NTL Incorporated (NASDAQ:NTLI) today announces first quarter
results for the quarter ended March 31, 2006. NTL merged with
Telewest Global, Inc. on March 3, 2006. This earnings release
contains financial information on both an actual reported basis and
a pro forma basis, which assumes that the merger took place on
January 1, 2006 (and for comparison purposes to the fourth quarter
of 2005 at the beginning of 2005.) Quarterly highlights(1) --
Revenue of GBP 611m, up GBP 127m on Q4-05, mainly due to merger
with Telewest -- Pro forma consumer revenue of GBP 637m, up GBP 6m
on Q4-05 -- Operating income of GBP 4m, up GBP 38m on Q4-05 -- ARPU
of GBP 41.50, up GBP 0.23 vs Q4-05 -- RGU net additions of 205,100
-- Customer net additions of 25,800 -- RGU per customer of 2.09, up
from 2.06 at Q4-05 and 2.00 at Q1-05 -- Triple play penetration of
34.9%, up from 32.4% at Q4-05 and 26.8% at Q1-05 -- Accelerated
plan to deliver annualized GBP 250m cost synergies (1) -
operational statistics prepared on a pro forma basis -0- *T (GBP
millions) (unaudited) ----------------------------------- Q1 2006
Q4 2005 Q1 2006 Q4 2005 ----------------------------------- Revenue
Consumer 636.7 631.2 461.4 379.4 Business 165.6 168.2 122.8 105.2
----------------------------------- Total Cable 802.3 799.4 584.2
484.6 Content 86.5 116.7 27.2 - -----------------------------------
Total Revenue 888.8 916.1 611.4 484.6 OCF 277.0 292.0 198.4 154.7
Operating (loss)/income (0.9) (19.4) 3.9 (34.4) Pro forma OCF in
the first quarter of 2006 has been negatively impacted by several
costs relating to the merger with Telewest, including; GBP 16.3m of
Telewest merger and related fees (such as investment banking fees
and insurance costs), GBP 4.6m of Telewest long term incentive plan
costs, GBP 3.6m of consultancy fees relating to the merger
integration (Q4-05: GBP 1.8m), an estimate of GBP 2.2m in
additional SG&A arising from our internal merger office and GBP
1.9m pro forma revaluation of Telewest stock based compensation
expense (Q4-05: GBP 1.9m). Some of these costs will recur as we
continue our drive to realize merger synergies. For further
discussion, please see Operational Review. OCF is Operating income
before depreciation, amortization and other charges and is a non
GAAP measure. The pro forma presentation set forth above and
elsewhere in this earnings release is non-GAAP financial
information. Please see Appendix F for reconciliation of non- GAAP
terms to their nearest GAAP equivalents. *T Steve Burch, Chief
Executive Officer of NTL, said: "The first quarter showed real
evidence of operational improvements in our consumer business, with
an increase in ARPU driven by our successful focus on quality
customer growth, improvements to RGU per customer and increasing
triple play penetration. "The merger of NTL with Telewest completed
on March 3, 2006, and our integration is progressing well. Today,
we are announcing our plans to accelerate our integration program
to achieve a run rate of at least GBP 250 million of annualized
cost synergies by the end of 2007. Part of this process will
involve outsourcing a significant number of jobs, where employment
would be transferred to an external organization, as well as actual
job reductions. In total, this will involve around 6,000 employees
by the end of 2007. Around 80% of the reduction will take place
within twelve months. The cost savings from the outsourcing and the
job losses combined will be equivalent to around 3,400 full-time
equivalent employees. "On April 4, 2006, we announced our offer to
acquire Virgin Mobile and a license for the Virgin brand allowing
us to transform from the UK's leading triple-play provider into a
national entertainment and communications quad-play company,
harnessing the power of the Virgin brand and leading our industry
in product convergence. "With the growth opportunities in our
markets, together with substantial merger synergies, we believe we
can drive significant free cash flow generation going forward,
providing us with strong financial flexibility and improved capital
deployment options." OPERATIONAL REVIEW The commentary below refers
to financial results prepared on both a pro forma and actual
reported basis. The actual reported results consolidate Telewest
from March 3, 2006. The pro forma financial information for the
first quarter of 2006 assume that the merger with Telewest occurred
on January 1, 2006. The pro forma results for 2005 quarterly
periods assume that the merger occurred on January 1, 2005. All
references to operational statistics including customer and
subscriber figures, ARPU and churn are on a pro forma basis. The
pro forma financial information is non-GAAP financial information
that management believes facilitates a comparative analysis of
developments in the Company's business. Total revenue in the
quarter was GBP 611.4 million, up GBP 126.8 million sequentially
and up GBP 113.6 million compared to the first quarter of 2005 due
mainly to the acquisition of Telewest. Total pro forma revenue in
the quarter was GBP 888.8 million, down GBP 27.3 million
sequentially due mainly to a decline in Content revenue of GBP 30.2
million because the fourth quarter holiday season is traditionally
situp's prime selling period. Total pro forma revenue was up GBP
55.6 million compared to the first quarter of 2005 due mainly to
Telewest's acquisition of sit-up in May 2005. Cable Segment
Consumer Consumer revenue in the first quarter was GBP 461.4
million, up GBP 82.0 million sequentially and GBP 77.2 million
compared to the first quarter of 2005 due mainly to the acquisition
of Telewest. Pro forma consumer revenue in the first quarter was
GBP 636.7 million, up GBP 5.5 million sequentially and up GBP 6.9
million compared to the first quarter of 2005. Sequential growth
was driven primarily by increased ARPU at GBP 41.50 compared to GBP
41.27 in the previous quarter. ARPU growth reflects our successful
focus on selling profitable product bundles and on cross-sell and
up-sell to existing customers and selected price increases. This is
reflected in growth in RGU per customer from 2.06 to 2.09 and in
triple play penetration which grew from 32.4% to 34.9% during the
quarter. The success of this focus was most apparent in old NTL
where ARPU reversed from recent declines and grew by GBP 0.32 to
GBP 39.28 in the quarter. ARPU will be impacted by further
television and telephony price increases this year as discussed
further below. Net RGU additions were 205,100 in the first quarter,
compared to 215,800 in the traditionally strong fourth quarter and
to 186,100 in the first quarter of 2005. This has been driven
primarily by further growth in broadband. Net customer additions
were 25,800 in the first quarter, compared to 40,700 in the
previous quarter and to 55,700 in the same quarter last year as we
focused on bundled selling and RGU growth as compared to overall
customer growth. From April 1, 2006, we have more closely aligned
old NTL up-front credit policies with those of old Telewest. This
has the effect of reducing acquisition levels in old NTL. This
focus on quality growth rather than overall customer growth, which
is reflected in improved ARPU, has continued into the second
quarter, where customer net additions are expected to be lower than
in the first quarter. Churn at 1.3% was down from 1.4% in the
previous quarter and flat as compared to the first quarter of 2005.
Broadband We continue to experience strong growth in the number of
broadband subscribers, with net additions of 191,400 in the
quarter, compared to 191,700 in the previous quarter and 168,400 in
the same quarter last year. Broadband penetration stands at 24.0%
of our homes marketable and the outlook for growth remains strong.
As an end-to-end network owner, we have competitive strengths in
the quality of broadband service that we offer. Customers can
receive consistent speeds no matter where they live and our top
speeds of 10Mb are available throughout our addressable areas.
Television Digital television net additions were 70,600 in the
quarter, compared to 85,500 in the previous quarter and to 32,800
in the first quarter of 2005. Total TV net additions, which
includes analog television, were 5,600 in the quarter compared to
23,300 in the fourth quarter and to net disconnections of 11,900 in
the same quarter last year. Our roll-out of exciting new television
products continues. Video-on-demand (VOD) is now available to 72%
of our digital subscribers and DVR and HDTV were launched in old
Telewest areas in February, 2006, with initial sales proving
encouraging. Consequently, cable was the first platform in the UK
to launch HDTV. We continue to add to our line-up of VOD and HDTV
content, and we expect to broadcast World Cup football matches in
HDTV to our HDTV customers in June. Television remains a focus for
ARPU improvements. In old Telewest, we increased the price of our
top two basic packages for existing customers and Sky premium
channels in March, 2006 and in old NTL we are increasing some basic
package prices in July, 2006, and Sky premium prices in September,
2006. Our HDTV/DVR service is charged at GBP 10 per month for
customers on the top basic service. Our wide and comprehensive
range of television services allow us to retain a competitive
advantage over competing platforms. Telephony Telephony net
additions were 8,100 in the quarter, compared to 800 in the
previous quarter and to 29,700 in the same quarter last year. We
have continued our strategy of migrating subscribers to flat rate
packages to reduce the impact of declining fixed line telephony
usage. We will be increasing the price of telephony line rental
from GBP 10.50 to GBP 11.00 in June. Our major telephony competitor
recently increased line rental pricing to the same level. Off-net
Consumer off-net revenue was GBP 18.0 million in the first quarter,
compared to GBP 17.6 million in the previous quarter and GBP 17.5
million in the same quarter last year. These revenues are largely
from Virgin.net, our wholly owned broadband ISP. As at the quarter
end, Virgin.net had 193,200 broadband subscribers. Net additions in
the quarter were 26,700 compared to 23,200 in the previous quarter
and to 25,600 in the same quarter last year. Business Business
revenue in the first quarter was GBP 122.8 million, up GBP 17.6
million sequentially and GBP 9.2 million compared to the first
quarter of 2005 due mainly to the acquisition of Telewest. Pro
forma business revenue was GBP 165.6 million, compared to GBP 168.2
million in the previous quarter and GBP 174.3 million in the same
quarter last year. The core part of our voice and data business
remains strong, but revenues were down versus the previous quarter
due to a reduction in the level of Project revenue, which arises
from the provision of LAN and WAN infrastructure to corporate
customers. In line with our continued focus on corporate and
mid-market customers, we have experienced a shift in revenue mix,
with pro forma data revenues growing strongly compared to the same
quarter last year. Business voice and data services remains an
extremely challenging market. We believe we are well positioned for
long term growth, with a lower unit network cost than our
competitors and a position that is enhanced by the scale benefits
of the merger. However, the fluctuating nature of our Project
business will make revenue growth in the next quarter challenging.
Cable Segment OCF Cable segment OCF in the quarter was GBP 195.4
million, up GBP 24.3 million as compared to the same quarter last
year, and up GBP 40.7 million compared to the previous quarter due
mainly to the merger with Telewest. The cable segment's pro forma
OCF in the quarter was GBP 267.6 million, down GBP 29.1 million as
compared to the same quarter last year, and down GBP 15.6 million
compared to the previous quarter due mainly to costs relating to
the merger with Telewest, detailed further below. Content Segment
The content segment consists of two businesses, Flextech and
sit-up. Content revenue, after inter segment elimination, in the
first quarter was GBP 27.2 million, comprising GBP 11.0 million
from Flextech and GBP 16.2 million from sit-up, compared to GBP nil
in both the prior quarter and the first quarter of 2005 due
entirely to the acquisition of Telewest. Flextech has historically
sold programming to NTL, as well as to Telewest. For pro forma
consolidation purposes therefore, these amounts have been
eliminated. Total pro forma content revenue, after inter segment
elimination, was GBP 86.5 million in the first quarter, up GBP 57.4
million on the first quarter of 2005 quarter due to the acquisition
of sit-up by Telewest in May 2005. Pro forma content revenue was
down GBP 30.2 million on the previous quarter because the fourth
quarter holiday selling season is traditionally sit-up's prime
selling period. Flextech pro forma revenue, after inter segment
elimination, was GBP 34.6 million in the quarter, up GBP 2.0
million on the previous quarter and up 19% on the first quarter of
2005. Flextech pro forma advertising revenue was GBP 22.0 million
in the first quarter, up GBP 3 million on the previous quarter and
up 28% on the same quarter last year, resulting primarily from
increased share of the advertising revenue market due to the prior
year growth in commercial impacts. Flextech pro forma subscription
revenue before inter segment elimination was relatively flat
compared to the previous quarter at GBP 14.4 million, but up 8% on
the same quarter last year, due to increased multi-channel
penetration. Sit-up pro forma revenue was GBP 51.8 million in the
quarter, flat on the same quarter last year (as reported by sit-up
under UK GAAP before its acquisition by Telewest.) Pro forma
revenue was down GBP 32.2 million from the previous quarter as the
fourth quarter holiday season is traditionally sit-up's prime
selling period. Content segment OCF in the quarter was GBP 3.0
million after inter segment eliminations, up GBP 3.0 million as
compared to both the same quarter last year and the prior quarter
due entirely to the merger with Telewest. The content segment's pro
forma OCF in the quarter was GBP 9.4 million before inter segment
eliminations of GBP 4.8 million, up GBP 5.4 million as compared to
the same quarter last year and up by GBP 0.6 million from the prior
quarter. Operating income before depreciation, amortization and
other charges (OCF) Actual reported OCF in the first quarter was
GBP 198.4 million, up GBP 43.7 million sequentially and up GBP 27.3
million compared to the first quarter of 2005 mainly due to the
merger with Telewest. Pro forma OCF in the first quarter was GBP
277.0 million, down GBP 15.0 million from the previous quarter. The
business continued to grow in the first quarter of 2006, although
pro forma OCF was impacted negatively by costs associated with the
merger. Some of these costs can be expected to recur as we continue
our drive to realize synergies from the Telewest merger. These
costs include: -- GBP 16.3 million of merger and related fees
incurred by Telewest, such as investment banking fees, lawyer fees
and insurance costs arising from the merger. -- GBP 4.6 million of
costs arising from accelerated payments under the Telewest
long-term incentive plan as a result of the merger. -- Planning and
implementing the merger integration resulted in third party costs
of GBP 3.6 million, primarily relating to outside consultancy
arrangements. These types of costs will increase and recur in
future quarters. In the fourth quarter of 2005, these costs were
GBP 1.8 million. -- The Company estimates additional selling,
general and administrative expense (SG&A) of approximately GBP
2.2 million due to the costs of our internal "merger office", a
department staffed by employees working predominantly on the
integration of the two businesses. We expect increased SG&A
from the merger office to recur in future quarters. -- Pro forma
adjustment of GBP 1.9 million of additional stock based
compensation expense (SBCE) from the revaluation of stock options
issued to Telewest personnel, upon the merger. We anticipate that
in our reported results for the second quarter, SBCE relating to
old Telewest personnel will increase by approximately GBP 3.1
million due primarily to the vesting of an additional tranche of
options. In addition to the items above, pro forma OCF for the full
year will also be impacted by SBCE of approximately GBP 10 million,
reflecting options and restricted stock awarded to the enhanced
management team and approximately GBP 13 million due to a reduction
in the amount of capitalized overhead attributable to capital
projects. Both of these items are non-cash related. In addition, we
believe 2006 pro forma OCF will be negatively impacted by increased
energy costs of around GBP 10 million due to nationwide increases
in the price of electricity and gas as well as an estimated
increase of around GBP 10 million in bonus expenses, reflecting the
fact that no annual bonus was paid to NTL employees in 2005. OCF
and pro forma OCF are non-GAAP measures. See Appendix F for
reconciliation of non- GAAP measures to their nearest GAAP
equivalents. Operating income, loss from continuing operations and
net loss Operating income in the first quarter was GBP 3.9 million,
compared to GBP 13.0 million in the first quarter of 2005. The
increase in OCF arising from the acquisition of Telewest was offset
by additional depreciation and amortization, also arising from the
acquisition of Telewest, together with an increase in other
charges. Other charges of GBP 8.4 million in the first quarter
represent employee termination and property exit costs in
connection with the merger integration restructuring program. Loss
from continuing operations in the first quarter was GBP119.9
million, compared to GBP 65.9 million in the first quarter of 2005.
The increased loss was driven primarily by an increase in interest
expense from the indebtedness incurred to acquire Telewest, a loss
of GBP 32.4 million on extinguishment of debt and a loss on
derivative instruments of GBP 9.2 million. Net loss was GBP 119.9
million in the first quarter compared to a profit of GBP 455.8
million in the same quarter last year, which included a GBP 514.6
million gain on the disposal of our Broadcast business. Capital
expenditure Fixed asset additions (accrual basis) in the quarter
was GBP 117.8 million, an increase of GBP 23.2 million as compared
to the previous quarter, and an increase of GBP 53.7 million as
compared to the first quarter of 2005, due mainly to the
acquisition of Telewest. Pro forma fixed asset additions (accrual
basis) in the quarter was GBP 158.3 million, flat as compared to
the previous quarter, and an increase of GBP 42.2 million as
compared to the first quarter of 2005 due mainly to an increase in
scaleable infrastructure a large part of which related to expansion
of broadband capacity and availability in old NTL's network. Fixed
asset additions (accrual basis) and pro forma fixed asset additions
(accrual basis) are non-GAAP financial measures. See Appendix F for
reconciliation of non-GAAP measures to their nearest GAAP
equivalents. Net Debt As of March 31, 2006, net debt was GBP
5,385.1 million. This consisted of GBP 3,200.0 million outstanding
on the company's Senior Credit Facilities, GBP 1,809.0 million of
Senior Bridge financing, GBP 776.4 million of Senior notes, GBP
111.7 million of capital leases and GBP 6.3 million of other,
offset by GBP 518.3 million of cash and cash equivalents. Net debt
is a non-GAAP financial measure. See Appendix F for reconciliation
of non-GAAP measures to their nearest GAAP equivalents. "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 merger with Telewest and the proposed
transaction with Virgin Mobile; (2) rates of success in executing,
managing and integrating key acquisitions, including the merger
with Telewest and the proposed transaction with Virgin Mobile; (3)
the ability to achieve business plans for the combined company; (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) the
ability to compete with a range of other communications and content
providers; (10) the effect of technological changes on NTL's
businesses; (11) the functionality or market acceptance of new
products that NTL may introduce; (12) possible losses in revenues
due to systems failures; (13) the ability to maintain and upgrade
NTL's networks in a cost-effective and timely manner; (14) the
reliance on single-source suppliers for some equipment and
software; (15) the ability to provide attractive programming at a
reasonable cost; and (16) 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 NTL Holdings Inc.'s Form 10-K that
were filed with the SEC on February 28, 2006 and March 1, 2006,
respectively. We assume no obligation to update our forward-looking
statements to reflect actual results, changes in assumptions or
changes in factors affecting these statements. NTL-Telewest Merger
On March 3, 2006, NTL Holdings Inc, (formerly known as NTL
Incorporated) merged with a subsidiary of NTL Incorporated
(formerly known as Telewest Global, Inc.) Because this transaction
is accounted for as a reverse acquisition, the actual reported
financial information included in this release is of the
corporation now known as NTL Holdings Inc. for the period through
March 3, 2006 and thereafter it reflects the reverse acquisition of
Telewest Global, Inc. The pro forma financial information treats
the merger as if it occurred at the beginning of the relevant year.
Non-GAAP Financial Measures NTL uses non- 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-GAAP financial measures, including (i)
operating income before depreciation, amortization and other
charges (OCF), (ii) fixed asset additions (accrual basis) and (iii)
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 GAAP, they should not be considered
as substitutes for operating income (loss), purchase of fixed
assets and total liabilities, respectively, as indicators of our
operating performance, expenditure for fixed assets and total
liabilities. The pro forma presentation of our financial results
contained herein is non GAAP financial information. We have
included the pro forma information to provide a useful basis for
evaluating developments in our business over time, but it should
not be viewed as a substitute for our GAAP financial information.
Please see Appendix F for a discussion of NTL's use of non-GAAP
financial measures. Appendices -0- *T Appendices: A) Financial
Statements -- Condensed Consolidated Statement of Operations --
Condensed Consolidated Balance Sheet -- Condensed Consolidated
Statement of Cashflows -- Quarterly Condensed Consolidated
Statement of Operations B) Residential Operations statistics C)
Segmental Analysis D) Fixed Asset Additions (accrual basis) E) Pro
Forma Combined Condensed Financial Information F) Use of non- GAAP
Financial Measures and Reconciliations to GAAP Appendices
---------- A) Financial Statements CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS (in GBP millions, except per share data) (unaudited)
3 months ended March 31, 2006 2005 -------------------- Revenue
611.4 497.8 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (254.9) (206.9) Selling,
general and administrative expenses (158.1) (119.8) Other charges
(8.4) (0.4) Depreciation (149.3) (130.3) Amortization (36.8) (27.4)
-------------------- Total costs and expenses (607.5) (484.8)
-------------------- Operating income 3.9 13.0 Other income
(expense) Interest income and other, net 8.6 6.5 Interest expense
(83.8) (70.1) Share of income from equity investments 1.4 - Foreign
currency transaction losses (10.0) (4.0) Loss on extinguishment of
debt (32.4) - Losses on derivative instruments (9.2) -
-------------------- Loss from continuing operations before income
taxes, minority interest and cumulative effect of change in
accounting principle (121.5) (54.6) Income tax expense - (11.3)
Minority interest income 0.4 - Cumulative effect of change in
accounting principle 1.2 - -------------------- Loss from
continuing operations (119.9) (65.9) --------------------
Discontinued operations Income from discontinued operations before
income taxes - 7.3 Gain on disposal of assets - 514.6 Income tax
expense - (0.2) -------------------- Income from discontinued
operations 0.0 521.7 -------------------- Net (loss) income (119.9)
455.8 ==================== Basic and diluted (loss) from continuing
(GBP 0.49)(GBP 0.30) operations per share ====================
Basic and diluted income from discontinued GBP 0.00 GBP 2.41
operations per share ==================== Basic and diluted net
(loss) income per share (GBP 0.49) GBP 2.11 ====================
Average number of shares outstanding 245.5 216.5
==================== CONDENSED CONSOLIDATED BALANCE SHEET (in GBP
millions) March 31, December 2006 31, 2005 --------------------
(Unaudited)(See Note) Assets Current assets Cash and cash
equivalents 518.3 735.2 Restricted cash 7.5 3.4 Marketable
securities - 96.9 Accounts receivable - trade, less allowance for
doubtful accounts of GBP 39.7 (2006) and GBP 41.7 (2005) 344.5
191.8 Inventory for re-sale 9.1 - Prepaid expenses and other
current assets 119.7 112.4 -------------------- Total current
assets 999.1 1,139.7 Fixed assets, net 6,227.0 3,294.9 Goodwill
1,350.5 - Reorganization value in excess of amounts allocable to
identifiable assets 193.0 193.0 Customer lists, net 1,017.2 247.6
Other intangible assets, net 71.2 2.4 Investments in and loans to
affiliates, net 370.5 - Programming inventory 37.4 - Other assets,
net of accumulated amortization of GBP 10.5 (2006) and GBP 32.2
(2005) 131.1 110.9 -------------------- Total assets 10,397.0
4,988.5 ==================== Liabilities and shareholders' equity
Current liabilities Accounts payable 309.4 176.9 Accrued expenses
and other current liabilities 580.6 291.1 Interest payable 56.7
37.8 Deferred revenue 233.0 103.2 Due to affiliates 0.9 - Current
portion of long-term debt 53.5 0.8 -------------------- Total
current liabilities 1,234.1 609.8 Long-term debt, net of current
portion 5,849.9 2,279.2 Deferred revenue and other long-term
liabilities 169.1 134.3 Deferred income taxes 138.8 9.2 Minority
Interest 0.6 1.0 -------------------- Total liabilities 7,392.5
3,033.5 -------------------- Commitments and contingent liabilities
Shareholders' equity Common stock 1.6 1.2 Additional paid-in
capital 3,744.2 2,671.0 Treasury stock - (114.0) Accumulated other
comprehensive income 27.3 45.5 Accumulated deficit (768.6) (648.7)
-------------------- Total shareholders' equity 3,004.5 1,955.0
-------------------- Total liabilities and shareholders' equity
10,397.0 4,988.5 ==================== Note: The balance sheet at
December 31, 2005 has been derived from the audited financial
statements at that date. CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (in GBP millions) (unaudited) 3 months ended March 31, 2006
2005 -------------------- Net cash provided by operating activities
207.3 157.4 -------------------- Investing activities Purchase of
fixed assets (135.3) (73.8) Investments in and loans to affiliates
4.9 - Acquisition of subsidiaries, net of cash acquired (1,999.2) -
Proceeds from the sale of fixed assets 0.7 - Decrease (increase) in
restricted cash 4.2 (2.0) Proceeds from sale of broadcast
operations, net - 1,221.4 -------------------- Net cash (used in)
provided by investing activities (2,124.7) 1,145.6
-------------------- Financing activities Proceeds from employee
stock option exercises 27.2 0.4 Purchase of stock - (69.2) New
borrowings 5,000.0 - Principal payments on long-term debt (3,241.3)
(500.2) Financing fees (80.0) - -------------------- Net cash
provided by (used in) financing activities 1,705.9 (569.0)
-------------------- Cash flow from discontinued operations Net
cash used by operating activities - (6.0) Net cash used by
investing activities - (3.0) -------------------- Net cash used in
discontinued operations - (9.0) -------------------- Effect of
exchange rate changes on cash and cash equivalents (5.4) (7.4)
(Decrease) increase in cash and cash equivalents (216.9) 717.6 Cash
and cash equivalents, beginning of period 735.2 125.2
-------------------- Cash and cash equivalents, end of period GBP
518.3 GBP842.8 ==================== QUARTERLY CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in GBP millions, except per
share data) (unaudited) Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2006 2005 2005 2005 2005
--------------------------------------------- Revenue 611.4 484.6
482.7 482.5 497.8 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (254.9) (205.2) (200.2)
(196.0) (206.9) Selling, general and administrative expenses
(158.1) (124.7) (116.2) (122.3) (119.8) Other charges (8.4) (22.4)
(1.3) (0.7) (0.4) Depreciation (149.3) (139.5) (142.3) (129.6)
(130.3) Amortization (36.8) (27.2) (27.4) (27.5) (27.4)
--------------------------------------------- Total costs and
expenses (607.5) (519.0) (487.4) (476.1) (484.8)
--------------------------------------------- Operating income
(loss) 3.9 (34.4) (4.7) 6.4 13.0 Other income (expense) Interest
income and other, net 8.6 7.8 6.8 8.3 6.5 Interest expense (83.8)
(55.6) (51.7) (58.4) (70.1) Share of income from equity investments
1.4 0.9 (0.2) 0.2 - Foreign currency transaction losses (10.0) 35.2
(13.1) (12.8) (4.0) Loss on extinguishment of debt (32.4) - (2.0) -
- Loss on derivative instruments (9.2) - - - -
--------------------------------------------- Loss from continuing
operations before income taxes, minority interest and cumulative
effect of change in accounting principle (121.5) (46.1) (64.9)
(56.3) (54.6) Income tax expense - (10.1) 12.4 (9.8) (11.3)
Minority interest income 0.4 - (1.0) - - Cumulative effect of
change in accounting principle 1.2 - - - -
--------------------------------------------- Loss from continuing
operations (119.9) (56.2) (53.5) (66.1) (65.9)
--------------------------------------------- Discontinued
operations Income from discontinued operations before income taxes
- 0.2 - (1.8) 7.3 Gain on disposal of assets - (0.2) 1.4 141.4
514.6 Income tax expenses - - - - (0.2)
--------------------------------------------- Income from
discontinued operations 0.0 0.0 1.4 139.6 521.7
--------------------------------------------- Net (loss) income
(119.9) (56.2) (52.1) 73.5 455.8
============================================= Basic and diluted
(loss) from continuing operations per share
(GBP0.49)(GBP0.26)(GBP0.25)(GBP0.31)(GBP0.30)
============================================= Basic and diluted
income from discontinued operations per share GBP 0.00 GBP 0.00 GBP
0.01 GBP 0.65 GBP 2.41
============================================= Basic and diluted net
(loss) income per share (GBP0.49)(GBP0.26)(GBP0.24)GBP 0.34 GBP
2.11 ============================================= Average number
of shares outstanding 245.5 212.8 212.8 212.8 216.5
============================================= B) RESIDENTIAL
OPERATIONS STATISTICS (data in 000's except percentages,
RGU/Customer and ARPU) Pro forma new NTL (1) Q1-06 Q4-05 Q3-05
Q2-05 Q1-05 --------------------------------------------- Customers
Opening Customers 4,958.0 4,945.4 4,893.1 4,830.6 4,774.9 Data
Cleanse(2) 0.0 (18.1) 0.0 0.0 0.0 Adjusted Opening Customers
4,958.0 4,927.3 4,893.1 4,830.6 4,774.9 Gross customer adds 218.1
248.9 271.9 250.8 235.7 Total Customer disconnections (192.3)
(208.2) (219.6) (188.3) (180.0) Net customer adds 25.8 40.7 52.3
62.5 55.7 Reduction to customer count(3) 0.0 (10.0) 0.0 0.0 0.0
--------------------------------------------- Closing Customers
4,983.8 4,958.0 4,945.4 4,893.1 4,830.6 Monthly customer churn %
1.3% 1.4% 1.5% 1.4% 1.3% RGUS Opening RGUs 10,200.6 10,040.2
9,837.5 9,641.4 9,455.6 Data Cleanse(2) 0.0 (43.1) 0.0 0.0 0.0
Adjusted Opening RGUs 10,200.6 9,997.1 9,837.5 9,641.4 9,455.6 Net
RGU adds 205.1 215.8 202.7 196.1 186.1 Reduction to RGU count(3)
0.0 (12.3) 0.0 0.0 (0.3)
--------------------------------------------- Closing RGUs 10,405.7
10,200.6 10,040.2 9,837.5 9,641.4 Net RGU Adds Telephone 8.1 0.8
2.6 33.1 29.7 Television 5.6 23.3 (5.0) 13.2 (11.9) DTV 70.6 85.5
42.9 57.1 32.8 Broadband 191.4 191.7 205.1 149.8 168.4
--------------------------------------------- Total Net RGU Adds
205.1 215.8 202.7 196.1 186.1 Revenue Generating Units (RGUs)
Telephone 4,268.1 4,260.0 4,285.0 4,282.4 4,249.3 Television
3,315.9 3,310.3 3,288.7 3,293.6 3,280.5 DTV 2,786.5 2,715.9 2,637.5
2,594.6 2,537.6 Broadband 2,821.7 2,630.3 2,466.5 2,261.4 2,111.6
--------------------------------------------- Total RGUs 10,405.7
10,200.6 10,040.2 9,837.5 9,641.4 RGU / Customer 2.09 2.06 2.03
2.01 2.00 Internet Customers Dial-up (metered) 46.6 56.8 64.5 72.4
81.5 Dial-up (unmetered) 87.4 117.2 146.6 192.2 230.7 DTV Access
6.4 7.6 8.0 8.4 6.9 ---------------------------------------------
Total Dial-up and DTV access customers 140.4 181.6 219.0 273.0
319.1 Broadband 2,821.7 2,630.3 2,466.5 2,261.4 2,111.6
--------------------------------------------- Total Internet
2,962.1 2,811.9 2,685.6 2,534.5 2,430.7
--------------------------------------------- Bundled Customers
Dual RGU 1,939.1 2,033.2 2,114.5 2,184.6 2,225.7 Triple RGU 1,741.4
1,604.6 1,490.2 1,379.9 1,292.6 Percentage of dual or triple RGUs
73.8% 73.4% 72.9% 72.8% 72.8% Percentage of triple RGUs 34.9% 32.4%
30.1% 28.2% 26.8% ARPU Combined GBP41.50 GBP41.27 GBP41.28 GBP41.63
GBP42.48 NTL GBP39.28 GBP38.96 GBP38.99 GBP39.69 GBP40.75 Telewest
GBP45.15 GBP45.13 GBP45.11 GBP44.84 GBP45.34 Homes Marketable
On-net Telephone 12,311.2 12,299.7 12,288.5 12,273.1 12,260.9 ATV
12,656.7 12,652.8 12,633.9 12,621.2 12,607.0 DTV 11,989.2 11,972.3
11,941.7 11,926.1 11,846.1 Broadband 11,745.7 11,613.6 11,583.2
11,567.9 11,447.3 Total homes 12,656.7 12,652.8 12,633.9 12,621.2
12,607.0 Penetration of Homes Marketable On-net Telephone 34.7%
34.6% 34.9% 34.9% 34.7% Television - Total 26.2% 26.2% 26.0% 26.1%
26.0% Television - DTV 23.2% 22.7% 22.1% 21.8% 21.4% Broadband
24.0% 22.6% 21.3% 19.5% 18.4% Total Customer 39.4% 39.2% 39.1%
38.8% 38.3% Notes: (1) Subscriber information is on a pro forma
combined basis assuming that the Telewest and NTL merger had
occurred on January 1, 2005 and reflects Telewest and NTL reported
on-net with prior periods restated for policy alignments where
applicable. (2) Data cleanse activity in Q4-05 resulted in a
decrease 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) Review of inactive backlog customers in
Q4-05 resulted in an adjustment to remove 10,000 inactive backlog
disconnects representing 12,300 RGUs (4) A table showing NTL
operational statistics for Q1-06 on an actual reported basis
reflecting the merger with Telewest on March 3, 2006 can be found
in our Form 10Q for Q1-06, expected to be filed with the SEC on May
9, 2006. RESIDENTIAL OPERATIONS STATISTICS (data in 000's except
percentages, RGU/Customer and ARPU) Old Telewest (1&4) Q1-06
Q4-05 Q3-05 Q2-05 Q1-05 ----------------------------------------
Customers Opening Customers 1,868.2 1,848.1 1,837.2 1,822.5 1,799.6
Data Cleanse(2) Adjusted Opening Customers 1,868.2 1,848.1 1,837.2
1,822.5 1,799.6 Gross customer adds 79.2 86.1 89.5 79.4 78.7 Total
Customer disconnections (60.6) (66.0) (78.6) (64.7) (55.7) Net
customer adds 18.6 20.1 10.9 14.7 23.0 Reduction to customer
count(3) ---------------------------------------- Closing Customers
1,886.8 1,868.2 1,848.1 1,837.2 1,822.5 Monthly customer churn %
1.1% 1.2% 1.4% 1.2% 1.0% RGUS Opening RGUs 4,059.6 3,955.2 3,873.8
3,784.8 3,671.4 Data Cleanse(2) Adjusted Opening RGUs 4,059.6
3,955.2 3,873.8 3,784.8 3,671.4 Net RGU adds 105.3 104.4 81.4 89.0
113.4 Reduction to RGU count(3)
---------------------------------------- Closing RGUs 4,164.9
4,059.6 3,955.2 3,873.8 3,784.8 Net RGU Adds Telephone 11.5 0.5
(2.8) 11.6 17.3 Television 3.3 19.0 16.8 11.3 7.7 DTV 21.4 42.6
38.6 39.9 27.3 Broadband 90.5 84.9 67.3 66.1 88.5
---------------------------------------- Total Net RGU Adds 105.3
104.4 81.4 89.0 113.4 Revenue Generating Units (RGUs) Telephone
1,698.4 1,686.9 1,686.4 1,689.2 1,677.6 Television 1,370.9 1,367.6
1,348.6 1,331.7 1,320.5 DTV 1,292.2 1,270.8 1,228.2 1,189.5 1,149.6
Broadband 1,095.6 1,005.1 920.2 852.8 786.7
---------------------------------------- Total RGUs 4,164.9 4,059.6
3,955.2 3,873.8 3,784.8 RGU / Customer 2.21 2.17 2.14 2.11 2.08
Internet Customers Dial-up (metered) 15.4 19.6 23.6 25.0 29.4
Dial-up (unmetered) 28.9 38.3 49.5 65.5 85.9 DTV Access
---------------------------------------- Total Dial-up and DTV
access customers 44.3 57.9 73.2 90.6 115.3 Broadband 1,095.6
1,005.1 920.2 852.8 786.7 ----------------------------------------
Total Internet 1,139.9 1,063.0 993.4 943.4 902.0
---------------------------------------- Bundled Customers Dual RGU
756.9 794.0 812.6 831.7 857.7 Triple RGU 760.6 698.6 647.3 602.4
552.3 Percentage of dual or triple RGUs 80.4% 79.9% 79.0% 78.1%
77.4% Percentage of triple RGUs 40.3% 37.4% 35.0% 32.8% 30.3% ARPU
GBP GBP GBP GBP GBP 45.15 45.13 45.11 44.84 45.34 Homes Marketable
On-net Telephone 4,701.2 4,698.4 4,696.4 4,694.0 4,691.7 ATV
4,702.9 4,700.8 4,698.1 4,698.5 4,694.5 DTV 4,568.5 4,525.2 4,503.9
4,501.2 4,451.4 Broadband 4,568.5 4,525.2 4,503.9 4,501.2 4,451.4
Penetration of Homes Marketable On-net Telephone 36.1% 35.9% 35.9%
36.0% 35.8% Television - Total 29.1% 29.1% 28.7% 28.3% 28.1%
Television - DTV 28.3% 28.1% 27.3% 26.4% 25.8% Broadband 24.0%
22.2% 20.4% 18.9% 17.7% Total Customer 40.1% 39.7% 39.3% 39.1%
38.8% Old NTL on-net (1) Q1-06 Q4 05 Q3-05 Q2-05 Q1-05
---------------------------------------- Customers Opening
Customers 3,089.8 3,097.3 3,055.9 3,008.1 2,975.3 Data Cleanse (2)
(18.1) Adjusted Opening Customers 3,089.8 3,079.2 3,055.9 3,008.1
2,975.3 Gross customer adds 138.9 162.8 182.4 171.4 157.0 Total
Customer disconnections (131.7) (142.2) (141.0) (123.6) (124.2) Net
customer adds 7.2 20.6 41.4 47.8 32.8 Reduction to customer
count(3) (10.0) 0.0 0.0 0.0
---------------------------------------- Closing Customers 3,097.0
3,089.8 3,097.3 3,055.9 3,008.1 Monthly customer churn % 1.5% 1.6%
1.6% 1.5% 1.5% RGUS Opening RGUs 6,141.0 6,085.0 5,963.7 5,856.6
5,784.2 Data Cleanse (2) (43.1) Adjusted Opening RGUs 6,141.0
6,041.9 5,963.7 5,856.6 5,784.2 Net RGU adds 99.8 111.4 121.3 107.1
72.7 Reduction to RGU count (3) (12.3) 0.0 0.0 (0.3)
---------------------------------------- Closing RGUs 6,240.8
6,141.0 6,085.0 5,963.7 5,856.6 Net RGU Adds Telephone (3.4) 0.3
5.4 21.5 12.4 Television 2.3 4.3 (21.8) 1.9 (19.6) DTV 49.2 42.9
4.2 17.2 5.4 Broadband 100.9 106.8 137.7 83.7 79.9
---------------------------------------- Total Net RGU Adds 99.8
111.4 121.3 107.1 72.7 Revenue Generating Units (RGUs) Telephone
2,569.7 2,573.1 2,598.6 2,593.2 2,571.7 Television 1,945.0 1,942.7
1,940.1 1,961.9 1,960.0 DTV 1,494.3 1,445.1 1,409.3 1,405.1 1,387.9
Broadband 1,726.1 1,625.2 1,546.3 1,408.6 1,324.9
---------------------------------------- Total RGUs 6,240.8 6,141.0
6,085.0 5,963.7 5,856.6 RGU / Customer 2.02 1.99 1.96 1.95 1.95
Internet Customers Dial-up (metered) 31.2 37.2 40.9 47.4 52.1
Dial-up (unmetered) 58.5 78.9 97.0 126.7 144.8 DTV Access 6.4 7.6
8.0 8.4 6.9 ---------------------------------------- Total Dial-up
and DTV access customers 96.1 123.7 145.9 182.5 203.8 Broadband
1,726.1 1,625.2 1,546.3 1,408.6 1,324.9
---------------------------------------- Total Internet 1,822.2
1,748.9 1,692.2 1,591.1 1,528.7
---------------------------------------- Bundled Customers Dual RGU
1,182.2 1,239.2 1,301.9 1,352.9 1,368.0 Triple RGU 980.8 906.0
842.9 777.5 740.3 Percentage of dual or triple RGUs 69.8% 69.4%
69.2% 69.7% 70.1% Percentage of triple RGUs 31.7% 29.3% 27.2% 25.4%
24.6% ARPU GBP GBP GBP GBP GBP 39.28 38.96 38.99 39.69 40.75 Homes
Marketable On-net Telephone 7,610.0 7,601.3 7,592.0 7,579.1 7,569.2
ATV 7,953.8 7,952.0 7,935.8 7,922.7 7,912.6 DTV 7,420.7 7,447.1
7,437.8 7,424.9 7,394.6 Broadband 7,177.2 7,088.4 7,079.3 7,066.7
6,995.9 Penetration of Homes Marketable On-net Telephone 33.8%
33.9% 34.2% 34.2% 34.0% Television - Total 24.5% 24.4% 24.4% 24.8%
24.8% Television - DTV 20.1% 19.4% 18.9% 18.9% 18.8% Broadband
24.0% 22.9% 21.8% 19.9% 18.9% Total Customer 38.9% 38.9% 39.0%
38.6% 38.0% Notes: (1) Subscriber information reflects Telewest and
NTL reported on-net with prior periods restated for policy
alignments where (2) Data cleanse activity in Q4-05 resulted in a
decrease 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) Review of inactive backlog customers in
Q4-05 resulted in an adjustment to remove 10,000 inactive backlog
disconnects representing 12,300 RGUs. (4) Old Telewest operational
statistics given above for Q1-06 are for the full 3 months ended
March 31, 2006, on a pro forma basis including the period prior to
the merger with NTL. C) SEGMENTAL ANALYSIS (in GBP millions)
(unaudited) Actual Reported Three months ended
--------------------------------------------- Mar 31, Dec 31, Sep
30, Jun 30, Mar 31, 2006 2005 2005 2005 2005
--------------------------------------------- Revenue Cable segment
Consumer 461.7 379.4 377.5 378.9 384.2 Business 122.8 105.2 105.2
103.6 113.6 --------------------------------------------- Total
584.5 484.6 482.7 482.5 497.8 Inter segment revenue (0.3) - - - -
--------------------------------------------- 584.2 484.6 482.7
482.5 497.8 --------------------------------------------- Content
segment Flextech 12.8 - - - - Sit-up 16.2 - - - -
--------------------------------------------- Total 29.0 - - - -
Inter segment revenue (1.8) - - - -
--------------------------------------------- 27.2 - - - -
---------------------------------------------
--------------------------------------------- Total revenue 611.4
484.6 482.7 482.5 497.8
--------------------------------------------- Segment OCF Cable
segment OCF 195.4 154.7 166.3 164.2 171.1 Content segment OCF 3.0 -
- - - --------------------------------------------- OCF (Total)
198.4 154.7 166.3 164.2 171.1
--------------------------------------------- Pro forma Three
months ended --------------------------------------------- Mar 31,
Dec 31, Sep 30, Jun 30, Mar 31, 2006 2005 2005 2005 2005
--------------------------------------------- Revenue Cable segment
Consumer 637.2 631.6 626.7 641.2 630.5 Business 165.6 168.2 169.1
166.2 174.3 --------------------------------------------- Total
802.8 799.8 795.8 807.4 804.8 Inter segment revenue (0.5) (0.4)
(0.7) (0.8) (0.7) ---------------------------------------------
802.3 799.4 795.1 806.6 804.1
--------------------------------------------- Content segment
Flextech 39.9 37.7 36.0 34.4 34.0 Sit-up 51.9 84.1 57.5 24.1 -
--------------------------------------------- Total 91.8 121.8 93.5
58.5 34.0 Inter segment revenue (5.3) (5.1) (5.4) (5.2) (4.9)
--------------------------------------------- 86.5 116.7 88.1 53.3
29.1 ---------------------------------------------
--------------------------------------------- Total revenue 888.8
916.1 883.2 859.9 833.2
--------------------------------------------- Segment OCF Cable
segment OCF 267.6 283.2 299.5 312.3 296.7 Content segment OCF 9.4
8.8 7.8 6.1 4.0 --------------------------------------------- OCF
(Total) 277.0 292.0 307.3 318.4 300.7
--------------------------------------------- Note: Segment OCF
includes inter segment revenue and costs as applicable. OCF is a
non-GAAP financial measure - see Appendix F D) Fixed Asset
Additions (Accrual Basis) (in GBP millions) (unaudited) 3 months
ended --------------------------------------------- Mar 31, Dec 31,
Sep 30, Jun 30, Mar 31, 2006 2005 2005 2005 2005
--------------------------------------------- NCTA Fixed Asset
Additions CPE 40.1 31.6 32.0 29.3 29.7 Scaleable Infrastructure
52.1 48.7 27.8 22.2 20.2 Commercial 11.4 6.2 8.2 4.9 3.6 Line
extensions 0.5 0.0 0.0 0.0 0.0 Upgrade/Rebuild 3.8 2.5 2.3 2.8 2.3
Support Capital 9.5 7.5 6.3 10.6 8.4
--------------------------------------------- Total NCTA Fixed
Asset Additions 117.4 96.5 76.6 69.8 64.2 Non NCTA Fixed Asset
Additions 0.4 (1.9) (0.3) 0.4 (0.1)
--------------------------------------------- Total Fixed Asset
Additions (Accrual Basis) 117.8 94.6 76.3 70.2 64.1 Change in
capital accruals 17.5 (22.8) (4.4) 0.4 9.7
--------------------------------------------- Total Purchase of
Fixed Assets 135.3 71.8 71.9 70.6 73.8
============================================= 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 F for a discussion of the
use of fixed asset additions (accrual basis) as a non- GAAP measure
and the reconciliation of fixed asset additions (accrual basis) to
GAAP purchase of fixed assets. E) Pro Forma Combined Condensed
Financial Information (in GBP millions) (unaudited) Three months
ended March 31 December September June 30 March 31 2006 31 2005 30
2005 2005 2005 --------- ------------------------------------
Revenue 888.8 916.1 883.2 859.9 833.2 Costs and expenses Operating
costs (exclusive of depreciation shown separately below) (369.0)
(399.1) (362.0) (331.4) (327.5) Selling, general and administrative
expenses (242.8) (225.0) (213.9) (210.1) (205.0) Other charges
(8.9) (22.4) (1.3) (0.7) (0.4) Depreciation (210.4) (229.2) (232.0)
(219.3) (220.0) Amortization (58.6) (59.8) (60.0) (60.1) (60.0)
--------- ------------------------------------ (889.7) (935.5)
(869.2) (821.6) (812.9) ---------
------------------------------------ Operating income (loss) (0.9)
(19.4) 14.0 38.3 20.3 Other income (expense) Interest income and
other, net 8.3 7.4 6.0 8.0 4.5 Interest expense (112.0) (126.9)
(119.2) (121.4) (111.3) (Loss) on extinguishment of debt (32.4) -
(2.0) - (57.8) Other, net (9.2) 4.0 - 1.0 0.3 Share of income from
equity investments 5.0 2.5 3.9 7.5 6.0 Foreign currency transaction
(losses) gains (8.6) 33.0 (13.9) (15.4) (8.2) ---------
------------------------------------ (Loss) from continuing
operations before income taxes (149.8) (99.4) (111.2) (82.0)
(146.2) Income tax (expense) benefit - (12.6) 12.9 (9.5) (11.3)
Minority interest 0.4 - (1.0) - - Cumulative effect of a change in
accounting principle 2.0 - - - - ---------
------------------------------------ (Loss) from continuing
operations (147.4) (112.0) (99.3) (91.5) (157.5) ---------
------------------------------------ Reconciliation of Pro Forma
OCF to Pro Forma Operating income (loss) Pro Forma OCF 277.0 292.0
307.3 318.4 300.7 Less: Other charges (8.9) (22.4) (1.3) (0.7)
(0.4) Depreciation (210.4) (229.2) (232.0) (219.3) (220.0)
Amortization (58.6) (59.8) (60.0) (60.1) (60.0) ---------
------------------------------------ Pro Forma Operating income
(loss) (0.9) (19.4) 14.0 38.3 20.3 ---------
------------------------------------ The pro forma information
presented in these schedules in respect of the three months ended
March 31, 2006 has been prepared on a basis as if the merger with
Telewest had occurred on January 1, 2006 and the pro forma
information in respect of the three months ended on each of March
31, June 30, September 30 and December 31, 2005 has been prepared
on a basis as if the merger with Telewest had occurred on January
1, 2005 and includes adjustments to reflect the purchase accounting
impact on our historical results. Readers should refer to the notes
herein for further explanation of the adjustments made. The
presentation does not include all the information and footnotes
required by generally accepted accounting principles in the United
States to be included in pro forma financial statements. These pro
forma operating results are not necessarily indicative of the
results that would have been achieved if the merger had occurred on
January 1, 2006 or January 1, 2005, and undue reliance should not
be placed on this information. Proforma Combined Condensed
Financial Information Three months ended March 31, 2006 (in GBP
millions) (unaudited) Telewest NTL Inc. Jan 1 - Total Pro Forma As
reported Mar 3 Adjustments Combined
-------------------------------- ---------- Revenue 611.4 279.9
(2.5) 888.8 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (254.9) (88.5) (25.6) (369.0)
Selling, general and administrative expenses (158.1) (110.0) 25.3
(242.8) Other charges (8.4) (0.5) - (8.9) Depreciation (149.3)
(66.1) 5.0 (210.4) Amortization (36.8) (8.4) (13.4) (58.6)
-------------------------------- ---------- (607.5) (273.5) (8.7)
(889.7) -------------------------------- ---------- Operating
income (loss) 3.9 6.4 (11.2) (0.9) Other income (expense) Interest
income and other, net 8.6 4.0 (4.3) 8.3 Interest expense (83.8)
(22.2) (6.0) (112.0) (Loss) on extinguishment of debt (32.4) - -
(32.4) Other, net (9.2) - - (9.2) Share of income from equity
investments 1.4 3.6 - 5.0 Foreign currency transaction (losses)
gains (10.0) 1.4 - (8.6) --------------------------------
---------- (Loss) from continuing operations before income taxes
(121.5) (6.8) (21.5) (149.8) Income tax (expense) benefit - - - -
Minority interest 0.4 - - 0.4 Cumulative effect of a change in
accounting principle 1.2 0.8 - 2.0 --------------------------------
---------- (Loss) from continuing operations (119.9) (6.0) (21.5)
(147.4) -------------------------------- ---------- For the three
months ended March 31, 2006, the unaudited pro forma combined
condensed financial information contains the actual combined
operating results of NTL Inc. with the results of Telewest for the
period from January 1, 2006 to March 3, 2006 adjusted to include
the pro forma impact of: the elimination of transactions between
the former NTL and the former Telewest; the adjustment of
amortization of acquired intangible assets and depreciation of
fixed assets based on the preliminary purchase price allocation;
the adjustment of interest income based on the reduced cash balance
after the merger transaction; the adjustment of interest expense
based on the refinancing in March 2006 using the new senior credit
facility and bridge facility borrowing rates; to reflect the impact
of income taxes on the pro forma adjustments utilizing NTL's
statutory tax rate of 35% and certain accounting policy alignment
adjustments. Readers can refer to the Unaudited Pro Forma Combined
Condensed Financial Data expected to be filed on Form 8-K/A on May
9, 2006, for detailed descriptions of the adjustments made to this
information. Proforma Combined Condensed Financial Information
Three months ended December 31, 2005 (in GBP millions) (unaudited)
Historical Historical Total Pro Forma NTL Telewest adjustments
Combined ---------------------------------- --------- Revenue 484.6
434.5 (3.0) 916.1 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (205.2) (163.9) (30.0) (399.1)
Selling, general and administrative expenses (124.7) (133.8) 33.5
(225.0) Other charges (22.4) - - (22.4) Depreciation (139.5) (97.9)
8.2 (229.2) Amortization (27.2) (16.0) (16.6) (59.8)
---------------------------------- --------- (519.0) (411.6) (4.9)
(935.5) ---------------------------------- --------- Operating
income (loss) (34.4) 22.9 (7.9) (19.4) Other income (expense)
Interest income and other, net 7.8 6.1 (6.5) 7.4 Interest expense
(55.6) (43.1) (28.2) (126.9) (Loss) on extinguishment of debt - - -
- Other, net 0.9 3.1 - 4.0 Share of income from equity investments
- 2.5 - 2.5 Foreign currency transaction (losses) gains 35.2 (2.2)
- 33.0 ---------------------------------- --------- (Loss) from
continuing operations before income taxes (46.1) (10.7) (42.6)
(99.4) Income tax (expense) benefit (10.1) (2.5) - (12.6) Minority
interest - - - - ---------------------------------- ---------
(Loss) from continuing operations (56.2) (13.2) (42.6) (112.0)
---------------------------------- --------- For the three months
ended December 31, 2005, the unaudited pro forma combined condensed
financial information contains the actual combined operating
results of NTL and the former Telewest adjusted to include the pro
forma impact of: the elimination of transactions between the former
NTL and the former Telewest; the adjustment of amortization of
acquired intangible assets and depreciation of fixed assets based
on the preliminary purchase price allocation; the adjustment of
interest income based on the reduced cash balance after the
transaction; the adjustment of interest expense based on the
refinancing in March 2006 using the new senior credit facility and
bridge facility borrowing rates; to reflect the impact of income
taxes on the pro forma adjustments utilizing NTL's statutory tax
rate of 35% and certain accounting policy alignment adjustments.
Readers can refer to the Unaudited Pro Forma Combined Condensed
Financial Data expected to be filed on Form 8-K/A on May 9, 2006,
for detailed descriptions of the adjustments made to this
information. Proforma Combined Condensed Financial Information
Three months ended September 30, 2005 (in GBP millions) (unaudited)
Historical Historical Total Pro Forma NTL Telewest adjustments
Combined ---------------------------------- --------- Revenue 482.7
403.7 (3.2) 883.2 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (200.2) (133.0) (28.8) (362.0)
Selling, general and administrative expenses (116.2) (128.5) 30.8
(213.9) Other charges (1.3) - - (1.3) Depreciation (142.3) (99.4)
9.7 (232.0) Amortization (27.4) (9.4) (23.2) (60.0)
---------------------------------- --------- (487.4) (370.3) (11.5)
(869.2) ---------------------------------- --------- Operating
income (loss) (4.7) 33.4 (14.7) 14.0 Other income (expense)
Interest income and other, net 6.8 5.7 (6.5) 6.0 Interest expense
(51.7) (38.9) (28.6) (119.2) (Loss) on extinguishment of debt (2.0)
- - (2.0) Other, net - - - - Share of income from equity
investments (0.2) 4.1 - 3.9 Foreign currency transaction (losses)
gains (13.1) (0.8) - (13.9) ----------------------------------
--------- (Loss) from continuing operations before income taxes
(64.9) 3.5 (49.8) (111.2) Income tax (expense) benefit 12.4 0.5 -
12.9 Minority interest (1.0) - - (1.0)
---------------------------------- --------- (Loss) from continuing
operations (53.5) 4.0 (49.8) (99.3)
---------------------------------- --------- For the three months
ended September 30, 2005, the unaudited pro forma combined
condensed financial information contains the actual combined
operating results of NTL and the former Telewest adjusted to
include the pro forma impact of: the elimination of transactions
between the former NTL and the former Telewest; the adjustment of
amortization of acquired intangible assets and depreciation of
fixed assets based on the preliminary purchase price allocation;
the adjustment of interest income based on the reduced cash balance
after the transaction; the adjustment of interest expense based on
the refinancing in March 2006 using the new senior credit facility
and bridge facility borrowing rates; to reflect the impact of
income taxes on the pro forma adjustments utilizing NTL's statutory
tax rate of 35% and certain accounting policy alignment
adjustments. Readers can refer to the Unaudited Pro Forma Combined
Condensed Financial Data expected to be filed on Form 8-K/A on May
9, 2006, for detailed descriptions of the adjustments made to this
information. Proforma Combined Condensed Financial Information
Three months ended June 30, 2005 (in GBP millions) (unaudited)
Historical Historical Total Pro Forma NTL Telewest adjustments
Combined ---------------------------------- --------- Revenue 482.5
380.7 (3.3) 859.9 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (196.0) (104.0) (31.4) (331.4)
Selling, general and administrative expenses (122.3) (118.6) 30.8
(210.1) Other charges (0.7) - - (0.7) Depreciation (129.6) (101.0)
11.3 (219.3) Amortization (27.5) (9.3) (23.3) (60.1)
---------------------------------- --------- (476.1) (332.9) (12.6)
(821.6) ---------------------------------- --------- Operating
income (loss) 6.4 47.8 (15.9) 38.3 Other income (expense) Interest
income and other, net 8.3 6.2 (6.5) 8.0 Interest expense (58.4)
(40.5) (22.5) (121.4) (Loss) on extinguishment of debt - - - -
Other, net - 1.0 - 1.0 Share of income from equity investments 0.2
7.3 - 7.5 Foreign currency transaction (losses) gains (12.8) (2.6)
- (15.4) ---------------------------------- --------- (Loss) from
continuing operations before income taxes (56.3) 19.2 (44.9) (82.0)
Income tax (expense) benefit (9.8) 0.3 - (9.5) Minority interest -
- - - ---------------------------------- --------- (Loss) from
continuing operations (66.1) 19.5 (44.9) (91.5)
---------------------------------- --------- For the three months
ended June 30, 2005, the unaudited pro forma combined condensed
financial information contains the actual combined operating
results of NTL and the former Telewest adjusted to include the pro
forma impact of: the elimination of transactions between the former
NTL and the former Telewest; the adjustment of amortization of
acquired intangible assets and depreciation of fixed assets based
on the preliminary purchase price allocation; the adjustment of
interest income based on the reduced cash balance after the
transaction; the adjustment of interest expense based on the
refinancing in March 2006 using the new senior credit facility and
bridge facility borrowing rates; to reflect the impact of income
taxes on the pro forma adjustments utilizing NTL's statutory tax
rate of 35% and certain accounting policy alignment adjustments.
Readers can refer to the Unaudited Pro Forma Combined Condensed
Financial Data expected to be filed on Form 8-K/A on May 9, 2006,
for detailed descriptions of the adjustments made to this
information. Proforma Combined Condensed Financial Information
Three months ended March 31, 2005 (in GBP millions) (unaudited)
Historical Historical Total Pro Forma NTL Telewest adjustments
Combined ---------------------------------- --------- Revenue 497.8
338.6 (3.2) 833.2 Costs and expenses Operating costs (exclusive of
depreciation shown separately below) (206.9) (89.2) (31.4) (327.5)
Selling, general and administrative expenses (119.8) (115.2) 30.0
(205.0) Other charges (0.4) - - (0.4) Depreciation (130.3) (100.9)
11.2 (220.0) Amortization (27.4) (9.3) (23.3) (60.0)
---------------------------------- --------- (484.8) (314.6) (13.5)
(812.9) ---------------------------------- --------- Operating
income (loss) 13.0 24.0 (16.7) 20.3 Other income (expense) Interest
income and other, net 6.5 4.5 (6.5) 4.5 Interest expense (70.1)
(29.2) (12.0) (111.3) (Loss) on extinguishment of debt - - (57.8)
(57.8) Other, net - 0.3 - 0.3 Share of income from equity
investments - 6.0 - 6.0 Foreign currency transaction (losses) gains
(4.0) (4.2) - (8.2) ---------------------------------- ---------
(Loss) from continuing operations before income taxes (54.6) 1.4
(93.0) (146.2) Income tax (expense) benefit (11.3) - - (11.3)
Minority interest - - - - ----------------------------------
--------- (Loss) from continuing operations (65.9) 1.4 (93.0)
(157.5) ---------------------------------- --------- For the three
months ended March 31, 2005, the unaudited pro forma combined
condensed financial information contains the actual combined
operating results of NTL and the former Telewest adjusted to
include the pro forma impact of: the elimination of transactions
between the former NTL and the former Telewest; the adjustment of
amortization of acquired intangible assets and depreciation of
fixed assets based on the preliminary purchase price allocation;
the adjustment of interest income based on the reduced cash balance
after the transaction; the adjustment of interest expense based on
the refinancing in March 2006 using the new senior credit facility
and bridge facility borrowing rates; to reflect the impact of
income taxes on the pro forma adjustments utilizing NTL's statutory
tax rate of 35% and certain accounting policy alignment
adjustments. Readers can refer to the Unaudited Pro Forma Combined
Condensed Financial Data expected to be filed on Form 8-K/A on May
9, 2006, for detailed descriptions of the adjustments made to this
information. F) Non GAAP Measures *T Use of non- GAAP Financial
Measures and Reconciliation to 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 GAAP. OCF
represents our earnings before interest, taxes, depreciation and
amortisation, other charges, share of income from equity
investments, loss on extinguishment of debt, loss on derivative
instruments 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 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-GAAP financial measure reflects an additional
way of viewing aspects of our operations that, when viewed with our
GAAP results and the reconciliation to operating income (loss)
shown below, provides a more complete understanding of factors and
trends affecting our business. Because GAAP financial measures are
not standardised, it may not be possible to compare OCF with other
companies' GAAP financial measures that have the same or similar
names. For a reconciliation of pro forma OCF to pro forma operating
(income) loss, see Appendix E. -0- *T Reconciliation of operating
income before depreciation, amortization and other charges to GAAP
operating income (loss) (in GBP millions) 3 months ended 3 months
ended ---------- ----------------------------------- March 31, Dec
31, Sept 30, June 30, March 31, 2006 2005 2005 2005 2005 ----------
-------- -------- -------- -------- Operating income before
depreciation, amortization and other charges 198.4 154.7 166.3
164.2 171.1 Reconciling items: Other charges (8.4) (22.4) (1.3)
(0.7) (0.4) Depreciation and amortization (186.1) (166.7) (169.7)
(157.1) (157.7) ---------- -------- -------- -------- --------
Operating income (loss) GBP 3.9 (GBP34.4)(GBP 4.7) GBP 6.4 GBP13.0
========== ======== ======== ======== ======== *T Net debt Net debt
is defined as long-term debt, including current portion, less cash
and cash equivalents and marketable securities. Our management,
including our chief operating decision-maker, consider net debt an
important measure of our financing obligations. 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 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. We believe net debt is helpful for understanding our entire
net debt funding obligations and 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 Reconciliation of net debt
to GAAP to Total liabilities March 31, December 31, (in GBP
millions) 2006 2005 ------------------------------ Net Debt 5,385.1
1,447.9 Cash and cash equivalents 518.3 735.2 Marketable Securities
- 96.9 ------------------------------ Long-term debt, including
current portion 5,903.4 2,280.0 Accounts payable 309.4 176.9
Accrued expenses and other current liabilities 580.6 291.1 Interest
Payable 56.7 37.8 Due to affiliates 0.9 - Deferred Revenue and
other long-term liabilities 402.1 237.5 Deferred Income Taxes 138.8
9.2 Minority Interest 0.6 1.0 ------------------------------ Total
liabilities 7,392.5 3,033.5 ------------------------------ *T Fixed
Asset Additions (Accrual Basis) Our 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. Our business is underpinned
by significant investment in network infrastructure and information
technology. Our management therefore consider Fixed Asset Additions
(Accrual Basis) an important component in evaluating our liquidity
and financial condition since purchases of fixed assets are a
necessary component of ongoing operations. Fixed Asset Additions
(Accrual Basis) is most directly comparable to the GAAP financial
measure purchase 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 purchase of
fixed assets is that Fixed Asset Additions (Accrual Basis) excludes
timing differences from payments of liabilities related to
purchases of fixed assets. We exclude 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 our management of fixed asset purchases for
long-term operational performance and liquidity. We compensate for
this limitation by separately measuring and forecasting working
capital. -0- *T Reconciliation of Pro Forma and Reported Fixed
Asset Additions (accrual basis) to GAAP Purchase of Fixed Assets
(in GBP millions) 3 months ended 3 months ended
---------------------------------------------- March 31, Dec 31,
Sept 30, June 30, March 31, 2006 2005 2005 2005 2005
---------------------------------------------- Pro forma Fixed
Asset Additions (accrual basis) GBP158.3 GBP158.6 GBP144.3 GBP129.2
GBP116.1 Pre-acquisition Telewest Additions (accrual basis) (40.5)
(64.0) (68.0) (59.0) (52.0)
---------------------------------------------- Fixed Asset
Additions GBP117.8 GBP 94.6 GBP 76.3 GBP 70.2 GBP 64.1 Changes in
liabilities related to Fixed Asset Additions (accrual basis) 17.5
(22.8) (4.4) 0.4 9.7 ----------------------------------------------
Purchase of Fixed Assets GBP135.3 GBP 71.8 GBP 71.9 GBP 70.6 GBP
73.8 ============================================== 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 GAAP. These
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP results
and the accompanying reconciliations to corresponding GAAP
financial measures, provide a more complete understanding of
factors and trends affecting our business. We encourage investors
to review our financial statements and publicly-filed reports in
their entirety and to not rely on any single financial measure. *T
Conference Call There will be a conference call for analysts and
investors today at 0900 EDT/ 1400 UK time. Analysts and investors
can dial in to the presentation by calling +1 617 786 2964 in the
United States or + 44 (0) 207 365 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, May 16, 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: 97547688.
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