization and
other charges. Please see Appendix E for reconciliation of non-US
GAAP terms such as OCF
(2) Please see page four of this press release for a detailed
explanation
(3) OCF margin is OCF as a percentage of revenue
*T
James Mooney, Chairman of NTL, commented: "Our attention during
the fourth quarter was squarely focused on improving our operations as
we prepare for our pending merger. These efforts included continuing
to drive end-to-end process improvements, stabilizing ARPU and
Business revenue and moving forward with a foundation for long-term
growth.
"Telewest had another strong quarter and together we are prepared
to take advantage of the multiple synergies inherent with the merger.
I am confident the leadership of our new CEO, Steve Burch, and our
strategies should make us extremely competitive and drive significant
free cash flow going forward. This will provide us with strong
financial flexibility and improved capital deployment options as a
merged company."
-0-
*T
Financial Highlights
NTL Telewest(2)
(GBP millions) Q4 2005 Q4 2004 Q4 2005 Q4 2004
---------- ---------- --------- ----------
Revenue
Consumer 380 391 252 241
Business 105 122 63 63
Content - - 36 32
Sit-up - - 84 -
---------- ---------- --------- ----------
Total Revenue 485 512 435 336
OCF / Adjusted EBITDA(1) 155 175 143 128
(1) The NTL measure, OCF, is Operating income before depreciation,
amortization and other charges. The Telewest measure, Adjusted
EBITDA, is earnings before interest, taxation, depreciation,
amortization, financial restructuring expenses and merger related
fees. Please see Appendix E for reconciliation of non-U.S. GAAP
terms such as OCF and Adjusted EBITDA.
(2) Telewest information is based upon Telewest's Form 10-K to be
filed on February 28, 2006 and other information provided by
Telewest.
*T
Commenting on the quarterly results for NTL and Telewest, Stephen
Burch, Chief Executive Officer of NTL, said: "During the quarter, both
companies continued to make considerable strides in enhancing their
customer base by adding quality RGUs. This is evidenced by the
continued growth in triple play subscribers and uptick in the number
of RGUs per subscriber. Broadband remains a growth engine for both
companies as each continues to differentiate its product offerings
versus the competition with unmatched features, enhancements and
industry leading speeds. Talk Plan penetration achieved further
consumer acceptance, mitigating the impact of fixed to mobile
substitution and increasing product bundle attractiveness. We believe
that Television is poised to renew its growth as the rollout of
additional revenue sources, such as VOD, SVOD, DVR and HD continues,
demonstrated by Telewest achieving its best quarter of TV net
additions in four years. Telewest's Flextech content assets also
enjoyed a strong quarter and the outlook continues to remain
promising.
"As we enter 2006, our efforts will be focused on successfully
integrating NTL and Telewest. We will leverage the collective
abilities of our past integration experiences and our long standing
familiarity of one another's operations. Furthermore, we have built a
world class management team by selecting the best from both companies,
and through the appointments of those who have the skills to help us
realize the previously discussed synergies. We believe that our
management team's experience and leadership will enable the combined
company to become a premier communications provider in the UK. We look
forward to providing further details related to the merger integration
as we move ahead."
The NTL financial and operating data and the Telewest financial
and operating data presented in this release are not necessarily
comparable as no adjustments have been made to ensure consistency of
definitions of the same or similar terms used by the respective
companies. Further, no adjustments have been made in respect of
potential differences in accounting policies or to eliminate
inter-company trading between the two companies.
NTL Q405 Review
Revenue
Fourth quarter revenue of GBP 484.6 million declined 5.4 per cent
compared to the prior year period. The decrease is due to lower
Consumer revenue, primarily attributed to reduced telephony usage,
together with lower Business revenue also due to lower telephony usage
and the loss of certain customer contracts.
Consumer
Consumer revenue in the fourth quarter was flat sequentially at
GBP 379.5 million compared with GBP 377.5 in Q3 2005 and was down 2.9%
compared with GBP 390.7 million in Q4 2004. Revenue increases from
continued strong broadband growth were offset by lower revenue from
telephony and TV. The fall in telephony revenue was primarily due to
lower usage, partially offset by higher Talk Plan revenue from an
increase in Talk Plan RGUs. Virgin.net revenue recognized within
Consumer increased by GBP 8.8 million in the quarter compared with Q4
2004, as virgin.net became a wholly owned subsidiary of the company
during Q4 2004. Net residential additions were 38,600 (20,600 on-net)
in the quarter to end the year with 3.33 million customers (3.09
million on-net), a 6.0 per cent increase over Q4 2004 (3.8 per cent
increase on-net). The above quarterly subscriber movements exclude the
impact of the data cleanse and other adjustments as noted in Appendix
C of this press release.
Net customer additions during the fourth quarter were flat
year-on-year, while RGU additions were strong due to the increased
penetration of NTL's product bundles, including the continued "3 for
GBP 30" triple play offer and the launch of new bundles, such as Value
Packs. On-net triple play penetration during the quarter increased to
29.3 per cent, up from 27.2 per cent reported in Q3 2005. Triples at
the point of sale were also up at 22.6 per cent, compared with 18.7
per cent in Q3 2005. Growth in RGUs was supported by NTL's improved
cross-sell and up-sell efforts, which reached a record level in Q4
2005.
NTL added 131,900 net RGUs (111,400 on-net), ending the quarter
with 6.40 million RGUs (6.14 million on-net), a 7.6 per cent increase
over Q4 2004 (6.2 per cent increase on-net). On-net RGU additions were
led by broadband of 106,800, followed by television at 4,300
(comprised of a DTV increase of 42,900 subscribers and the loss of
38,600 ATV subscribers) and telephony, which was slightly up at 300.
The strong performance in RGU net additions comes on the heels of
last quarter's strong growth of 140,500 net RGUs (121,300 on-net).
On-net RGUs per customer improved to 1.99, up from 1.94 in the same
period last year and 1.96 on a sequential basis. This performance can
be attributed to the increased effectiveness of the company's ability
to up-sell singles to duals and duals to triples, the
institutionalization of the triple play, the introduction and
acceptance of a wide range of Value Packs and the rollout of advanced
RGUs that continue to differentiate NTL's product offerings from the
competition.
ARPU during the fourth quarter at GBP 38.98 reduced marginally,
compared with GBP 39.08 reported in Q3 2005. As noted above, NTL's
emphasis on promoting the triple play and continued improvements in
marketing and sales helped stabilize ARPU during the quarter.
Churn was flat compared with Q3 2005 at 1.5 per cent, with a
larger than anticipated portion attributed to movers. Excluding the
impact of a higher level of movers than has historically been
experienced in Q4, churn would have been approximately 1.2%. The
implementation of tighter credit policies introduced in the second
half of 2005 reduced churn associated with credit deficient customers.
Video on Demand (VOD) deployment continues on schedule and NTL
anticipates the service will be available to one million customers by
the end of the second quarter and to all DTV customers by the end of
the third quarter. During the fourth quarter NTL secured an additional
441 hours of programming content ranging from movies to music to kids
programming. The number of first time users of the VOD service has
exceeded our expectations. As a result of the increased usage of the
service, NTL is seeing a positive contribution to ARPU and a decline
in churn. NTL intends to introduce Subscription Video on Demand (SVOD)
during the first quarter, which should further contribute to revenue,
ARPU and a reduction in churn.
Business
Business revenue of GBP 105.2 million was flat compared to Q3 2005
and down GBP 16.4 million versus the same period last year. There was
GBP 10.3 million of revenue reported in Q4 2004 related to the
wholesale contract with virgin.net that did not recur in Q4 2005.
Following its acquisition by ntl, virgin.net is no longer a third
party wholesale customer (please see Appendix F for a summary of the
revenue impact related to the acquisition of virgin.net). In addition,
as previously reported, the loss of wholesale contracts with AOL and
Vodafone resulted in a revenue loss of GBP 7.2 million compared with
Q4 2004. Excluding these contracts, year-on-year business revenue
remains stable with a decline in telephony usage being offset by
increases in wholesale internet and new product revenues.
Corporate and public sector customer wins during the quarter were
strong for a second consecutive quarter and include a GBP 2.0 million
contract with Mid Bedfordshire Council whereby NTL will provide
inbound voice and Ethernet services including 2 x 100Mb connections
and 2 x 10Mb connections. NTL also won a GBP 1.2 million contract with
Nottingham City Council that calls for NTL to provide Ethernet data
network for 128 council sites across Nottingham. NTL is also supplying
Cisco LAN and terminating equipment as well as maintenance over a five
year contract term. Last, NTL entered into a three year, GBP 1.2
million contract to provide Leicester City Council with data services.
Operating income before depreciation, amortization and other
charges (OCF)
OCF decreased 7.0 per cent to GBP 154.7 million, compared with Q3
2005. Q4 2005 OCF includes a GBP 9.2 million bad debt charge increase
over Q3 2005, GBP 1.8m in Telewest related merger costs and GBP 1.1
million in redundancy costs. The bad debt increase was the result of
the substantial increase in gross additions throughout the last half
of 2004 and the first half of 2005. NTL has since implemented tighter
credit policies and placed a higher emphasis on bundled RGUs over
single RGUs. OCF decreased by 11.5 per cent compared with Q4 2004. The
year-on-year decrease was driven primarily by a reduction in revenue,
as well as an increase in the charge for bad debt as noted above.
Please refer to Appendix E for a discussion of NTL's use of OCF as
a non-U.S. GAAP measure and the reconciliation of OCF to U.S. GAAP
operating income (loss).
Operating loss, loss from continuing operations and net loss
Operating loss of GBP 34.4 million in Q4 2005 compares to an
operating loss of GBP 11.1 million during the same period last year.
The increased quarterly loss was driven by the lower OCF and higher
restructuring charges partly offset by a decrease in depreciation due
to certain short-lived assets becoming fully depreciated at the end of
2004. Other charges include a charge of GBP 22.6 million relating to
an increase in the provision for vacant leasehold properties. NTL has
several properties that have been vacant for a number of years
following previous restructuring events. The provision held against
the cost of owning these properties whilst they remain vacant has been
reappraised taking in to account the lack of interest from potential
tenants together with the generally poor outlook for any improvement
in the market conditions in the foreseeable future. Consequently the
provision against these properties has been increased by GBP 22.6
million to GBP 45.3 million at the end of the period.
Loss from continuing operations of GBP 56.2 million improved from
a loss of GBP 86.6 million during the same period last year. The
increased operating loss has been offset by foreign currency
transaction gains of GBP 35.2m together with a reduction in net
interest expense due to the debt repayments made during 2005.
Net loss was GBP 56.2 million versus a net loss of GBP 73.6
million during the same period last year. The year- on-year
improvement reflects the movement in loss from continuing operations
and the loss in Q4 2005 of GBP 13.0 million relating to discontinued
operations.
Cash and Cash equivalents and Marketable Securities
At December 31, 2005, cash and cash equivalents and marketable
securities totaled GBP 832.1 million, compared to GBP 136.8 million at
December 31, 2004. The increase is primarily due to the retained
balance of proceeds from the sale of our Broadcast operations.
Free Cash Flow
Free cash flow for the fourth quarter of 2005 was GBP 35 million,
compared with negative GBP 3 million in the fourth quarter of 2004.
The increase can be primarily attributed to the improvement in working
capital and lower cash interest payments offset by reduced OCF and
higher purchases of fixed assets.
Please refer to Appendix E for a discussion of NTL's use of free
cash flow as a non-U.S. GAAP measure and the reconciliation of free
cash flow to U.S. GAAP net cash provided by (used in) operating
activities.
Capital Expenditure
Fixed asset additions (accrual basis) was GBP 94.6 million for the
quarter, an increase of GBP 15.7 million compared with the fourth
quarter of 2004. The increase can be attributed in part to the build
out of infrastructure needed for the rollout of NTL's "10Mbs As
Standard" broadband offering, which was launched in the fourth
quarter. Fixed asset additions (accrual basis) for the full year was
GBP 305.2 million compared with GBP 281.5 million in 2004.
Please refer to Appendix E for a discussion of NTL's use of fixed
asset additions (accrual basis) as a non-U.S. GAAP measure and the
reconciliation of fixed asset additions (accrual basis) to U.S. GAAP
purchases of fixed assets.
Net Debt
As of December 31, 2005, net debt was GBP 1.4 billion. This
consisted of GBP 1.5 billion outstanding on the company's Senior
Credit Facility, GBP 0.8 billion of Senior Notes, and other debt, net
of GBP 0.8 billion in total of cash and cash equivalents and
marketable securities.
Please refer to Appendix E for a discussion of NTL's use of net
debt as a non-U.S. GAAP measure and the reconciliation of net debt to
U.S. GAAP total liabilities.
Telewest Q405 Review
Telewest's fourth quarter results demonstrate continued strong
financial and operational performance. Consumer revenue grew 5%
year-on-year and household ARPU is steady at GBP 45.17. Revenues at
the Business Division remain stable, Flextech continues to grow
impressively and sit-up experienced a strong rebound from the third
quarter due to the Christmas season.
Consumer
Customer net additions were 20,000, up 9,000 from the previous
quarter primarily due to reduced churn at 1.2%. RGUs per customer grew
to 2.17 and triple play penetration grew to 37.4% reflecting a
successful focus on profitable growth and on selling bundled products.
Household ARPU was GBP 45.17, being flat as compared to the previous
quarter.
The number of broadband subscribers increased by 85,000, as
compared to 67,000 in the previous quarter, passing the 1 million
milestone. Telewest continues its process of previously announced
broadband speed upgrades. As of February 28, 70% of broadband
customers had been upgraded to the higher speeds. We expect the
remainder to be upgraded during the first half of 2006. These upgrades
are at no extra charge to customers and our 4Mb customers have
received a GBP 15 per month price reduction when they were migrated to
the 10Mb tier.
The number of television subscribers grew by 19,000 in the
quarter, compared to 17,000 in the previous quarter. This represents
the best performance for four years. The number of digital subscribers
rose by 43,000.
Telewest's VOD roll-out is now complete with all digital
subscribers receiving the "Teleport" service. This additional
functionality has enabled price increases on selected television
packages for new customers from January 1, 2006. These increases will
take effect for existing customers from March 1, 2006. The price of
the Essential TV pack is increasing by GBP 1 to GBP 11.50 and the
price of the Supreme TV pack is increasing by GBP 2 to GBP 17.50. The
prices of Sky premium channel packages are also being increased by
between GBP 1 and GBP 3 depending on the package, in line with BSkyB's
price increases in September 2005.
Telewest launched its HDTV compatible Digital Video Recorder (DVR)
service, "TV Drive" in February, 2006. The service is charged at GBP
10 per month for "Supreme" customers and GBP 15 per month for
"Starter" and "Essential" customers. Consequently, Telewest was the
first platform in the UK to offer HDTV content.
The number of telephony subscribers was flat as compared to the
previous quarter at 1,687,000. Acquisition was affected by marketing
and promotional activity principally focused upon broadband and
television services in the quarter.
Telewest continued its strategy of migrating subscribers to flat
rates packages to reduce the impact of declining fixed line telephony
usage. In January 2006, Telewest expanded on this strategy by
launching a bundled minutes services, "Talk Anywhere" in the North
West region. This service is the first of its kind in the UK and gives
customers a choice of 200, 400 or 800 minutes per month that can be
used to phone local, national or international, mobile, non-geographic
calls and internet numbers for a fixed price of GBP 18, GBP 24 or GBP
34 per month, respectively, including line rental.
Business
The business sales division had another solid quarter with
revenues of GBP 63 million. This was down GBP 1 million from the
previous quarter, which had benefited from a GBP 1 million settlement
received from BT Group plc in respect of rates being applied to
Special Rate Services calls during prior periods.
Content
Overall revenue in the content segment was GBP 36 million in the
quarter, up 13% on the fourth quarter of 2004, and up GBP 3 million on
the previous quarter.
Advertising revenue was up 19% on the same quarter last year
resulting primarily from improved commercial impacts on Flextech's
channels, and up GBP 1 million on the previous quarter at GBP 19
million.
Subscription revenue was up 9% on the same quarter last year, and
up GBP 1 million on the previous quarter at GBP 12 million, due to
increased multi-channel penetration and improved pricing.
The content segment's Adjusted EBITDA in the quarter was GBP 0
million after inter-company eliminations, up by GBP 1 million from the
same quarter last year. The content segment's Adjusted EBITDA for the
full year 2005 was GBP 14 million after inter-company eliminations up
from GBP 9 million in 2004.
Telewest owns 50% of the companies that comprise UKTV, a group of
joint ventures formed with BBC Worldwide. UKTV offers a portfolio of
multi-channel television channels based on the BBC's program library.
Telewest accounts for its interest in UKTV under the equity method
and recognized its share of net income of GBP 1 million for the three
months ended December 31, 2005. This compares with GBP 2 million share
of net income for the three months ended December 31, 2004.
sit-up
Revenue at sit-up was GBP 84 million in the quarter, up 4% from
the same quarter last year (as reported by sit-up under UK GAAP prior
to its 100% acquisition by Telewest). Revenue was up GBP 26 million
from the previous quarter as the fourth quarter Christmas season is
traditionally sit-up's prime selling period.
Adjusted EBITDA was GBP 7 million in the quarter, up by GBP 6m
compared to the previous quarter due to the Christmas season.
Financial results
Adjusted EBITDA (earnings before interest, taxation, depreciation,
amortization, financial restructuring expenses and merger related
fees) for the fourth quarter of 2005 was GBP 143 million. Merger
related fees were GBP 6 million in the fourth quarter.
Free cash flow (cash flow from operating activities excluding
financial restructuring expenses and merger related fees, less capital
expenditure) for the fourth quarter of 2005 was GBP 56 million,
compared with GBP (3) million for the fourth quarter of 2004.
Capital expenditure was GBP 59 million for the quarter, a decrease
of GBP 5 million compared to the fourth quarter of 2004. Capital
expenditure for the full year was GBP 232 million compared with GBP
241 million in 2004.
As of December 31, 2005, net debt was GBP 1.6 billion. This
consisted of GBP 1.8 billion drawn down on Telewest's credit
facilities and GBP 0.1 billion of leases and other loans, offset by
cash balances of GBP 0.3 billion. Net cash interest paid was GBP 107
million for the year ended December 31, 2005.
Other Matters
On March 2, 2006, the stockholders of NTL and Telewest will vote
upon a proposal to merge NTL into a subsidiary of Telewest. The
combination would create the U.K.'s second largest communications
company and leading triple play service provider with a cable
footprint covering more than 50 per cent of the U.K. households. The
combination of the two companies' local access networks, which do not
overlap, would provide a strong platform allowing for product
differentiation and innovation and the delivery of unique packages of
service offerings. The combined company would have more than 5 million
residential customers. It would be the largest provider of residential
broadband services in the country with 2.8 million subscribers, the
second largest pay TV provider with 3.3 million subscribers and also
the second largest fixed telephony provider with 4.3 million
subscribers.
If the proposed combination of NTL and Telewest is completed,
William J. Connors, currently a member of the Telewest Board of
Directors, will continue as a director of the combined company. The
merger agreement's terms provided for two of the existing Telewest
Board members to remain on the Board of the combined company. Mr.
Connors became a director of Telewest on November 26, 2003. Mr.
Connors is a Portfolio Manager for W.R. Huff Asset Management Co., LLC
and Chief Investment Officer of WRH Global Securities, LP. Mr. Connors
serves on the Board of Directors of Impsat Fiber Networks, Inc. and is
a Chartered Financial Analyst. Anthony (Cob) Stenham, currently
Telewest's Chairman of the Board of Directors, is the other Telewest
director who is expected to remain. NTL has a classified board and all
directors will continue to have the same three year terms as they had
in the separate companies, with the exception of Steve Burch, whose
term will expire in 2006 instead of 2007.
Conference Call
There will be a conference call for analysts and investors today
at 08.30 EDT/ 13.30 UK time. Analysts and investors can dial in to the
presentation by calling +1 617 786 2964 in the United States or + 44
(0) 207354 8426 for international access, passcode "NTL" for all
participants. The presentation can also be accessed live via webcast
on the Company's website, www.ntl.com/investors. The teleconference
replay will be available for one week beginning approximately two
hours after the end of the call and will be available until Tuesday,
March 7, 2006. The dial-in replay number for the US is: +1 617 801
6888 and the international dial-in replay number is: +44 (0) 207 365
8427, passcode: 30554958.
About NTL
-- NTL Incorporated offers a wide range of communications and
content distribution services to residential and business
customers throughout the UK.
-- NTL Incorporated is the UK's largest cable company with 3.3
million residential customers, and the UK's leading supplier
of broadband services to consumers, with 1.8 million broadband
customers.
-- NTL Incorporated's network can service 7.7 million homes in
the UK.
-- Information on NTL Incorporated and its products can be
obtained at www.ntl.com.
About Telewest
Telewest Global, Inc., the broadband communications and media
group, currently passes and markets to 4.7 million homes and provides
multi-channel television, telephone and internet services to 1.8
million residential customers and Telewest Business, the company's
business division, supplies broadband communications to the public and
private sector markets. Its content division, Flextech, is the BBC's
partner in UKTV. For further information go to
http://mediacentre.telewest.co.uk/.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
Various statements contained in this document constitute
"forward-looking statements" as that term is defined under the Private
Securities Litigation Reform Act of 1995. Words like "believe,"
"anticipate," "should," "intend," "plan," "will," "expects,"
"estimates," "projects," "positioned," "strategy," and similar
expressions identify these forward-looking statements, which involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements or industry
results to be materially different from those contemplated, projected,
forecasted, estimated or budgeted, whether expressed or implied, by
these forward-looking statements. These factors include: (1) the
failure to obtain and retain expected synergies from the proposed
merger with Telewest; (2) rates of success in executing, managing and
integrating key acquisitions, including the proposed merger with
Telewest; (3) the ability to achieve business plans for the combined
NTL/Telewest group; (4) the ability to manage and maintain key
customer relationships; (5) the ability to fund debt service
obligations through operating cash flow; (6) the ability to obtain
additional financing in the future and react to competitive and
technological changes; (7) the ability to comply with restrictive
covenants in NTL's indebtedness agreements; (8) the ability to control
customer churn; (9) our potential offer for 100% of the shares of
Virgin Mobile; (10) the ability to compete with a range of other
communications and content providers; (11) the effect of technological
changes on NTL's businesses; (12) the functionality or market
acceptance of new products that NTL may introduce; (13) possible
losses in revenues due to systems failures; (14) the ability to
maintain and upgrade NTL's networks in a cost-effective and timely
manner; (15) the reliance on single-source suppliers for some
equipment and software; (16) the ability to provide attractive
programming at a reasonable cost; and (17) the extent to which NTL's
future earnings will be sufficient to cover its fixed charges.
These and other factors are discussed in more detail under "Risk
Factors" and elsewhere in NTL's Form 10-K and in our joint proxy
statement/prospectus dated January 30, 2006. We assume no obligation
to update our forward-looking statements to reflect actual results,
changes in assumptions or changes in factors affecting these
statements.
Combined Information
The information in this presentation relating to NTL has been
provided by NTL, which is solely responsible for that information. The
information in this presentation relating to Telewest has been
provided by Telewest, which is solely responsible for that
information.
The combined information in Appendix C has been prepared by NTL in
reliance on Telewest information from Telewest.
Non-U.S. GAAP Measures
NTL and Telewest use non-U.S. GAAP measures with a view to
providing investors with a better understanding of the operating
results and underlying trends to measure past and future performance
and liquidity.
NTL evaluates operating performance based on several non-U.S. GAAP
measures, including (i) operating income before depreciation,
amortization and other charges (OCF) and the associated term OCF
margin, (ii) free cash flow (iii) fixed asset additions (accrual
basis) and (iv) net debt, as we believe these are important measures
of the operational strength of our business. Since these measures are
not calculated in accordance with U.S. GAAP, they should not be
considered as substitutes for operating income (loss), net cash flow
provided by/(used in) operating activities, purchase of fixed assets
and total liabilities, respectively, as indicators of our operating
and cash flow performance, expenditure for fixed assets and total
liabilities.
Telewest evaluates operating performance based on several non-U.S.
GAAP measures, including (i) Adjusted EBITDA (earnings before
interest, depreciation, amortization, financial restructuring expenses
and merger related fees); (ii) free cash flow and (iii) net debt.
Since these measures are not calculated in accordance with U.S. GAAP,
they should not be considered as substitutes for operating income
(loss), net cash flow provided by/(used in) operating activities, and
total liabilities, respectively, as indicators of our operating and
cash flow performance and total liabilities.
Please see Appendix E for a discussion of NTL's and Telewest's use
of non-U.S. GAAP financial measures.
Additional Information and Where to Find It
This press announcement may be deemed to be solicitation material
in respect of the proposed merger of ntl and Telewest or any related
transaction. In connection with the proposed merger and related
transactions, ntl and Telewest have filed a joint proxy
statement/prospectus with the U.S. Securities and Exchange Commission
(the "SEC"). INVESTORS AND SECURITY HOLDERS OF NTL AND TELEWEST ARE
ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THOSE DOCUMENTS WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND RELATED
TRANSACTIONS. The final joint proxy statement/prospectus was mailed to
stockholders of ntl and Telewest on or about January 31, 2006.
Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus, and other documents filed by ntl and
Telewest with the SEC, at the SEC's web site at http://www.sec.gov.
Free copies of the joint proxy statement/prospectus, and each
company's other filings with the SEC, may also be obtained from the
respective companies. Free copies of ntl's filings may be obtained by
directing a request to ntl Incorporated, 909 Third Avenue, Suite 2863,
New York, New York 10022, Attention: Investor Relations. Free copies
of Telewest's filings may be obtained by directing a request to
Telewest Global, Inc., 160 Great Portland Street, London W1W 5QA,
United Kingdom, Attention: Investor Relations.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be any
sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
-0-
*T
Appendices:
A) NTL Financial Statements
-- Consolidated Statement of Operations
-- Consolidated Balance Sheet
-- Consolidated Statement of Cashflows
B) NTL Fixed Asset Additions (accrual basis) and Telewest Fixed Asset
Additions
C) NTL and Telewest Residential Operations statistics
D) Telewest Income Statement
E) Use of non-U.S. GAAP (Generally Accepted Accounting Principles)
Financial Measures and Reconciliations to U.S. GAAP
(I) NTL
(II) Telewest
F) virgin.net revenue impact related to acquisition
Appendices
A) Financial Statements
NTL CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
3 months ended
December 31, Year ended December 31,
---------------------------
2005 2004 2005 2004 2003
-------------------------------------------
unaudited
Revenue GBP GBP GBP GBP GBP
484.6 512.3 1,947.6 2,000.3 1,887.4
Costs and expenses
Operating costs
(exclusive of
depreciation shown
separately below) (205.2)(205.9) (808.3) (827.7) (788.9)
Selling, general and
administrative
expenses (124.7)(131.5) (483.0) (502.2) (500.8)
Other charges (22.4) (4.8) (24.8) (23.8) (22.3)
Depreciation (139.5)(154.1) (541.7) (594.9) (666.9)
Amortization (27.2) (27.1) (109.5) (104.2) (102.9)
-------------------------------------------
Total costs and expenses (519.0)(523.4)(1,967.3)(2,052.8)(2,081.8)
-------------------------------------------
Operating loss (34.4) (11.1) (19.7) (52.5) (194.4)
Other income (expense)
Interest income and
other, net 7.8 0.4 29.4 5.8 10.2
Interest expense (55.6) (64.1) (235.8) (271.0) (456.5)
Loss on
extinguishment of
debt - - (2.0) (162.2) -
Share of (losses)
income from equity
investments - (0.4) - (0.1) 1.1
Gain on derivative
instruments 0.9 - 0.9 - -
Foreign currency
transaction gains
(losses) 35.2 (8.4) 5.3 (24.4) 33.0
-------------------------------------------
Loss from continuing
operations before income
taxes (46.1) (83.6) (221.9) (504.4) (606.6)
and minority interest
expense
Income tax expense (10.1) (3.0) (18.8) (5.0) (0.1)
Minority interest expense - - (1.0) - -
-------------------------------------------
Loss from continuing
operations (56.2) (86.6) (241.7) (509.4) (606.7)
-------------------------------------------
Discontinued operations
Income from discontinued
operations before income
taxes 0.2 12.5 5.7 25.2 21.9
Income tax expense - 0.5 (0.2) (0.7) -
Gain on disposal,
net of tax (0.2) - 657.2 - -
-------------------------------------------
Income from discontinued
operations 0.0 13.0 662.7 24.5 21.9
-------------------------------------------
Net income (loss) (GBP (GBP GBP (GBP (GBP
56.2) 73.6) 421.0 484.9) 584.8)
===========================================
Basic and diluted loss from (GBP (GBP (GBP (GBP (GBP
continuing operations per 0.7) 1.0) 2.8) 5.8) 9.6)
common share
===========================================
Basic and diluted income GBP - GBP0.1 GBP 7.8 GBP 0.3 GBP 0.3
from discontinued operations
per common share
===========================================
Basic and diluted net (GBP (GBP GBP 4.9 (GBP (GBP
income (loss) per common 0.7) 0.8) 5.6) 9.3)
share
===========================================
Average number of shares
outstanding 85.1 87.5 85.5 87.2 63.2
===========================================
NTL CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
------------------
2005 2004
-------- ---------
Assets
Current assets
Cash and cash equivalents GBP GBP
735.2 125.2
Restricted cash 3.4 15.8
Marketable securities 96.9 11.6
Accounts receivable - trade, less allowance
for doubtful accounts of GBP 41.7 (2005) and
GBP 43.4 (2004) 191.8 207.3
Prepaid expenses and other current assets 112.4 47.8
Current assets held for sale - 50.3
-------- ---------
Total current assets 1,139.7 458.0
Fixed assets, net 3,294.9 3,531.6
Reorganization value in excess of amounts
allocable to identifiable assets 193.0 200.7
Customer lists, net 247.6 354.0
Other intangible assets, net 2.4 5.5
Investments in and loans to affiliates, net - 0.7
Other assets, net of accumulated amortization of
GBP 32.2 (2005) and GBP 8.0 (2004) 110.9 123.4
Other assets held for sale - 819.4
-------- ---------
Total assets GBP GBP
4,988.5 5,493.3
======== =========
Liabilities and shareholders' equity
Current liabilities
Accounts payable GBP GBP
176.9 114.0
Accrued expenses and other current
liabilities 291.1 300.1
Interest payable 37.8 51.9
Deferred revenue 103.2 109.5
Current liabilities of discontinued
operations - 108.4
Current portion of long-term debt 0.8 60.9
-------- ---------
Total current liabilities 609.8 744.8
Long-term debt, net of current portion 2,279.2 2,952.6
Deferred revenue and other long-term liabilities 134.3 217.2
Deferred income taxes 9.2 -
Long-term liabilities of discontinued operations - 4.2
Minority
Interest 1.0 -
-------- ---------
Total
liabilities 3,033.5 3,918.8
-------- ---------
Shareholders' equity
Preferred stock - $.01 par value; authorized
5.0 (2005 and 2004) shares; issued and
outstanding none - -
Common stock - $.01 par value; authorized 400.0 (2005
and 2004) shares; issued 88.4 (2005) and 87.7 (2004)
and outstanding 85.2 (2005) and 87.7 (2004) 0.5 0.5
Additional paid-in capital 2,687.0 2,670.0
Treasury stock (114.0) -
Unearned stock-based compensation (15.3) (17.0)
Accumulated other comprehensive income (loss) 45.5 (9.3)
Accumulated deficit (648.7)(1,069.7)
-------- ---------
Total shareholders' equity 1,955.0 1,574.5
-------- ---------
Total liabilities and shareholders' equity GBP GBP
4,988.5 5,493.3
======== =========
NTL CONSOLIDATED STATEMENT OF CASHFLOWS
(in millions)
Year ended December 31,
------------------------------------
2005 2004 2003
---------- ------------ ------------
Operating Activities:
Net income (loss) GBP 421.0 (GBP 484.9) (GBP 584.8)
Income from discontinued
operations (662.7) (24.5) (21.9)
---------- ------------ ------------
Loss from continuing operations (241.7) (509.4) (606.7)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Depreciation and amortization 651.2 699.1 769.8
Non-cash compensation 9.8 14.3 7.6
Share of income from equity
investments - 0.1 1.1
Deferred income taxes 20.8 4.0 (6.7)
Loss on extinguishment of debt 2.0 162.2 -
Amortization of original issue
discount and deferred finance
costs 24.2 9.4 83.4
Minority interest expense 1.0 - -
Other - - 0.1
Changes in operating assets and
liabilities, net of effect from
business acquisitions and
dispositions:
Marketable securities (79.3) (12.1) 3.2
Accounts receivable 15.5 (15.8) 23.1
Prepaid expenses and other current
assets (13.3) 4.1 (11.9)
Other assets (1.0) 7.4 -
Accounts payable 45.5 (28.5) (25.5)
Accrued expenses and other current
liabilities (26.7) (53.5) (48.9)
Deferred revenue and other long-
term liabilities (82.4) (32.0) 13.7
---------- ------------ ------------
Net cash provided by (used in)
operating activities 325.6 249.3 202.3
---------- ------------ ------------
Investing activities
Purchase of fixed assets (288.1) (274.5) (327.9)
Investments in and loans to
affiliates 0.7 1.0 3.3
Proceeds from sale of assets 2.6 1.3 -
Acquisitions, net of cash
acquired - (18.8) -
Decrease in restricted cash 12.4 - -
Proceeds from the sale of
broadcast operations, net 1,229.0 - -
Proceeds from the sale of
Ireland operations, net 216.2 - -
---------- ------------ ------------
Net cash provided by (used
in) investing activities 1,172.8 (291.0) (324.6)
---------- ------------ ------------
Financing activities
Proceeds from borrowings, net
of financing costs - 2,902.0 -
Net proceeds from rights
offering - - 806.5
Proceeds from employee stock
options 5.0 4.4 1.9
Purchase of stock (114.0) - -
Principal payments on long-term
debt (786.6) (3,288.7) (734.4)
---------- ------------ ------------
Net cash provided by (used
in) financing activities (895.6) (382.3) 74.0
---------- ------------ ------------
Cash flow from discontinued
operations
Net cash (used) provided by
operating activities (14.3) 127.5 128.3
Net cash used in investing
activities (4.1) (21.1) (23.3)
---------- ------------ ------------
Net cash (used) provided by
discontinued operations (18.4) 106.4 105.0
---------- ------------ ------------
Effect of exchange rate changes on
cash and cash equivalents 25.6 (3.3) (8.7)
Increase (decrease) in cash and
cash equivalents 610.0 (320.9) 48.0
Cash and cash equivalents at
beginning of year 125.2 446.1 398.1
---------- ------------ ------------
Cash and cash equivalents at end GBP 735.2 GBP 125.2 GBP 446.1
of year
========== ============ ============
NTL Fixed Assets Additions (Accrual Basis)
3 months ended Dec 31,
(in millions) 2005 2004
----------- -----------
NCTA Fixed Asset Additions
CPE GBP 31.6 GBP 29.1
Scaleable Infrastructure 48.7 24.5
Commercial 6.2 8.8
Upgrade/Rebuild 2.5 1.3
Support Capital 7.5 18.6
----------- -----------
Total NCTA Fixed Asset Additions 96.5 82.3
Non NCTA Fixed Asset Additions (1.9) (3.4)
----------- -----------
Total Fixed Asset Additions (Accrual Basis) GBP 94.6 GBP 78.9
=========== ===========
Note: ntl is not a member of NCTA and is providing this information
solely for comparative purposes.
Fixed asset additions (accrual basis) are from continuing operations.
See Appendix E for a discussion of the use of fixed asset additions
(accrual basis) as a non-U.S.GAAP measure and the reconciliation of
fixed asset additions (accrual basis) to U.S. GAAP purchase of fixed
assets.
Telewest Fixed Asset Additions
3 months ended
(in millions) Dec 31, 2005 Dec 31, 2004
------------ ------------
NCTA Fixed Asset Additions
CPE GBP 17 GBP 25
Scaleable Infrastructure 6 14
Commercial 12 8
Line Extensions (1) 1
Upgrade/Rebuild 16 10
Support Capital 14 7
------------ ------------
Total NCTA Fixed Additions 64 65
Content Segment - 1
sit-up Segment - -
Change in Capital Accruals (5) (2)
and Leasing ------------ ------------
Total Fixed Asset Additions GBP 59 GBP 64
============ ============
Note: Telewest is not a member of NCTA and is providing this
information solely for comparative purposes. See Appendix E for a
discussion of the use if fixed asset additions as a non-U.S. GAAP
measure and the reconciliation of fixed asset additions to U.S. GAAP
purchase of fixed assets.
C) NTL Residential Operations Statistics
(data in 000's except percentages, RGU/Customer and ARPU)
ntl Consumer (1)
Q4-05 Q3-05 Q2-05 Q1-05 Q4-04
--------------------------------------------
Customers
Opening Customers 3,315.4 3,261.5 3,194.9 3,136.8 3,102.8
Virgin.net at
acquisition 0.0 61.8
Data Cleanse (2) (18.1) 0.0 (20.0)
Adjusted Opening
Customers 3,297.3 3,261.5 3,194.9 3,136.8 3,144.6
Gross customer adds 195.4 218.6 205.5 195.1 185.2
Total Customer
disconnections (156.8) (164.7) (138.9) (137.0) (151.0)
Net customer adds 38.6 53.9 66.6 58.1 34.2
Reduction to customer
count (3) (10.0) 0.0 (42.0)
--------------------------------------------
Closing Customers 3,325.9 3,315.4 3,261.5 3,194.9 3,136.8
Monthly customer churn % 1.6% 1.7% 1.4% 1.4% 1.6%
RGUS
Opening RGUs 6,323.6 6,183.1 6,049.9 5,948.4 5,911.9
Virgin.net at
acquisition 61.8
Data Cleanse (2) (43.1) 0.0 (29.3)
Adjusted Opening RGUs 6,280.5 6,183.1 6,049.9 5,948.4 5,944.4
Gross RGU adds 505.7 525.7 472.5 420.0 409.8
RGU disconnections (373.8) (385.2) (339.3) (318.2) (329.3)
Net RGU adds 131.9 140.5 133.2 101.8 80.5
Reduction to RGU
count (3) (12.3) (0.3) (76.5)
--------------------------------------------
Closing RGUs 6,400.1 6,323.6 6,183.1 6,049.9 5,948.4
Net RGU Adds
Telephone (3.7) (3.3) 19.6 8.2 (4.6)
Television 4.3 (21.8) 1.8 (19.6) (28.0)
DTV 42.9 4.2 17.2 5.4 0.1
Broadband 131.3 165.6 111.8 113.2 113.1
--------------------------------------------
Total Net RGU Adds 131.9 140.5 133.2 101.8 80.5
Revenue Generating Units
(RGUs)
Telephone 2,633.4 2,663.0 2,666.3 2,646.7 2,638.5
Television 1,942.8 1,940.0 1,961.8 1,960.0 1,979.6
DTV 1,445.1 1,409.3 1,405.1 1,387.9 1,382.5
Broadband 1,823.9 1,720.6 1,555.0 1,443.2 1,330.3
--------------------------------------------
Total RGUs 6,400.1 6,323.6 6,183.1 6,049.9 5,948.4
RGU / Customer 1.92 1.91 1.90 1.89 1.90
Internet Customers
Dial-up (metered) 321.9 355.3 436.5 486.5 579.5
Dial-up (unmetered) 138.9 172.2 173.3 202.0 167.6
DTV Access 7.6 8.0 8.4 6.9 7.7
--------------------------------------------
Total Dial-up and DTV
access customers 468.4 535.5 618.2 695.4 754.8
Broadband 1,791.6 1,699.1 1,532.1 1,429.6 1,262.5
Virgin.net
broadband at
acquisition 0.0 - 61.8
Off-net 32.3 21.5 22.9 13.6 6.0
--------------------------------------------
Total Broadband Customers 1,823.9 1,720.6 1,555.0 1,443.2 1,330.3
--------------------------------------------
Total Internet 2,292.3 2,256.1 2,173.2 2,138.6 2,085.1
--------------------------------------------
Bundled Customers
Dual RGU 1,262.1 1,322.5 1,366.7 1,374.5 1,386.0
Triple RGU 906.0 842.9 777.5 740.3 712.8
Percentage of dual or
triple RGUs 65.2% 65.3% 65.7% 66.2% 66.9%
Percentage of triple
RGUs 27.2% 25.4% 23.8% 23.2% 22.7%
Homes Marketable On-net
Telephone
ATV
DTV
Broadband
Penetration of Homes
Marketable On-net
Telephone
Television - Total
Television - DTV
Broadband
Total Customer
GBP GBP GBP GBP GBP
ARPU 37.45 37.65 38.45 39.55 41.43
ntl on-net
Q4 05 Q3-05 Q2-05 Q1-05 Q4-04
--------------------------------------------
Customers
Opening Customers 3,097.3 3,055.9 3,008.1 2,975.3 3,013.8
Virgin.net at
acquisition
Data Cleanse (2) (18.1) 0.0 (20.0)
Adjusted Opening
Customers 3,079.2 3,055.9 3,008.1 2,975.3 2,993.8
Gross customer adds 162.8 182.4 171.4 157.0 162.1
Total Customer
disconnections (142.2) (141.0) (123.6) (124.2) (141.4)
Net customer adds 20.6 41.4 47.8 32.8 20.7
Reduction to customer
count (3) (10.0) 0.0 0.0 0.0 (39.2)
--------------------------------------------
Closing Customers 3,089.8 3,097.3 3,055.9 3,008.1 2,975.3
Monthly customer churn % 1.5% 1.5% 1.3% 1.4% 1.5%
RGUS
Opening RGUs 6,085.0 5,963.7 5,856.6 5,784.2 5,822.0
Virgin.net at
acquisition
Data Cleanse (2) (43.1) (29.3)
Adjusted Opening RGUs 6,041.9 5,963.7 5,856.6 5,784.2 5,792.7
Gross RGU adds 472.1 476.5 433.5 378.2 386.7
RGU disconnections (360.7) (355.2) (326.4) (305.5) (321.3)
Net RGU adds 111.4 121.3 107.1 72.7 65.2
Reduction to RGU
count (3) (12.3) 0.0 0.0 (0.3) (73.7)
--------------------------------------------
Closing RGUs 6,141.0 6,085.0 5,963.7 5,856.6 5,784.2
Net RGU Adds
Telephone 0.3 5.4 21.5 12.4 2.4
Television 4.3 (21.8) 1.9 (19.6) (28.0)
DTV 42.9 4.2 17.2 5.4 0.1
Broadband 106.8 137.7 83.7 79.9 90.8
--------------------------------------------
Total Net RGU Adds 111.4 121.3 107.1 72.7 65.2
Revenue Generating Units
(RGUs)
Telephone 2,573.1 2,598.6 2,593.2 2,571.7 2,559.3
Television 1,942.7 1,940.1 1,961.9 1,960.0 1,979.6
DTV 1,445.1 1,409.3 1,405.1 1,387.9 1,382.5
Broadband 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
--------------------------------------------
Total RGUs 6,141.0 6,085.0 5,963.7 5,856.6 5,784.2
RGU / Customer 1.99 1.96 1.95 1.95 1.94
Internet Customers
Dial-up (metered) 37.2 40.9 47.4 52.1 54.8
Dial-up (unmetered) 78.9 97.0 126.7 144.8 167.6
DTV Access 7.6 8.0 8.4 6.9 7.7
--------------------------------------------
Total Dial-up and DTV
access customers 123.7 145.9 182.5 203.8 230.1
Broadband 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
Virgin.net
broadband at
acquisition
Off-net
--------------------------------------------
Total Broadband Customers 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
--------------------------------------------
Total Internet 1,748.9 1,692.2 1,591.1 1,528.7 1,475.4
--------------------------------------------
Bundled Customers
Dual RGU 1,239.2 1,301.9 1,352.9 1,368.0 1,383.2
Triple RGU 906.0 842.9 777.5 740.3 712.8
Percentage of dual or
triple RGUs 69.4% 69.2% 69.7% 70.1% 70.4%
Percentage of triple
RGUs 29.3% 27.2% 25.4% 24.6% 24.0%
Homes Marketable On-net
Telephone 7,601.3 7,592.0 7,579.1 7,569.2 7,739.5
ATV 7,735.9 7,935.8 7,922.7 7,912.6 7,910.4
DTV 7,447.1 7,437.8 7,424.9 7,394.6 7,420.4
Broadband 7,088.4 7,079.3 7,066.7 6,995.9 6,961.9
Penetration of Homes
Marketable On-net
Telephone 33.9% 34.2% 34.2% 34.0% 33.1%
Television - Total 25.1% 24.4% 24.8% 24.8% 25.0%
Television - DTV 19.4% 18.9% 18.9% 18.8% 18.6%
Broadband 22.9% 21.8% 19.9% 18.9% 17.9%
Total Customer 39.9% 39.0% 38.6% 38.0% 37.6%
GBP GBP GBP GBP GBP
ARPU 38.98 39.08 39.81 40.82 42.39
Notes
(1) Includes on-net, off-net and virgin.net customers acquired in
November 2004.
(2) Data cleanse activity, as part of the harmonisation of billing
systems, resulted in a reduction in customers of approximately
20,000 in Q4-04. Further datacleanse in Q405 resulted in an
adjustment of 18,100 customers and 43,100 RGUs, a decrease of
approximately 17,700 Telco; 26,600 Broadband and an increase of
1,300 net TV RGUs.
(3) In Q4-04 we adjusted customer and RGU numbers following the
implementation of a new credit policy and the resultant
disconnection of inactive backlog customers. Further review in
Q4-05 resulted in adjustment of an additional 10,000 inactive
backlog disconnects.
Telewest (1)
Q4-05 Q3-05 Q2-05 Q1-05 Q4-04
--------------------------------------------
Customers
Opening Customers 1,848.1 1,837.2 1,822.5 1,799.6 1,769.3
Virgin.net at
acquisition
Data Cleanse (2)
Adjusted Opening
Customers 1,848.1 1,837.2 1,822.5 1,799.6 1,769.3
Gross customer adds 86.1 89.5 79.4 78.7 89.5
Total Customer
disconnections (66.0) (78.6) (64.7) (55.7) (59.2)
Net customer adds 20.1 10.9 14.7 23.0 30.3
Reduction to customer
count (3)
--------------------------------------------
Closing Customers 1,868.2 1,848.1 1,837.2 1,822.5 1,799.6
Monthly customer churn % 1.2% 1.4% 1.2% 1.0% 1.1%
RGUS
Opening RGUs 3,955.2 3,873.8 3,784.8 3,671.4 3,539.2
Virgin.net at
acquisition
Data Cleanse (2)
Adjusted Opening RGUs 3,955.2 3,873.8 3,784.8 3,671.4 3,539.2
Gross RGU adds 301.7 309.0 274.9 271.1 292.5
RGU disconnections (197.4) (227.6) (185.9) (157.7) (160.3)
Net RGU adds 104.4 81.4 89.0 113.4 132.2
Reduction to RGU
count (3)
--------------------------------------------
Closing RGUs 4,059.6 3,955.2 3,873.8 3,784.8 3,671.4
Net RGU Adds
Telephone 0.5 (2.8) 11.6 17.3 25.7
Television 19.0 16.8 11.3 7.7 15.5
DTV 42.6 38.6 39.9 27.3 43.7
Broadband 84.9 67.3 66.1 88.5 91.0
--------------------------------------------
Total Net RGU Adds 104.4 81.4 89.0 113.4 132.2
Revenue Generating Units
(RGUs)
Telephone 1,686.9 1,686.4 1,689.2 1,677.6 1,660.3
Television 1,367.6 1,348.6 1,331.7 1,320.5 1,312.8
DTV 1,270.8 1,228.2 1,189.5 1,149.6 1,122.3
Broadband 1,005.1 920.2 852.8 786.7 698.2
--------------------------------------------
Total RGUs 4,059.6 3,955.2 3,873.8 3,784.8 3,671.4
RGU / Customer 2.17 2.14 2.11 2.08 2.04
Internet Customers
Dial-up (metered) 19.6 23.6 25.0 29.4 33.4
Dial-up (unmetered) 38.3 49.5 65.5 85.9 107.2
DTV Access
--------------------------------------------
Total Dial-up and DTV
access customers 57.9 73.2 90.6 115.3 140.6
Broadband 1,005.1 920.2 852.8 786.7 698.2
Virgin.net
broadband at
acquisition
Off-net
--------------------------------------------
Total Broadband Customers 1,005.1 920.2 852.8 786.7 698.2
--------------------------------------------
Total Internet 1,063.0 993.4 943.4 902.0 838.9
--------------------------------------------
Bundled Customers
Dual RGU 794.0 812.6 831.7 857.7 886.3
Triple RGU 698.6 647.3 602.4 552.3 492.8
Percentage of dual or
triple RGUs 79.9% 79.0% 78.1% 77.4% 76.6%
Percentage of triple
RGUs 37.4% 35.0% 32.8% 30.3% 27.4%
Homes Marketable On-net
Telephone 4,698.4 4,696.4 4,694.0 4,691.7 4,683.2
ATV 4,700.8 4,698.1 4,698.5 4,694.5 4,686.8
DTV 4,525.2 4,503.9 4,501.2 4,451.4 4,420.4
Broadband 4,525.2 4,503.9 4,501.2 4,451.4 4,420.4
Penetration of Homes
Marketable On-net
Telephone 35.9% 35.9% 36.0% 35.8% 35.5%
Television - Total 29.1% 28.7% 28.3% 28.1% 28.0%
Television - DTV 28.1% 27.3% 26.4% 25.8% 25.4%
Broadband 22.2% 20.4% 18.9% 17.7% 15.8%
Total Customer 39.7% 39.3% 39.1% 38.8% 38.4%
ARPU GBP GBP GBP GBP GBP
45.17 45.17 44.86 45.34 45.13
ntl on-net (1)
Q4 05 Q3-05 Q2-05 Q1-05 Q4-04
--------------------------------------------
Customers
Opening Customers 3,097.3 3,055.9 3,008.1 2,975.3 3,013.8
Virgin.net at
acquisition
Data Cleanse (2) (18.1) 0.0 (20.0)
Adjusted Opening
Customers 3,079.2 3,055.9 3,008.1 2,975.3 2,993.8
Gross customer adds 162.8 182.4 171.4 157.0 162.1
Total Customer
disconnections (142.2) (141.0) (123.6) (124.2) (141.4)
Net customer adds 20.6 41.4 47.8 32.8 20.7
Reduction to customer
count (3) (10.0) 0.0 0.0 0.0 (39.2)
--------------------------------------------
Closing Customers 3,089.8 3,097.3 3,055.9 3,008.1 2,975.3
Monthly customer churn % 1.5% 1.5% 1.3% 1.4% 1.5%
RGUS
Opening RGUs 6,085.0 5,963.7 5,856.6 5,784.2 5,822.0
Virgin.net at
acquisition
Data Cleanse (2) (43.1) (29.3)
Adjusted Opening RGUs 6,041.9 5,963.7 5,856.6 5,784.2 5,792.7
Gross RGU adds 472.1 476.5 433.5 378.2 386.7
RGU disconnections (360.7) (355.2) (326.4) (305.5) (321.3)
Net RGU adds 111.4 121.3 107.1 72.7 65.2
Reduction to RGU
count (3) (12.3) 0.0 0.0 (0.3) (73.7)
--------------------------------------------
Closing RGUs 6,141.0 6,085.0 5,963.7 5,856.6 5,784.2
Net RGU Adds
Telephone 0.3 5.4 21.5 12.4 2.4
Television 4.3 (21.8) 1.9 (19.6) (28.0)
DTV 42.9 4.2 17.2 5.4 0.1
Broadband 106.8 137.7 83.7 79.9 90.8
--------------------------------------------
Total Net RGU Adds 111.4 121.3 107.1 72.7 65.2
Revenue Generating Units
(RGUs)
Telephone 2,573.1 2,598.6 2,593.2 2,571.7 2,559.3
Television 1,942.7 1,940.1 1,961.9 1,960.0 1,979.6
DTV 1,445.1 1,409.3 1,405.1 1,387.9 1,382.5
Broadband 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
--------------------------------------------
Total RGUs 6,141.0 6,085.0 5,963.7 5,856.6 5,784.2
RGU / Customer 1.99 1.96 1.95 1.95 1.94
Internet Customers
Dial-up (metered) 37.2 40.9 47.4 52.1 54.8
Dial-up (unmetered) 78.9 97.0 126.7 144.8 167.6
DTV Access 7.6 8.0 8.4 6.9 7.7
--------------------------------------------
Total Dial-up and DTV
access customers 123.7 145.9 182.5 203.8 230.1
Broadband 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
Virgin.net
broadband at
acquisition
Off-net
--------------------------------------------
Total Broadband Customers 1,625.2 1,546.3 1,408.6 1,324.9 1,245.3
--------------------------------------------
Total Internet 1,748.9 1,692.2 1,591.1 1,528.7 1,475.4
--------------------------------------------
Bundled Customers
Dual RGU 1,239.2 1,301.9 1,352.9 1,368.0 1,383.2
Triple RGU 906.0 842.9 777.5 740.3 712.8
Percentage of dual or
triple RGUs 69.4% 69.2% 69.7% 70.1% 70.4%
Percentage of triple
RGUs 29.3% 27.2% 25.4% 24.6% 24.0%
Homes Marketable On-net
Telephone 7,601.3 7,592.0 7,579.1 7,569.2 7,739.5
ATV 7,735.9 7,935.8 7,922.7 7,912.6 7,910.4
DTV 7,447.1 7,437.8 7,424.9 7,394.6 7,420.4
Broadband 7,088.4 7,079.3 7,066.7 6,995.9 6,961.9
Penetration of Homes
Marketable On-net
Telephone 33.9% 34.2% 34.2% 34.0% 33.1%
Television - Total 25.1% 24.4% 24.8% 24.8% 25.0%
Television - DTV 19.4% 18.9% 18.9% 18.8% 18.6%
Broadband 22.9% 21.8% 19.9% 18.9% 17.9%
Total Customer 39.9% 39.0% 38.6% 38.0% 37.6%
ARPU GBP GBP GBP GBP GBP
38.98 39.08 39.81 40.82 42.39
Notes
(1) All subscriber information is reported in line with existing
Telewest and ntl definitions respectively. It is anticipated that
review and alignment of policies of the individual companies will
result in adjustments post deal close.
(2) Data cleanse activity, as part of the harmonisation of ntl billing
systems, resulted in a reduction in customers of approximately
20,000 in Q4-04. Further datacleanse in Q405 resulted in an
adjustment in ntl of 18,100 customers and 43,100 RGUs, a decrease
of approximately 17,700 Telco; 26,600 Broadband and an increase of
1,300 net TV RGUs.
(3) In Q4-04 we adjusted ntl customer and RGU numbers following the
implementation of a new credit policy and the resultant
disconnection of inactive backlog customers. Further review in
Q4-05 resulted in adjustment of an additional 10,000 inactive
backlog disconnects.
UK Cable (1 & 2)
Q4-05 Q3-05 Q2-05 Q1-05 Q4-04
------------------------------------------
Customers
Opening Customers 4,945.4 4,893.1 4,830.6 4,774.9 4,783.1
Virgin.net at acquisition 0.0 0.0 0.0 0.0 0.0
Data Cleanse (3) (18.1) 0.0 0.0 0.0 (20.0)
Adjusted Opening
Customers 4,927.3 4,893.1 4,830.6 4,774.9 4,763.1
Net customer adds 40.7 52.3 62.5 55.7 51.0
Reduction to customer
count (4) (10.0) 0.0 0.0 0.0 (39.2)
------------------------------------------
Closing Customers 4,958.0 4,945.4 4,893.1 4,830.6 4,774.9
RGUS
Opening RGUs 10,040.2 9,837.5 9,641.4 9,455.6 9,361.2
Virgin.net at acquisition 0.0 0.0 0.0 0.0 0.0
Data Cleanse (3) (43.1) 0.0 0.0 0.0 (29.3)
Adjusted Opening RGUs 9,997.1 9,837.5 9,641.4 9,455.6 9,331.9
Net RGU adds 215.8 202.7 196.1 186.1 197.4
Reduction to RGU count (4) (12.3) 0.0 0.0 (0.3) (73.7)
------------------------------------------
Closing RGUs 10,200.6 10,040.2 9,837.5 9,641.4 9,455.6
Net RGU Adds
Telephone 0.8 2.6 33.1 29.7 28.1
Television 23.3 (5.0) 13.2 (11.9) (12.5)
DTV 85.5 42.9 57.1 32.8 43.8
Broadband 191.7 205.1 149.8 168.4 181.8
------------------------------------------
Total Net RGU Adds 215.8 202.7 196.1 186.1 197.4
Revenue Generating Units
(RGUs)
Telephone 4,260.0 4,285.0 4,282.4 4,249.3 4,219.6
Television 3,310.3 3,288.7 3,293.6 3,280.5 3,292.4
DTV 2,715.9 2,637.5 2,594.6 2,537.5 2,504.8
Broadband 2,630.3 2,466.5 2,261.4 2,111.6 1,943.5
------------------------------------------
Total RGUs 10,200.6 10,040.2 9,837.5 9,641.4 9,455.6
RGU / Customer 2.06 2.03 2.01 2.00 1.98
Internet Customers
Dial-up (metered) 56.8 64.5 72.4 81.5 88.2
Dial-up (unmetered) 117.2 146.6 192.2 230.7 274.8
DTV Access 7.6 8.0 8.4 6.9 7.7
------------------------------------------
Total Dial-up and DTV access
customers 181.6 219.0 273.0 319.1 370.7
Broadband 2,630.3 2,466.5 2,261.4 2,111.6 1,943.5
------------------------------------------
Total Internet 2,811.9 2,685.6 2,534.5 2,430.7 2,314.3
------------------------------------------
Bundled Customers
Dual RGU 2,033.2 2,114.5 2,184.6 2,225.7 2,269.5
Triple RGU 1,604.6 1,490.2 1,379.9 1,292.6 1,205.6
Percentage of dual or
triple RGUs 73.4% 72.9% 72.8% 72.8% 72.8%
Percentage of triple RGUs 32.4% 30.1% 28.2% 26.8% 25.2%
Notes
(1) UK Cable includes Telewest and ntl on-net subscribers.
(2) All subscriber information is reported in line with existing
Telewest and ntl definitions respectively. It is anticipated that
review and alignment of policies of the individual companies will
result in adjustments post deal close.
(3) Data cleanse activity, as part of the harmonisation of ntl billing
systems, resulted in a reduction in customers of approximately
20,000 in Q4-04. Further datacleanse in ntl in Q405 resulted in an
adjustment of 18,100 customers and 43,100 RGUs, a decrease of
approximately 17,700 Telco; 26,600 Broadband and an increase of
1,300 net TV RGUs.
(4) In Q4-04 we adjusted ntl customer and RGU numbers following the
implementation of a new credit policy and the resultant
disconnection of inactive backlog customers. Further review in
Q4-05 resulted in adjustment of an additional 10,000 inactive
backlog disconnects.
D) TELEWEST INCOME STATEMENT
Telewest Global, Inc.
Consolidated Statements of Operations
(amounts in GBP millions, except share and per share data)
(unaudited)
Three months ended Dec. 31,
-------------------------------
2005 2004
--------------- ---------------
Revenue
Consumer Sales Division 252 241
Business Sales Division 63 63
----------------------------------------------------------------------
Total Cable segment 315 304
Content segment 36 32
sit-up segment 84 -
----------------------------------------------------------------------
Total revenue 435 336
----------------------------------------------------------------------
Operating expenses
Cable segment expenses 73 69
Content segment expenses 29 25
sit-up segment expenses 61 -
Depreciation 98 101
Amortization of intangible assets 16 9
Selling, general and administrative
expenses 129 114
Merger related fees 6 -
----------------------------------------------------------------------
412 318
----------------------------------------------------------------------
Operating income 23 18
Other income/(expense)
Interest income 5 5
Interest expense (43) (47)
Foreign exchange (losses)/gains, net (2) 3
Share of net income of affiliates 3 4
Other, net 3 -
----------------------------------------------------------------------
Loss before income taxes (11) (17)
Income tax charge (3) -
----------------------------------------------------------------------
Net loss (14) (17)
----------------------------------------------------------------------
Basic and diluted loss per share of GBP (0.06) GBP (0.07)
common stock
Weighted average number of shares of
common stock - (millions) 246 245
----------------------------------------------------------------------
*T
E) Non-U.S. GAAP Measures
(I) NTL Use of non-U.S. GAAP Financial Measures and Reconciliation
to U.S. GAAP
Operating income before depreciation, amortization and other
charges (OCF)
Operating income before depreciation, amortization and other
charges, which we refer to as OCF, is not a financial measure
recognised under U.S. GAAP. OCF represents our earnings before
interest, taxes, depreciation and amortisation, other charges, share
of income from equity investments, loss on extinguishment of debt and
foreign currency transaction gains (losses). Our management, including
our chief executive officer who is our chief operating decision maker,
considers OCF as an important indicator of our operational strength
and performance. OCF excludes the impact of costs and expenses that do
not directly affect our cash flows. Other charges, including
restructuring charges, are also excluded from OCF as management
believes they are not characteristic of our underlying business
operations. OCF is most directly comparable to the U.S. GAAP financial
measure operating income (loss). Some of the significant limitations
associated with the use of OCF as compared to operating income (loss)
are that OCF does not consider the amount of required reinvestment in
depreciable fixed assets and ignores the impact on our results of
operations of items that management believes are not characteristic of
our underlying business operations.
We believe OCF is helpful for understanding our performance and
assessing our prospects for the future, and that it provides useful
supplemental information to investors. In particular, this non-U.S.
GAAP financial measure reflects an additional way of viewing aspects
of our operations that, when viewed with our U.S. GAAP results and the
reconciliation to operating income (loss) shown below, provides a more
complete understanding of factors and trends affecting our business.
Because non-U.S. GAAP financial measures are not standardised, it may
not be possible to compare OCF with other companies' non-U.S. GAAP
financial measures that have the same or similar names.
-0-
*T
Reconciliation of operating income before depreciation, amortization
and other charges to U.S. GAAP operating income (loss)
(in millions)
Year ended
December 31, 3 months ended
---------------------------------------
Dec 31, Sept 30, June 30, March 31,
2005 2005 2005 2005 2005
------------ --------- --------- --------- ---------
Revenue GBP 1,947.6 GBP 484.6 GBP 482.7 GBP 482.5 GBP 497.8
------------ --------- --------- --------- ---------
Operating income
before
depreciation,
amortization and
other charges 656.3 154.7 166.3 164.2 171.1
Reconciling
items:
Other charges (24.8) (22.4) (1.3) (0.7) (0.4)
Depreciation and
amortization (651.2) (166.7) (169.7) (157.1) (157.7)
------------ --------- --------- --------- ---------
Operating (loss)
income (GBP 19.7)(GBP 34.4) (GBP 4.7) GBP 6.4 GBP 13.0
============ ========= ========= ========= =========
OCF as a
percentage of
revenue (OCF
margin) 33.7% 31.9% 34.5% 34.0% 34.4%
Operating (loss)
income as a
percentage of
revenue (1.0%) (7.1%) (1.0%) 1.3% 2.6%
Year ended
December 31, 3 months ended
---------------------------------------
Dec 31, Sept 30, June 30, March 31,
2004 2004 2004 2004 2004
------------ --------- --------- --------- ---------
Revenue GBP 2,000.3 GBP 512.3 GBP 498.5 GBP 493.8 GBP 495.7
------------ --------- --------- --------- ---------
Operating income
before
depreciation,
amortization
and other
charges 670.4 174.9 171.4 164.0 160.1
Reconciling
items:
Other charges (23.8) (4.8) (3.7) (14.7) (0.6)
Depreciation and
amortization (699.1) (181.2) (175.5) (171.9) (170.5)
------------ --------- --------- --------- ---------
Operating (loss) (GBP 52.5) (GBP (GBP (GBP (GBP
income 11.1) 7.8) 22.6) 11.0)
============ ========= ========= ========= =========
OCF as a
percentage of
revenue (OCF
margin) 33.5% 34.1% 34.4% 33.2% 32.3%
Operating (loss)
income as a
percentage of
revenue (2.6%) (2.2%) (1.6%) (4.6%) (2.2%)
*T
Free Cash Flow (Continuing Operations)
ntl's primary measure of cash flow is Free Cash Flow. Free Cash
Flow is defined as net cash provided by (used in) operating activities
less cash used in the purchase of fixed assets adding back cash used
in the purchase of marketable securities and one-off contributions to
our defined benefit pension schemes made as a condition of the sale of
our Broadcast operations. ntl's business is underpinned by its
significant investment in network infrastructure and information
technology. Management therefore considers it important to measure
cash flow from continuing operations after cash used in the purchase
of fixed assets. Free Cash Flow is most directly comparable to the
U.S. GAAP financial measure net cash provided by (used in) operating
activities. The significant limitation associated with Free Cash Flow
as compared to net cash provided by (used in) operating activities is
that Free Cash Flow deducts cash used in the purchase of fixed assets
and adds back cash flow from the purchase of marketable securities as
well as one-off contributions to defined benefit pension schemes which
are made as a condition of the sale of our Broadcast operation.
Management deducts purchase of fixed assets in arriving at Free Cash
Flow because it considers the amount invested in the purchase of fixed
assets to be an important component in evaluating ntl's liquidity.
Management adds back the purchase of marketable securities and the
one-off pension contribution because it believes that they are not
important components in evaluating ntl's liquidity on a continuing
basis.
The presentation of this supplemental information is not meant to
be considered in isolation or as a substitute for other measures of
financial performance reported in accordance with U.S. GAAP accepted
in the United States. These non-U.S. GAAP financial measures reflect
an additional way of viewing aspects of ntl's operations that, when
viewed with ntl's U.S. GAAP results and the accompanying
reconciliations to corresponding U.S. GAAP financial measures, provide
a more complete understanding of factors and trends affecting ntl's
business. Management encourages investors to review ntl's financial
statements and publicly-filed reports in their entirety and to not
rely on any single financial measure.
-0-
*T
Reconciliation of Free Cashflow to U.S. GAAP Net cash provided by
continuing operating activities
Year ended 3 months ended
Dec 31, Dec 31, Sept 30, June 30, March 31,
2005 2005 2005 2005 2005
---------- --------- --------- ---------- ---------
Free Cash Flow
from continuing
operations GBP 170.8 GBP 35.5 GBP 44.8 GBP 24.3 GBP 66.2
Pension Payment* (54.0) (54.0)
Marketable
securities (79.3) (4.4) (0.0) (77.6) 2.7
Purchase of Fixed
Assets -
continuing
operations 288.1 71.8 71.9 70.6 73.8
---------- --------- --------- ---------- ---------
Net cash provided
by operating
activities
continuing
operations GBP 325.6 GBP 102.9 GBP 116.7 (GBP 36.7) GBP 142.7
========== ========= ========= ========== =========
Year ended 3 months ended
Dec 31, Dec 31, Sept 30, June 30, March 31,
2004 2004 2004 2004 2004
---------- --------- --------- --------- ----------
Free Cash Flow
from continuing
operations (GBP 13.1) (GBP 2.6) GBP 27.0 (GBP 0.4) (GBP 37.1)
Pension Payment*
Marketable
securities (12.1) (12.1) - - -
Purchase of Fixed
Assets -
continuing
operations 274.5 82.8 75.5 65.5 50.7
---------- --------- --------- --------- ----------
Net cash provided
by operating
activities
continuing
operations GBP 249.3 GBP 68.1 GBP 102.5 GBP 65.1 GBP 13.6
========== ========= ========= ========= ==========
* The GBP 54m Pension payment in Q2-05 relates to a one-off
contribution to one of our defined benefit pension schemes which was
made in connection with the sale of our Broadcast operations
*T
Net debt
Net debt is defined as the sum of debt repayable, capital lease
obligations and accrued interest payable on notes and debentures less
cash and cash equivalents and marketable securities. The Company's
management, including its chief operating decision-maker, considers
net debt an important measure of the financing obligations undertaken
by the Company.
Net debt is not a financial measure recognized under U.S. GAAP.
This measure is most directly comparable to the U.S. GAAP financial
measure, total liabilities. The significant limitation associated with
the use of net debt as compared to total liabilities is that net debt
does not consider current liabilities due in respect of accounts
payable and other liabilities. It also assumes that all of cash and
cash equivalents and marketable securities are available to service
debt. ntl believes net debt is helpful for understanding its entire
net debt funding obligations and it provides useful supplemental
information to investors. Because non-U.S. GAAP financial measures are
not standardized, it may not be possible to compare net debt with
other companies' non-U.S. GAAP financial measures that have the same
or similar names. The presentation of this supplemental information is
not meant to be considered in isolation or as a substitute for total
liabilities, or other measures of financial performance reported in
accordance with U.S. GAAP.
-0-
*T
Reconciliation of net debt to U.S. GAAP Total liabilities
in millions Year ended December 31,
2005 2004
----------- -----------
Net Debt GBP 1,447.9 GBP 2,876.7
Cash and cash equivalents 735.2 125.2
Marketable Securities 96.9 11.6
----------- -----------
Total Debt 2,280.0 3,013.5
Accounts payable 176.9 114.0
Accrued expenses and other current liabilities 291.1 300.1
Interest Payable 37.8 51.9
Liabilities of discontinued operations 0.0 112.6
Deferred Revenue and other long-term
liabilities 237.5 326.7
Deferred Income Taxes 9.2 0.0
Minority Interest 1.0 0.0
----------- -----------
Total liabilities 3,033.5 3,918.8
=========== ===========
*T
NTL Fixed Asset Additions (Accrual Basis)
ntl's primary measure of expenditures for fixed assets is Fixed
Asset Additions (Accrual Basis). Fixed Asset Additions (Accrual Basis)
is defined as the purchase of fixed assets as measured on an accrual
basis. ntl's business is underpinned by its significant investment in
network infrastructure and information technology. Management
therefore considers Fixed Asset Additions (Accrual Basis) an important
component in evaluating ntl's liquidity and financial condition since
purchases of fixed assets are a necessary component of ongoing
operations. Fixed Asset Additions (Accrual Basis) (formerly Capital
Expenditure) is most directly comparable to the U.S. GAAP financial
measure purchases of fixed assets as reported in the Statement of Cash
Flows. The significant limitations associated with the use of Fixed
Asset Additions (Accrual Basis) as compared to purchases of fixed
assets is that Fixed Asset Additions (Accrual Basis) excludes timing
differences from payments of liabilities related to purchases of fixed
assets. Management excludes this amount from Fixed Asset Additions
(Accrual Basis) because timing differences from payments of
liabilities are more related to the cash management treasury function
than to ntl's management of fixed asset purchases for long-term
operational performance and liquidity. Management compensates for this
limitation by separately measuring and forecasting working capital.
-0-
*T
Reconciliation of Fixed Asset Additions (accrual basis) to U.S. GAAP
Purchase of Fixed Assets
(in millions)
Year ended
December 31, 3 months ended
------------------------------------
Dec 31, Sept 30, June 30, March 31,
2005 2005 2005 2005 2005
------------ -------- -------- -------- ---------
Fixed Asset
Additions (accrual
basis) GBP 305.2 GBP 94.6 GBP 76.3 GBP 70.2 GBP 64.1
Changes in
liabilities related
to Fixed Asset
Additions (accrual
basis) (17.1) (22.8) (4.4) 0.4 9.7
------------ -------- -------- -------- ---------
Purchase of Fixed
Assets GBP 288.1 GBP 71.8 GBP 71.9 GBP 70.6 GBP 73.8
============ ======== ======== ======== =========
Year ended
December 31, 3 months ended
------------------------------------
Dec 31, Sept 30, June 30, March 31,
2004 2004 2004 2004 2004
------------ -------- -------- -------- ---------
Fixed Asset
Additions (accrual
basis) GBP 281.5 GBP 78.9 GBP 77.9 GBP 62.3 GBP 62.4
Changes in
liabilities related
to Fixed Asset
Additions (accrual
basis) (7.0) 3.9 (2.4) 3.2 (11.7)
------------ -------- -------- -------- ---------
Purchase of Fixed
Assets GBP 274.5 GBP 82.8 GBP 75.5 GBP 65.5 GBP 50.7
============ ======== ======== ======== =========
*T
The presentation of this supplemental information is not meant to
be considered in isolation or as a substitute for other measures of
financial performance reported in accordance with U.S. GAAP. These
non- U.S. GAAP financial measures reflect an additional way of viewing
aspects of ntl's operations that, when viewed with ntl's U.S. GAAP
results and the accompanying reconciliations to corresponding U.S.
GAAP financial measures, provide a more complete understanding of
factors and trends affecting ntl's business. Management encourages
investors to review ntl's financial statements and publicly-filed
reports in their entirety and to not rely on any single financial
measure.
(II) TELEWEST Use of non-U.S. GAAP Financial Measures and
Reconciliation to U.S. GAAP
Adjusted EBITDA
Telewest's primary measure of income or loss for each of its
reportable segments is Adjusted EBITDA. Its management, including its
chief operating decision-maker, considers Adjusted EBITDA an important
indicator of the operational strength and performance of its
reportable segments. Adjusted EBITDA for each segment and in total
excludes the impact of costs and expenses that do not directly affect
its cash flows or do not directly relate to the operating performance
of that segment. These costs and expenses include depreciation,
amortization, financial restructuring charges, merger related fees,
interest expense, foreign exchange gains/(losses), share of net
income/(loss) from affiliates and income taxes. It is the belief of
Telewest management that the legal and professional costs relating to
its financial restructuring and the proposed merger with NTL are not
characteristic of its underlying business operations. Furthermore
management believes that some of the components of these charges are
not directly related to the performance of a single reportable
segment.
Adjusted EBITDA is not a financial measure recognised under GAAP.
This measure is most directly comparable to the GAAP financial measure
net income/(loss). Some of the significant limitations associated with
the use of Adjusted EBITDA as compared to net income/(loss) are that
Adjusted EBITDA does not reflect the amount of required reinvestment
in depreciable fixed assets, financial restructuring charges, merger
related fees, interest expense, foreign exchange gains or losses,
income taxes expense or benefit and similar items on Telewest's
results of operations. Telewest believes Adjusted EBITDA is helpful
for understanding Telewest's performance and assessing Telewest's
prospects for the future, and that it provides useful supplemental
information to investors. In particular, this non-GAAP financial
measure reflects an additional way of viewing aspects of Telewest's
operations that, when viewed with Telewest's GAAP results and the
reconciliations to net income/(loss), shown below, provide a more
complete understanding of factors and trends affecting Telewest's
business. Because non-GAAP financial measures are not standardized, it
may not be possible to compare Adjusted EBITDA with other companies'
non-GAAP financial measures that have the same or similar names. The
presentation of this supplemental information is not meant to be
considered in isolation or as a substitute for net cash provided by
operating activities, operating income/(loss), net income/(loss), or
other measures of financial performance reported in accordance with
GAAP.
Telewest Free cash flow
Telewest's primary measure of cash flow is free cash flow. Free
cash flow is defined as net cash provided by/(used in) operating
activities excluding cash paid for financial restructuring charges and
merger related fees, less capital expenditure. Telewest management,
including its chief operating decision-maker, considers free cash flow
an important indicator of the operational performance of its business.
Free cash flow is not a financial measure recognized under GAAP.
This measure is most directly comparable to the GAAP financial measure
net cash provided by/(used in) operating activities. The significant
limitation associated with the use of free cash flow as compared to
net cash provided by/(used in) operating activities is that free cash
flow does not consider the amount of cash required to pay financial
restructuring charges and merger related fees. Telewest believes free
cash flow is helpful for understanding its performance and it provides
useful supplemental information to investors. Because non-GAAP
financial measures are not standardized, it may not be possible to
compare free cash flow with other companies' non-GAAP financial
measures that have the same or similar names. The presentation of this
supplemental information is not meant to be considered in isolation or
as a substitute for net cash provided by/(used in) operating
activities, or other measures of financial performance reported in
accordance with GAAP.
Telewest Net debt
Net debt is defined as the sum of debt repayable, capital lease
obligations and accrued interest payable on notes and debentures less
cash and cash equivalents. Telewest's management, including its chief
operating decision-maker, considers net debt an important measure of
the financing obligations undertaken by Telewest.
Net debt is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure,
total liabilities. The significant limitation associated with the use
of net debt as compared total liabilities is that net debt does not
consider current liabilities due in respect of accounts payable and
other liabilities. It also assumes that all of cash and cash
equivalents is available to service debt. Telewest believes net debt
is helpful for understanding its entire net debt funding obligations
and it provides useful supplemental information to investors. Because
non-GAAP financial measures are not standardized, it may not be
possible to compare net debt with other companies' non-GAAP financial
measures that have the same or similar names. The presentation of this
supplemental information is not meant to be considered in isolation or
as a substitute for total liabilities, or other measures of financial
performance reported in accordance with GAAP.
-0-
*T
Reconciliations of Non-GAAP Financial Measures
(amounts in GBP millions)
Three months ended Dec. 31,
---------------------------
2005 2004
----------- ------------
Reorganized Reorganized
Company Company
----------------------------------------------------------------------
Reconciliation of Adjusted EBITDA to net income/(loss)
Adjusted EBITDA 143 128
Financial restructuring charges - -
Merger related fees (6) -
Depreciation (98) (101)
Amortization (16) (9)
----------------------------------------------------------------------
Operating income 23 18
Interest income 5 5
Interest expense (including
amortization of debt discount) (43) (47)
Foreign exchange (losses)/gains, net (2) 3
Share of net income of affiliates 3 4
Other, net 3 -
Income tax (charge)/benefit (3) -
----------------------------------------------------------------------
Net (loss)/income (14) (17)
----------------------------------------------------------------------
Reconciliation of free cash flow to net cash provided by operating
activities
Free cash flow 56 (3)
Deduct cash paid for financial
restructuring charges - (9)
Deduct cash paid for merger related
fees (3) -
Add capital expenditure 59 64
----------------------------------------------------------------------
Net cash provided by operating
activities 112 52
----------------------------------------------------------------------
Free cash flow is reported after cash paid for interest, net, and cash
received for income taxes.
Supplementary cash flow information:
Cash paid for interest, net 32 72
Cash received for income taxes, net - (2)
Dec. 31, 2005
--------------
Reorganized
Company
----------------------------------------------------------------------
Reconciliation of net debt to total liabilities
Net debt 1,601
Cash and cash equivalents 292
----------------------------------------------------------------------
Total debt 1,893
Accounts payable 129
Other liabilities 463
Deferred taxes 98
----------------------------------------------------------------------
Total liabilities 2,583
----------------------------------------------------------------------
Three months
ended June 30,
2005
----------------------------------------------------------------------
Reconciliation of Household ARPU to Household ARPU (excluding impact
of the GBP 16 million VAT recovery)
Consumer sales division revenue in the period GBP 262 million
period
Average number of residential customers in the
period 1,830,895
----------------------
Household ARPU GBP 47.72
----------------------
Consumer sales division revenue in the period GBP 262 million
VAT recovery GBP (16)million
----------------------
Consumer sales division revenue (excluding GBP 246 million
GBP 16 million VAT recovery)
Average number of residential customers in the
period 1,830,895
----------------------
Household ARPU (excluding impact of the GBP 44.86
GBP 16 million VAT recovery)
----------------------
*T
F) virgin.net revenue impact related to acquisition
-- ntl acquired 100 per cent of virgin.net in November 2004.
Prior to the acquisition, virgin.net was a wholesale customer
of ntl. Revenue generated from these wholesale services was
reported within our Business revenue category. As a result of
the acquisition, 100 per cent of virgin.net revenues are now
reported in our Consumer revenue category.
-- In Q4 of 2004, Business revenue was GBP 121.5 million in the
aggregate, including GBP 10.3 million of wholesale revenue
from virgin.net. In Q4 of 2005, Business revenue was lower
compared with Q4 of 2004 partly because Business no longer
includes wholesale revenue from virgin.net as virgin.net is no
longer a third party customer of ntl. virgin.net's own third
party revenue is now consolidated into ntl's group revenue and
is included in Consumer revenue.
-- In Q4 of 2004, Consumer revenue was GBP 390.8 million and
included GBP 4.8m revenue from virgin.net. In Q4 of 2005,
Consumer revenue was GBP 379.5 million and included GBP 13.6
million from virgin.net. Accordingly, Consumer revenue in Q4
of 2005 increased as compared against Q4 of 2004 by GBP 8.8
million in relation to virgin.net.
-- virgin.net reported approximately GBP 3.4 million of third
party revenue in Q4 of 2004 during the pre-acquisition period
(unaudited figures provided by virgin.net's management
accounts). This amount was not included in ntl's consolidated
group revenues.