WE MAY NOT BE ABLE TO OBTAIN CAPITAL SUFFICIENT TO FUND OUR PLANNED UPGRADES AND
TO KEEP PACE WITH TECHNOLOGICAL DEVELOPMENTS. THIS COULD ADVERSELY AFFECT OUR
ABILITY TO OFFER NEW PRODUCTS AND SERVICES AND COMPETE EFFECTIVELY, AND COULD
ADVERSELY AFFECT OUR GROWTH, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We intend to upgrade a significant portion of our cable systems over the
coming years and make other capital investments. For the period from January 1,
2000 to December 31, 2002, we plan to spend approximately $2.9 billion to
upgrade the systems we own and the systems we have agreed to acquire in our
pending acquisitions. We also plan to spend an additional $2.6 billion in the
same period to maintain and expand the systems we own and the systems we have
agreed to acquire. We cannot assure you that these amounts will be sufficient to
accomplish our planned system upgrades, maintenance and expansion. If we cannot
obtain the necessary funds from increases in our operating cash flow, additional
borrowings or other sources, we may not be able to fund our planned upgrades and
expansion and offer new products and services on a timely basis.
The cable business is characterized by rapid technological change and the
introduction of new products and services. We cannot assure you that we will be
able to fund the capital expenditures necessary to keep pace with technological
developments or that this type of rapid technological change will not adversely
affect our plans to upgrade or expand our systems and respond to competitive
pressures. We cannot assure you that we will be able to upgrade, maintain and
expand our systems on a timely basis or at all. Consequently, our growth,
financial condition and results of operations could suffer materially.
WE HAVE A LIMITED HISTORY OF OPERATING OUR CURRENT SYSTEMS. THIS MAKES IT
DIFFICULT FOR YOU TO COMPLETELY EVALUATE OUR PERFORMANCE.
We commenced active operations in 1994 and have grown rapidly since then
through acquisitions of cable systems. Giving effect to the acquisitions we
completed in 1999 and our pending acquisitions, at June 30, 1999 our systems
served approximately 165% more customers than we served as of December 31, 1998.
As a result, historical financial information about us may not be indicative of
the future or of results that we can achieve with the cable systems which will
be under our control. Our recent growth in revenue and EBITDA over our short
operating history is not necessarily indicative of future performance.
WE HAVE A HISTORY OF NET LOSSES AND EXPECT TO CONTINUE TO EXPERIENCE NET LOSSES.
CONSEQUENTLY, WE MAY NOT HAVE THE ABILITY TO FINANCE FUTURE OPERATIONS.
We have had a history of net losses and expect to continue to report net
losses for the foreseeable future. We reported net losses before extraordinary
items of $157 million for 1997, $200 million for 1998 and $94.9 million for the
three months ended March 31, 1999. On a pro forma basis, giving effect to our
recent and pending acquisitions, we had net losses before minority interest of
$1.4 billion for 1998. For the three months ended March 31, 1999, on the same
pro forma basis, we had net losses of $322 million. We expect our net losses to
increase as a result of our recent and pending acquisitions. We cannot predict
what impact, if any, continued losses will have on our ability to finance our
operations in the future.
IF WE ARE UNSUCCESSFUL IN IMPLEMENTING OUR GROWTH STRATEGY, OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.
We expect that a substantial portion of our future growth will be achieved
through revenues from new products and services and the acquisition of
additional cable systems. We may not be able to offer these new products and
services successfully to our customers and these new products and services may
not generate adequate revenues. In addition, we cannot predict the success of
our acquisition strategy. In the past year, the cable television industry has