NTL Reports First Quarter 2005 Results.LONDON London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. -- NTL NTL Nevertheless NTL National Transportation Library NTL Norsk Tjenestemannslag NTL National Training Laboratories NTL Never Too Late NTL Nothing to Lose NTL National Training Laboratory NTL None the Less NTL Number Theory Library Incorporated (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : NTLI) today reported its first quarter results for 2005.
OCF of GBP 178 million, up 7 per cent
Operating income of GBP 16 million compared to
loss of GBP 7 million for Q1 2004
OCF margins improved to 34 per cent from 32 per cent
Net cash provided by operating activities of GBP 139 million
Free Cash Flow from continuing operations of GBP 59 million
Record quarter of 195,100 gross additions (157,000 on-net)
Strong broadband growth of 112,900 (79,600 on-net)
Triples up 17 per cent;
triple play penetration of 23.2 per cent (24.6 per cent on-net)
Improvement in all key customer service metrics vs. Q4 2004
Churn improved to 1.4 per cent;
net additions of 58,100 (on-net 32,800)
Ireland business sold for EUR 325 million
3.24 million shares repurchased to date for a total of $215 million
Financial Highlights
%
(GBP millions) Q1-2005 Q1-2004 change
--------- ---------
Revenue
Consumer 384.5 369.8 4.0%
Business 113.6 126.3 (10.1%)
Ireland 19.2 17.5 9.7%
--------- ---------
Total Revenue 517.3 513.6 0.7%
Operating income before depreciation,
amortization and other charges (OCF) 177.5 166.2 6.8%
Operating income (loss) 16.4 (7.3) n.m.
(Loss) from continuing operations (62.6) (75.5) 17.1%
========= =========
(1) Please see Appendix E for reconciliation of non-US GAAP terms such
as OCF and Free Cash Flow
(2) OCF margin is OCF as a percentage of revenue
Commenting on the results, Simon Duffy Duffy is a surname of Irish origin. It comes from the original Irish name Ó Dubhthaigh, meaning descendant or grandson of Dubhthach. Dubhthach was an Old Irish first name meaning "Dark one". , Chief Executive Officer of ntl, said: "We have started the year with continued margin expansion, robust gross additions, improved customer churn churn: see butter. and continued growth in our triple play customer penetration The successful unauthorized breach of a security perimeter. See penetration test. . Compared to the first quarter of last year, our OCF (1) (Open Container Format) See OPS. (2) (OpenCard Framework) A smart card specification from the OpenCard Consortium. margins are up nearly two points to 34.3 per cent. Gross additions of 195,100 and improved customer service - which have helped reduce churn to 1.4 per cent - resulted in total net additions of 58,100. Continued strong performance in gross additions and further improvements in churn should put us back on track for our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. on-net Connected to the Internet, or connected to a LAN or WAN. Contrast with off-net. target of over 50,000 net customer additions per quarter from Q2 onwards on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Adv. 1. , resulting in over 200,000 on-net customer additions this year. We have repurchased a total of 3.24 million shares in the open market at a cost of $215 million and yesterday concluded the sale of our operations in the Republic of Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. for EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 325 million, reinforcing re·in·force also re-en·force or re·en·force tr.v. re·in·forced, re·in·forc·ing, re·in·forc·es 1. To give more force or effectiveness to; strengthen: The news reinforced her hopes. our focus on building our UK cable business. This activity leaves us well positioned for the next stage of our development." Q105 Review Revenue First quarter revenue was GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 517.3 million ($977.8 million), up 0.7 per cent compared to the prior year period. The increase is primarily due to growth in Consumer revenue which is discussed in detail below. Consumer We provide bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. services, including a range of broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. internet services, local, long distance and international telephone services, and digital and analogue (electronics) analogue - (US: "analog") A description of a continuously variable signal or a circuit or device designed to handle such signals. The opposite is "discrete" or "digital". cable television, to our residential customers through our Consumer sales channel. Included within Consumer are ntl's residential off-net Not connected to the Internet, or not connected to a LAN or WAN. Contrast with on-net. and virgin.net customers. Consumer revenue was GBP 384.5 million ($726.8million), up 4.0 per cent over the same period last year. The increase in revenue reflects the acquisition of virgin.net and strong growth in broadband RGUs which increased by 112,900 (79,600 on-net) in the quarter and by 414,400 (296,100 on-net) compared to the same period last year. Also contributing to Consumer revenue growth were an increase in digital TV customers, which grew by 16,900 compared to the same period last year, and two TV price increases. These positive factors were offset by a decline in telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. usage, lower pricing, fewer ATV (1) (Advanced TV) An early name for the digital TV standard proposed by the Advisory Committee on Advanced Television Service (ACATS). See ACATS. See also ATV Forum. (2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. customers and lower TV premiums and off-net revenue. The strength of the ntl product portfolio led to a record quarter of 195,100 (157,000 on-net) total gross customers additions. Customers taking all three services increased 17 per cent from the first quarter of last year bringing triple customer penetration to 23.2 per cent (24.6 per cent on-net). Triples as a percentage of on-net gross additions increased to 11.8 per cent up from 8.4 per cent in the first quarter of 2004, reflecting a continued improvement in the value of our customer base. On-net gross customer RGU RGU The Robert Gordon University (Aberdeen, Scotland) RGU Responsible Governmental Unit RGU Revenue-Generating Unit additions were evenly distributed between all three product categories with 35 per cent for broadband, 35 per cent for telephony and 30 per cent for television. Following the major reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. and billing system migrations that took place last year, customer service metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. improved considerably during the first quarter, with particularly strong results achieved in March. The average speed of answering a call improved from the fourth quarter to the first quarter by 42 per cent and in March averaged 77 seconds, the fastest since Q2 2004. March call abandonment abandonment, in law, voluntary, intentional, and absolute relinquishment of rights or property without conveying them to any other person. Abandonment also means willfully leaving one's spouse or children, intending not to return (see desertion). rates improved to 4.2 per cent and calls answered within 20 seconds improved to 55 per cent, levels last experienced in the first quarter of 2004. These improvements in customer service metrics contributed to a reduction in customer churn to 1.4 per cent which resulted in a 70 per cent increase in total net additions and 58 per cent increase in on-net net additions compared to the fourth quarter. We added 58,100 residential customers (32,800 on-net) to end the quarter with 3.19 million customers (3.01 million on-net), a 4.0 per cent increase over Q1 2004. We also added 101,800 RGUs (72,700 on-net), ending the quarter with over 6 million RGUs (5.86 million on-net), a 4.7 per cent increase over Q1 2004. On-net RGUs per customer also continued to improve to 1.95 RGUs per customer, up from 1.93 over the same period last year. There were no customer adjustments during the first quarter of 2005. We successfully launched our video on demand service in Glasgow Glasgow, city, Scotland Glasgow (glăs`gō, –kō, glăz`gō), city (1991 pop. 688,500) and council area, S central Scotland, on the river Clyde. and Wales Wales, Welsh Cymru, western peninsula and political division (principality) of Great Britain (1991 pop. 2,798,200), 8,016 sq mi (20,761 sq km), west of England; politically united with England since 1536. The capital is Cardiff. (Swansea Swansea, town, United States Swansea (swŏn`zē), town (1990 est. pop. 15,500), Bristol co., SE Mass., a suburb of Fall River, on an inlet of Mount Hope Bay; founded 1667, inc. 1785. and Cardiff Cardiff (kär`dĭf), Welsh Caerdydd, city and county (1998 est. pop. 320,900), S Wales, on the Taff River near its mouth on the Bristol Channel. Cardiff is the capital of Wales and an important port. Until the early 20th cent. ) during the first quarter. We will be launching in three additional markets during the summer and expect to be in a total of 10 markets by year end. Business We provide a range of retail and wholesale voice, data and internet products and services to the business market comprising private and public organizations as well as resellers and mobile operators. Business revenue of GBP 113.6 million ($214.8 million) was down 10.1 per cent over the same period last year primarily due to the loss of virgin.net revenue. Prior to the 100 per cent acquisition of virgin.net by ntl in November November: see month. 2004, virgin.net was a third party wholesale internet customer. Please see Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. F for a brief summary of the revenue impact related to the acquisition of virgin.net. The remaining decline in Business revenue is primarily due to the previously announced conclusion of our contract with Vodafone Vodafone Group Plc is a mobile network operator headquartered in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover and has a market value of about £84.7 billion (July 2007). and the continued transition toward replacing declining traditional circuit switched network services revenue such as voice, frame relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. and ATM with higher growth "New Wave" IP-based data and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality revenue such as Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer and Virtual Private Network (VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. ) solutions. During the first quarter we launched our National Ethernet product, building on our existing portfolio of Ethernet services including Metro Ethernet A metropolitan area network (MAN) that uses a 10 Gigabit Ethernet (10GbE) backbone rather than SONET/SDH links. Ethernet offers a more economical alternative. In a Metro Ethernet network, multiprotocol label switching (MPLS) may be deployed to provide quality of service (QoS). and Ethernet VPN solutions. The Ethernet portfolio is aimed at enterprises that are seeking to modernise Verb 1. modernise - become technologically advanced; "Many countries in Asia are now developing at a very fast pace"; "Viet Nam is modernizing rapidly" modernize, develop and consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. their existing legacy networks and is also available to carriers and wholesale customers. National Ethernet will deliver improved operating efficiency at a lower cost and higher bandwidth bandwidth Measurement of the capacity of a communications signal. For digital signals, the bandwidth is the data speed or rate, measured in bits per second (bps). For analog signals, it is the difference between the highest and lowest frequency components, measured in hertz than legacy ATM or frame relay technologies. The product will allow businesses to integrate their Wide Area Networks and Local Area Networks into a single, national LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. capable of supporting new services such as multimedia presentations, VoIP and video conferencing See videoconferencing. (communications) video conferencing - A discussion between two or more groups of people who are in different places but can see and hear each other using electronic communications. . One of the early wins for our new National Ethernet product was a managed services contract to deliver our National Ethernet solution to the Association of Chartered Certified Accountants The Association of Chartered Certified Accountants (ACCA) is a British chartered accountancy body with a global presence that offers the Chartered Certified Accountant (Designatory letters ACCA or FCCA) qualification worldwide. . Other New Wave contract wins in the first quarter included a contract to provide one of the world's largest content delivery networks for a major public organisation in the UK and a contract to provide a managed optical wavelength service for a Fortune 100 company. Ireland As announced on May 9, 2005, we sold our operations in Ireland for EUR 325 million. We intend to use the net sale proceeds to repay principal amounts outstanding under our senior credit facility in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with its terms. In the second quarter of 2005, Ireland will be accounted for on the basis of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Ireland revenue is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from digital and analogue cable television services provided to homes in the Republic of Ireland including Dublin Dublin, city, Republic of Ireland Dublin, Irish Baile Átha Cliath, county borough (1991 pop. 915,516), Leinster, capital of the Republic of Ireland, on Dublin Bay at the mouth of the Liffey River. , Waterford Waterford, county, Republic of Ireland Waterford (wô`tərfərd), county (1991 pop. 91,624), 710 sq mi (1,839 sq km), S Republic of Ireland. The county seat is the port town of Waterford. and Galway Galway, city, Republic of Ireland Galway, city (1991 pop. 50,853), seat of Co. Galway, W Republic of Ireland, on Galway Bay near the mouth of the Corrib River. , and broadband in parts of Dublin. Additionally, we have offered a full range of business telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. in Ireland, including voice, data and internet products. Ireland revenue was GBP 19.2 million ($36.2 million), up 9.7 per cent over the same period last year, reflecting strong subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. growth, greater take up of digital television services and increases in television pricing. In the first quarter, residential customers increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2,400 to reach 350,100. Monthly customer churn declined to 0.7 per cent vs. 1.1 per cent during the same period last year. Digital television subscriber numbers grew significantly to reach 102,000, an increase of 31 per cent over the same period last year. The ongoing investment in Broadband has increased the number of marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. Broadband homes to over 102,000. Broadband customers increased by 2,500 in the first quarter to 10,000, a penetration level of approximately 10 per cent of marketable homes. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation, amortization and other charges (OCF) OCF increased by 6.8 per cent to GBP 177.5 million ($335.5 million) versus the same period last year. The increase reflects the improved product mix in Consumer and higher margin internet revenue. Savings in operational overheads were achieved through the ongoing benefit of renegotiated maintenance contracts and lower costs due to a reduced level of set top box repair and recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. . These savings were partly offset by increased installs in pre-wired residential customer homes where the cost to install is expensed rather than capitalised, higher bad debt expense and the conclusion of the Vodafone contract. First quarter stock based compensation expense (SBCE SBCE Scott Bradford Creative Enterprises SBCE Society for Better Computing Ethics SBCE Subspace-Based Channel Estimation SBCE Server Blade Chassis Enterprise ), which is included in OCF, was GBP 2.9 million ($5.4 million) compared to GBP 2.1 million ($3.8 million) during the same period last year. Please refer to Appendix E for a discussion of the use of OCF as a non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure and the reconciliation of OCF to U.S. GAAP operating income (loss). Operating income (loss) and net income (loss) Operating income was GBP 16.4 million ($31.1 million) versus an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of GBP 7.3 million ($13.5 million) during the same period last year. The improvement is primarily due to our increased OCF and lower depreciation charges. Net income was GBP 456.1 million ($1,068.0 million) versus a net loss of GBP 65.4 million ($120.3 million) during the same period last year. The improvement reflects a GBP 514.6 million ($1,178.4 million) gain from the sale of our Broadcast operations completed on January January: see month. 31, 2005 which was partly offset by exchange rate losses. Excluding the gain from the sale of Broadcast, (loss) from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was GBP 62.6 million ($118.2 million). Fixed asset additions (accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. basis) First quarter fixed asset additions from continuing operations were GBP 67.2 million ($123.7 million), an increase of GBP 1.9 million over the same period last year. The increase is due to higher scaleable infrastructure costs primarily associated with broadband speed increases and other network enhancements and higher CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment (customer premise equipment) costs reflecting an increase in deliveries of set top boxes and cable modems cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. . These increases were partly offset by lower Support Capital costs due primarily to decreased billing system migration and IT spend and Commercial costs related primarily to a reduction in business install costs. Please refer to Appendix B for the NCTA NCTA National Cable & Telecommunications Association (fka National Cable Television Association) NCTA National Cable Television Association (now the National Cable & Telecommunications Association) breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of our fixed asset additions (accruals basis) and to Appendix E for a reconciliation of fixed asset additions (accruals basis) to US GAAP purchase of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → . Cash and Cash equivalents At March 31, 2005, cash and cash equivalents were GBP 842.8 million ($1,591.8 million), an increase of GBP 717.5 million ($1,351.8 million) over the prior quarter. The increase is primarily due to the retained balance of proceeds from the previously announced sale of our Broadcast operations. Other Matters As of the end of April, we have purchased 3.24 million shares of our common stock in the open market for a total of approximately $215 million. About ntl --ntl Incorporated (NASDAQ: NTLI) offers a wide range of communications and content distribution services to residential and business customers throughout the UK and Ireland. --ntl is the UK's largest cable company with 3 million residential customers, and the UK's leading supplier of broadband services See broadband and broadband service provider. to consumers, with over 1.3 million broadband customers. --ntl's network can service 7.9 million homes in the UK. --Information on ntl and its products can be obtained at www.ntl.com 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 +1 334 420 4950 or +1 334 420 4951 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or + 44 (0) 20 7162 0125 for international access or via a live webcast of the conference call and presentation on the Company's website, www.ntl.com/investors. The replay will be available for one week beginning approximately two hours after the end of the call until May 17, 2005. The dial-in replay number for the US is: +1 954 334 0342 and the international dial-in replay number are: +44 (0)20 7031 4064, conference ID: 656734. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 Various statements contained in this document constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. , by these forward-looking statements. These factors include: potential adverse developments with respect to our liquidity or results of operations; our significant debt payments and other contractual commitments; our ability to fund and execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our business plan; our ability to generate cash sufficient to service our debt; the impact of new business opportunities requiring significant up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. investments; our ability to attract and retain customers and increase our overall market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" ; our ability to compete against other communications and content distribution businesses; our ability to complete the integration of our billing systems; our ability to develop and maintain back-up In cartography, an image printed on the reverse side of a map sheet already printed on one side. Also the printing of such images. for our critical systems; our ability to respond adequately to technological developments; our ability to maintain contracts that are critical to our operations; our ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and development, in a timely manner at reasonable costs and on satisfactory terms and conditions; our ability to have an impact upon, or to respond effectively to, new or modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. laws or regulations; and interest rate and currency exchange rate fluctuations. We assume no obligation to update these forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. Non-GAAP measures The company's intention is to provide investors with a better understanding of the operating results and underlying trends to measure past and future performance and liquidity. We evaluate operating performance based on several non-US GAAP measures, including (i) operating income before depreciation, amortization and other charges (OCF) and the associated term OCF margin, (ii) free cash flow from continuing operations and (iii) fixed asset additions (accrual basis A method of accounting that reflects expenses incurred and income earned for Income Tax purposes for any one year. Taxpayers who use the accrual method must include in their taxable income any money that they have the right to receive as payment for services, once it ), 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 provided by (used in) operating activities, and purchase of fixed assets, respectively, as indicators of our operating and cash flow performance and expenditure for fixed assets. Please see Appendix E for use of non-GAAP financial measures. Exchange rates The reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. for the company is the U.S. dollar; however, the functional currencies of our subsidiaries are the Pound Sterling and the Euro. Unless otherwise disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , all amounts in U.S. dollars as of March 31, 2005 are based on an exchange rate of $1.8888 to GBP 1 and $1.2969 to EUR 1, all amounts disclosed for the 3 months to March 31, 2005 are based on an average exchange rate of $1.8904 to GBP 1 and $1.3107 to EUR 1, and all amounts disclosed for the 3 months ended March 31, 2004 are based on an average exchange rate of $1.8396 to GBP 1 and $1.2513 to EUR 1. All amounts in U.S. dollars as of March 31, 2004 are based on an exchange rate of $1.8400 to GBP 1 and $1.2292 to EUR 1. All rates are based on the noon buying rate in the City of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of for cable transfers as certified See certification. for customs purposes by the Federal Reserve Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. . The variation between the 2004 and 2005 exchange rates has impacted the dollar comparisons.
Appendices:
A) Financial Statements
-- Condensed Statement of Operations
-- Condensed Balance Sheet
-- Condensed Statement of Cashflows
B) Fixed Asset Additions (accruals basis) continuing operations
C) Q104 to Q105 UK Residential Operations statistics
D) Q105 Residential Operations Statistics, UK and Ireland
E) Use of non-US GAAP (Generally Accepted Accounting Principals)
Financial Measures and Reconciliations to US GAAP
F) virgin.net revenue impact related to acquisition
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited; in millions, except per share data)
Three months ended
March 31,
------------------
2005 2004
--------- --------
Revenue $977.8 $944.8
Costs and expenses
Operating costs (exclusive of depreciation
shown separately below) (405.9) (398.8)
Selling, general and administrative
expenses (236.4) (240.4)
Other charges (0.7) (0.9)
Depreciation (250.3) (269.6)
Amortization (53.4) (48.6)
--------- --------
Total costs and expenses (946.7) (958.3)
--------- --------
Operating income (loss) 31.1 (13.5)
Other income (expense)
Interest income and other, net 12.4 3.0
Interest expense (132.6) (137.9)
Share of income from equity investments - 0.2
Foreign currency transaction (losses) gains (7.4) 12.9
--------- --------
(Loss) from continuing operations before income
taxes (96.5) (135.3)
Income tax (expense) (21.7) (3.5)
--------- --------
(Loss) from continuing operations ($118.2) ($138.8)
--------- --------
Discontinued operations
Income from discontinued operations before
income taxes $7.8 $18.5
Gain on disposal of assets 1,178.4 -
Income tax (expense) benefit - -
--------- --------
Income from discontinued operations $1,186.2 $18.5
--------- --------
Net income (loss) $1,068.0 ($120.3)
========= ========
Basic and diluted loss from continuing operations
per share ($1.36) ($1.60)
Basic and diluted income from discontinued
operations per share $13.70 $0.21
Basic and diluted net income (loss) per share $12.33 ($1.39)
Average number of shares outstanding 86.6 86.8
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited; in millions, except per share data)
March 31, December 31,
------------------------
2005 2004
---------- ------------
Assets
Current assets
Cash and cash equivalents $1,591.8 $240.0
Restricted Cash 33.6 31.4
Marketable securities 16.8 22.1
Accounts receivable - trade, less
allowance for doubtful accounts of
$99.6 (2005) and $90.7 (2004) 424.7 410.4
Prepaid expenses and other current
assets 98.8 93.0
Current assets held for sale - 80.5
---------- ------------
Total current assets 2,165.7 877.4
Fixed assets, net 6,708.5 6,933.8
Reorganization value in excess of amounts
allocable to identifiable assets 374.9 383.6
Customer lists, net 636.4 698.1
Other intangible assets, net 8.7 10.4
Investments in and loans to affiliates,
net 1.3 1.3
Other assets, net of accumulated amortization
of $40.6 (2005) and $15.2 (2004) 208.0 236.4
Other assets held for sale - 1,384.2
---------- ------------
Total assets $10,103.5 $10,525.2
========== ============
March 31, December 31,
------------------------
2005 2004
---------- ------------
Liabilities and shareholders' equity
Current liabilities
Accounts payable $260.5 $230.6
Accrued expenses and other current
liabilities 575.2 602.9
Interest payable 176.6 99.4
Deferred revenue 222.8 224.2
Current liabilities of discontinued
operations - 144.1
Current portion of long-term debt 73.5 116.8
---------- ------------
Total current liabilities 1,308.6 1,418.0
Long-term debt, net of current portion 4,672.5 5,657.1
Deferred revenue and other long-term
liabilities 390.5 420.9
Deferred income taxes - -
Long-term liabilities of discontinued
operations - 3.5
Shareholders' equity
Preferred stock - $0.1 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 and outstanding 87.8
and outstanding 85.9 (2005) and issued
and outstanding 87.7 (2004) 0.9 0.9
Additional paid-in capital 4,382.3 4,376.9
Treasury stock (129.7) -
Unearned stock-based compensation (27.0) (29.8)
Accumulated other comprehensive
income 271.7 512.0
Accumulated (deficit) (766.3) (1,834.3)
---------- ------------
Total shareholders' equity 3,731.9 3,025.7
---------- ------------
Total liabilities and shareholders' equity $10,103.5 $10,525.2
========== ============
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
(unaudited; in millions)
Three months ended
March 31,
-------------------
2005 2004
--------- ---------
Net cash provided by operating activities $262.5 $81.2
Investing activities
Purchase of fixed assets (145.3) (104.7)
Investments in and loans to affiliates - 0.9
Purchase of marketable securities (11.3) -
Proceeds from sale of marketable securities 16.4 -
Proceeds from sale of broadcast operations, net 2,302.3 -
--------- ---------
Net cash provided by (used in) investing
activites 2,162.1 (103.8)
Financing activities
Proceeds from employee stock option exercises 0.8 1.2
Purchase of shares (129.7) -
Principal payments on long-term debt (942.9) (432.8)
--------- ---------
Net cash (used in) provided by financing
activities (1,071.8) (431.6)
Effect of exchange rate changes on cash and cash
equivalents (1.0) 24.8
--------- ---------
Increase (decrease) in cash and cash equivalents 1,351.8 (429.4)
Cash and cash equivalents, beginning of period 240.0 795.9
--------- ---------
Cash and cash equivalents, end of period $1,591.8 $366.5
========= =========
Supplemental disclosure of cash flow information
Cash paid during the period for interest,
exclusive of amounts capitalized $25.8 $211.9
Fixed Assets Additions (Accruals Basis)
(in millions) Q1 2005 Q1 2004
----- ------ ----- ------
GBP $ GBP $
----- ------ ----- ------
UK Fixed Asset Additions (Accruals Basis)
NCTA Fixed Asset Additions
CPE 29.7 56.2 26.5 48.8
Scaleable Infrastructure 20.2 38.1 13.5 24.9
Commercial 3.6 6.8 5.9 10.9
Line Extensions 0.0 0.0 0.0 0.0
Upgrade/Rebuild 2.3 4.4 2.7 4.9
Support Capital 8.4 15.8 12.1 22.1
----- ------ ----- ------
Total NCTA Fixed Asset Additions 64.2 121.3 60.7 111.6
Non NCTA Fixed Asset Additions 0.0 0.0 1.6 3.0
----- ------ ----- ------
Total UK Fixed Asset Additions (Acc. Basis) 64.2 121.3 62.3 114.6
Ireland 3.0 5.7 3.0 5.5
----- ------ ----- ------
Total Fixed Asset Additions
(Accruals Basis) 67.2 127.0 65.3 120.1
===== ====== ===== ======
Note: ntl is not a member of NCTA and is providing this information
solely for comparative purposes. Fixed asset additions (accruals
basis) are from continuing operations. See Appendix E for a
discussion of the use of fixed asset additions (accruals basis) as a
non-GAAP measure and the reconciliation of fixed asset additions
(accruals basis) to US GAAP purchase of fixed assets.
Residential Operations Statistics
(data in 000's except percentages, RGU/Customer and ARPU)
ntl Consumer (1)
Q1-05 Q4-04 Q3-04 Q2-04 Q1-04
--------------------------------------------
Customers
Opening Customers 3,136.8 3,102.8 3,082.1 3,070.6 3,007.1
Virgin.net at
acquisition 61.8
Data Cleanse (2) 0.0 (20.0) 2.7 (6.1) (6.2)
Adjusted Opening
Customers 3,136.8 3,144.6 3,084.8 3,064.5 3,000.9
Gross customer adds 195.1 185.2 190.7 169.7 191.6
Customer disconnections (137.0) (151.0) (148.9) (116.6) (121.9)
Net customer adds 58.1 34.2 41.7 53.1 69.7
Reduction to customer
count (3) 0.0 (42.0) (23.8) (35.5) 0.0
--------------------------------------------
Closing Customers 3,194.9 3,136.8 3,102.8 3,082.1 3,070.6
Monthly customer churn % 1.4% 1.6% 1.6% 1.2% 1.3%
RGUS
Opening RGUs 5,948.4 5,911.9 5,858.5 5,783.4 5,637.0
Virgin.net at
acquisition 61.8
Data Cleanse (2) 0.0 (29.3) 1.0 (4.6) (3.3)
Adjusted Opening RGUs 5,948.4 5,944.4 5,859.5 5,778.8 5,633.7
Gross RGU adds 420.0 409.8 429.6 386.9 413.6
RGU disconnections (318.2) (329.3) (341.6) (271.7) (264.0)
Net RGU adds 101.8 80.5 88.0 115.2 149.6
Reduction to RGU count
(3) (0.3) (76.5) (35.6) (35.5) 0.0
--------------------------------------------
Closing RGUs 6,049.9 5,948.4 5,911.9 5,858.5 5,783.4
Revenue Generating Units
(RGUs)
Telephone 2,646.7 2,638.5 2,681.4 2,693.7 2,705.7
Television 1,960.0 1,979.6 2,056.1 2,070.6 2,048.9
DTV 1,387.9 1,382.5 1,414.7 1,408.7 1,371.0
Broadband 1,443.2 1,330.3 1,174.4 1,094.2 1,028.8
--------------------------------------------
Total RGUs 6,049.9 5,948.4 5,911.9 5,858.5 5,783.4
RGU / Customer 1.89 1.90 1.91 1.90 1.88
Internet Customers
Dial-up (metered) 486.5 579.5 144.8 163.6 212.8
Dial-up (unmetered) 202.0 167.6 193.9 219.8 243.9
DTV Access 6.9 7.7 8.2 10.5 11.7
--------------------------------------------
Total Dial-up and DTV
access customers 695.4 754.8 346.9 393.9 468.4
Broadband (4) 1,429.6 1,245.3 1,173.5 1,094.2 1,028.8
Virgin.net broadband
at acquisition - 79.0 - - -
Off-net 13.6 6.0 0.9 0.0 0.0
--------------------------------------------
Total Broadband Customers 1,443.2 1,330.3 1,174.4 1,094.2 1,028.8
--------------------------------------------
Total Internet 2,138.6 2,085.1 1,521.3 1,488.1 1,497.2
--------------------------------------------
Bundled Customers
Dual RGU 1,374.5 1,386.0 1,429.6 1,451.0 1,448.2
Triple RGU 740.3 712.8 695.8 663.5 632.4
Percentage of dual or
triple RGUs 66.2% 66.9% 68.5% 68.6% 67.8%
Percentage of triple RGUs 23.2% 22.7% 22.4% 21.5% 20.6%
Homes Marketable On-net
Telephone
ATV
DTV
Broadband
Penetration of Homes
Marketable On-net
Telephone
Television - Total
Television - DTV
Broadband
Total Customer
ARPU GBP 39.58 41.44 40.80 40.10 40.66
Notes
(1) Includes on-net, off-net and virgin.net customers aquired 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. We anticipate that there may be similar
adjustments to customer and RGU numbers as data cleanse progresses
during the course of this year, although (2) none have been
identified in Q1-05.
(3) In Q4-04 we removed a further approximately 42,000 customers,
representing approximately 76,500 RGUs from the customer count,
following implementation of a new credit policy and the resultant
disconnection of inactive backlog customers. Of the 76,500 RGUs,
35,300 are telephony RGUs, 19,900 are DTV RGUs, 3,700 are ATV
RGUs, 14,800 are Broadband RGUs and 2,800 are offnet RGU's. In
Q2-04 we disconnected 42,700 off-net telephony customers, 35,500
due to disconnection of non-paying customers and 7,200 due to
disconnects as part of business as usual.
(4) Q1-05 includes 1,060 BB free trial customers (consistent with
historical experience, assumes 22% of the 1,359 at 31st March 2005
will churn; Q4-04 broadband includes 61.8k virgin.net upon
acquisition and 17.2k virgin broadband adds post acquisition.
Residential Operations Statistics
(data in 000's except percentages, RGU/Customer and ARPU)
ntl on-net
Q1-05 Q4-04 Q3-04 Q2-04 Q1-04
--------------------------------------------
Customers
Opening Customers 2,975.3 3,013.8 2,981.5 2,923.2 2,867.9
Virgin.net at
acquisition
Data Cleanse (2) 0.0 (20.0) 2.7 (2.2) (6.2)
Adjusted Opening
Customers 2,975.3 2,993.8 2,984.2 2,921.0 2,861.7
Gross customer adds 157.0 162.1 187.9 166.5 160.3
Customer disconnections (124.2) (141.4) (134.5) (106.0) (98.8)
Net customer adds 32.8 20.7 53.4 60.5 61.5
Reduction to customer
count (3) 0.0 (39.2) (23.8) 0.0 0.0
--------------------------------------------
Closing Customers 3,008.1 2,975.3 3,013.8 2,981.5 2,923.2
Monthly customer churn % 1.4% 1.5% 1.5% 1.2% 1.1%
RGUS
Opening RGUs 5,784.2 5,822.0 5,757.9 5,636.1 5,497.8
Virgin.net at
acquisition
Data Cleanse (2) (29.3) 0.9 (0.7) (3.3)
Adjusted Opening RGUs 5,784.2 5,792.7 5,758.8 5,635.4 5,494.5
Gross RGU adds 378.2 386.7 426.8 383.7 382.2
RGU disconnections (305.5) (321.3) (328.0) (261.2) (240.6)
Net RGU adds 72.7 65.2 98.8 122.5 141.6
Reduction to RGU count
(3) (0.3) (73.7) (35.6) 0.0 0.0
--------------------------------------------
Closing RGUs 5,856.6 5,784.2 5,822.0 5,757.9 5,636.1
Revenue Generating Units
(RGUs)
Telephone 2,571.7 2,559.3 2,592.4 2,593.1 2,558.4
Television 1,960.0 1,979.6 2,056.1 2,070.6 2,048.9
DTV 1,387.9 1,382.5 1,414.7 1,408.7 1,371.0
Broadband 1,324.9 1,245.3 1,173.5 1,094.2 1,028.8
--------------------------------------------
Total RGUs 5,856.6 5,784.2 5,822.0 5,757.9 5,636.1
RGU / Customer 1.95 1.94 1.93 1.93 1.93
Internet Customers
Dial-up (metered) 52.1 54.8 56.7 63.0 65.5
Dial-up (unmetered) 144.8 167.6 193.9 219.8 243.9
DTV Access 6.9 7.7 8.2 10.5 11.7
--------------------------------------------
Total Dial-up and DTV
access customers 203.8 230.1 258.8 293.3 321.1
Broadband (4) 1,324.9 1,245.3 1,173.5 1,094.2 1,028.8
Virgin.net
broadband at
acquisition
Off-net
--------------------------------------------
Total Broadband Customers 1,324.9 1,245.3 1,173.5 1,094.2 1,028.8
--------------------------------------------
Total Internet 1,528.7 1,475.4 1,432.3 1,387.5 1,349.9
--------------------------------------------
Bundled Customers
Dual RGU 1,368.0 1,383.2 1,428.7 1,451.0 1,448.2
Triple RGU 740.3 712.8 695.8 663.5 632.4
Percentage of dual or
triple RGUs 70.1% 70.4% 70.5% 70.9% 71.2%
Percentage of triple
RGUs 24.6% 24.0% 23.1% 22.3% 21.6%
Homes Marketable On-net
Telephone 7,569.2 7,739.5 7,730.1 7,579.1 7,642.2
ATV 7,912.6 7,910.4 7,910.0 7,798.0 7,861.1
DTV 7,394.6 7,420.4 7,411.0 7,308.0 7,371.1
Broadband 6,995.9 6,961.9 6,854.9 6,752.4 6,762.0
Penetration of Homes
Marketable On-net
Telephone 34.0% 33.1% 33.5% 34.2% 33.5%
Television - Total 24.8% 25.0% 26.0% 26.6% 26.1%
Television - DTV 18.8% 18.6% 19.1% 19.3% 18.6%
Broadband 18.9% 17.9% 17.1% 16.2% 15.2%
Total Customer 38.0% 37.6% 38.1% 38.2% 37.2%
ARPU GBP 40.86 42.40 41.56 41.38 41.91
Notes
(1) Includes on-net, off-net and virgin.net customers aquired 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. We anticipate that there may be similar
adjustments to customer and RGU numbers as data cleanse progresses
during the course of this year, although none have been identified
in Q1-05.
(3) In Q4-04 we removed a further approximately 42,000 customers,
representing approximately 76,500 RGUs from the customer count,
following implementation of a new credit policy and the resultant
disconnection of inactive backlog customers. Of the 76,500 RGUs,
35,300 are telephony RGUs, 19,900 are DTV RGUs, 3,700 are ATV
RGUs, 14,800 are Broadband RGUs and 2,800 are offnet RGU's. In
Q2-04 we disconnected 42,700 off-net telephony customers, 35,500
due to disconnection of non-paying customers and 7,200 due to
disconnects as part of business as usual.
(4) Q1-05 includes 1,060 BB free trial customers (consistent with
historical experience, assumes 22% of the 1,359 at 31st March 2005
will churn; Q4-04 broadband includes 61.8k virgin.net upon
acquisition and 17.2k virgin broadband adds post acquisition.
Q105 Residential Operations Statistics UK and Ireland
(data in 000's except percentages and RGU/Customer)
UK Ireland (6) Total
(on-net and off-net)
------------------------------------------
Homes Marketable on-net (1)
Telco 7,569.2 0.0 7,569.2
ATV 7,912.6 466.2 8,378.8
DTV 7,394.6 424.2 7,818.8
Broadband 6,995.9 102.0 7,097.9
==========================================
Customers (2)
Single RGU 1,080.1 320.1 1,400.2
Dual RGU(3) 1,374.5 10.0 1,384.5
Triple RGU(3) 740.3 0.0 740.3
------------------------------------------
3,194.9 330.1 3,525.0
==========================================
Telephone (4) 2,646.7 0.0 2,646.7
Television
DTV 1,387.9 81.9 1,469.8
ATV 572.1 248.2 820.3
------------------------------------------
Total 1,960.0 330.1 2,290.1
==========================================
Internet
Dial-Up (metered -
active last 30 days) 486.5 0.0 486.5
Dial-Up (unmetered -
active last 30 days) 202.0 0.0 202.0
DTV Access 6.9 0.0 6.9
Broadband 1,443.2 10.0 1,453.2
------------------------------------------
Total 2,138.6 10.0 2,148.6
==========================================
RGUs (3)
Telephone 2,646.7 0.0 2,646.7
Television 1,960.0 330.1 2,290.1
Broadband Internet 1,443.2 10.0 1,453.2
------------------------------------------
6,049.9 340.1 6,390.0
==========================================
RGUs/Customer 1.89 1.03 1.81
Q1 Customer/RGU Movement
Opening Customers (at
January 31, 2005) 3,136.8 328.5 3,465.3
Gross Adds 195.1 8.2 203.3
Disconnects (136.97) (6.60) (143.57)
------------------------------------------
Closing Customers (at
March 31, 2005) 3,194.9 330.1 3,525.0
==========================================
Quarterly Customer Adds 58.1 1.6 59.7
Quarterly RGU Adds 101.5 4.1 105.6
% Customer Churn (4) 1.4% 0.7% 1.3%
On-net Penetration (5):
Telephone 34.0% 0.0% 34.0%
Televison 24.8% 70.8% 27.3%
Broadband Internet 18.9% 9.8% 18.8%
Customer 38.0% 70.8% 39.9%
(1) Homes marketable refers to the number of homes within our service
area that can potentially be served by our network with minimal
connection costs.
(2) UK Customer numbers include Virgin.net and offnet
(3) Each telephone, television and broadband internet subscriber
directly connected to our network counts as one RGU. Accordingly,
a subscriber who receives both telephone and television service
counts as two RGUs. RGUs may include subscribers receiving some
services for free or at a reduced rate in connection with
incentive offers.
(4) Customer churn rate is calculated by taking the total disconnects
during the month and dividing them by the average number of
customers during the month. Average monthly churn during a quarter
is the average of the three monthly churn calculations within the
quarter.
(5) Penetration rate measures the number of subscribers for our onnet
services divided by the number of marketable homes that our
services pass.
(6) In Ireland we also offer microwave multi-point distribution
services, or MMDS, to 70,000 marketable homes and had
approximately 20,000 digital MMDS customers at March 31, 2005.
E) 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, amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. 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 The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. 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 Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. 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 restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , are also excluded from OCF as management believes they are not characteristic of our underlying business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . 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 Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. fixed assets and ignore 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 Adj. 1. standardised - brought into conformity with a standard; "standardized education" standardized standard - conforming to or constituting a standard of measurement or value; or of the usual or regularized or accepted kind; "windows of standard width"; , it may not be possible to compare OCF with other companies' non-U.S. GAAP financial measures that have the same or similar names.
Reconciliation of Revenue to US GAAP Revenue and Reconciliation of
Operating Income before Depreciation, Amoritisation and other Charges
to US GAAP Operating income (loss)
(in millions)
CONTINUING ACTIVITIES 3 months ended 3 months ended
March 31, March 31,
2005 2004
-------------------------------
Revenue GBP 517.3 GBP 513.6
Effective exchange rate 1.89 1.84
-------------------------------
US GAAP Revenue (in US$'s) $977.8 $944.8
Operating income before depreciation, GBP 177.5 GBP 166.2
amortisation and other charges (in
GBP 's)
Effective exchange rate 1.89 1.84
-------------------------------
Operating income before depreciation, GBP 305.7
amortisation and other charges (in US
$'s) $335.5
Reconciling items:
Other charges (0.7) (0.9)
Depreciation and amortization (303.7) (318.3)
-------------------------------
Operating income (loss) 31.1 (13.5)
===============================
GBP Equivalent operating income (loss) GBP 16.4 (GBP 7.3)
OCF as a precentage of revenue (OCF
margin) 34.3% 32.4%
Operating income (loss) as a
percentage of revenue 3.2% (1.4%)
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 and are from continuing operations. 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.
Reconciliation of Fixed Asset Additions (accrual basis) to US GAAP
Purchase of Fixed Assets
(in millions)
Three months ended
March 31,
--------------------
2005 2004
--------- ---------
Fixed Asset Additions (accrual basis) (in GBP's) GBP 67.2 GBP 65.3
Effective exchange rate 1.89 1.84
--------- ---------
Fixed Asset Additions (accrual basis) (in US$'s) $127.0 $120.1
Other Items:
Fixed Asset Additions (accruals basis) -
discontinued operations 2.1 5.8
Changes in liabilities related to Fixed Asset
Additions (accrual basis) 16.2 (21.2)
--------- ---------
Purchase of Fixed Assets (in US $'s) $145.3 $104.7
========= =========
Free Cash Flow (Continuing Operations) ntl's primary measure of cash flow is Free Cash Flow. Free Cash Flow is defined as net cash provided by (used in) operating activities less cash used in the purchase of fixed assets less cashflow from discontinued operations. ntl's business is underpinned by its significant investment in network infrastructure and information technology. Management therefore considers it important to measure cash flow from continuing operations after cash used in the purchase of fixed assets. Free Cash Flow is most directly comparable to the US GAAP financial measure net cash provided by (used in) operating activities. The significant limitation associated with Free Cash Flow as compared to net cash provided by (used in) operating activities is that Free Cash Flow deducts cash used in the purchase of fixed assets and cash flow from discontinued operations. Management deducts purchase of fixed assets in arriving at Free Cash Flow because it considers the amount invested in the purchase of fixed assets to be an important component in evaluating ntl's liquidity. Management deducts cash flow from discontinued operations because it believes that it is not an important component in evaluating ntl's liquidity on a continuing basis.
Reconciliation of Free Cashflow to US GAAP Net cash provided by
operating activities
Free Cash Flow - Continuing Operations
(in millions)
----------- -----------
Three months ended
March 31,
------------------------
2005 2004
----------- -----------
Free Cash Flow (GBP m) GBP 58.9 (GBP 38.4)
Effective exchange rate 1.89 1.84
----------- -----------
Free Cashflow ($m) $111.3 ($70.6)
Add back:
Cashflow from discontinued operations 8.0 52.9
Purchase of Fixed Assets - continuing
operations 143.2 98.9
----------- -----------
Net cash provided by operating activities $262.5 $81.2
=========== ===========
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 US GAAP accepted in the United States. These non-US GAAP financial measures reflect an additional way of viewing aspects of ntl's operations that, when viewed with ntl's US GAAP results and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. reconciliations to corresponding US 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 The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. and to not rely on any single financial measure. 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 Q1 of 2004, Business revenue was GBP 126.3 million in the aggregate, including GBP 11.8 million from virgin.net wholesale revenues. In Q1 of 2005, Business revenue was lower compared against Q1 of 2004 by GBP 11.8 million, reflecting the elimination of virgin.net wholesale revenues from Business. --In Q1 of 2004, Consumer revenue was GBP 369.8 million and did not include any revenue from virgin.net. In Q1 of 2005, Consumer revenue was GBP 384.5 million and included GBP 13.3 million from virgin.net. Accordingly, Consumer revenue in Q1 of 2005 increased as compared against Q1 of 2004 by GBP 13.3 million. --virgin.net reported approximately GBP 9.0 million of revenue in Q1 of 2004 (unaudited figures provided by virgin.net's management accounts). |
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