Liberty Global Reports Second Quarter 2009 Results
Rebased Operating Cash Flow Growth of 8% in Q2 & YTD
Free Cash Flow of $496 Million YTD
Consolidated Liquidity of $3 Billion
ENGLEWOOD, Colo.--(BUSINESS WIRE)--
Liberty Global, Inc. ("Liberty Global," "LGI," or the "Company")
(NASDAQ: LBTYA) (NASDAQ: LBTYB) (NASDAQ: LBTYK), today announces
financial and operating results for the second quarter ("Q2") ended June
30, 2009. Highlights for the quarter compared to the same period for
2008 (unless noted), include:
-- Revenue of $2.65 billion, reflecting 4% rebased1 growth
-- Operating Cash Flow ("OCF")2 of $1.17 billion, representing rebased
growth of 8%
-- OCF margin3 of 44.1%, an increase of 190 basis points
-- Total RGU4 additions of 206,000, including 198,000 organic RGU additions
-- Net loss of $93 million attributable to LGI stockholders, due
principally to non-operating items
-- Free Cash Flow ("FCF")5 of $332 million in Q2, a sequential increase of
103% over Q1 2009
President and CEO Mike Fries said, "Our mid-year results reflect the
continued resilience of our business and the increasing relevance of our
products and services to our customers. For the first six months of
2009, we achieved rebased OCF growth of 8%, which is above our full-year
guidance range of 5-7%, and record free cash flow of $496 million. In
light of this performance, we are reconfirming our guidance targets for
2009."
"In the first half of the year, we added 1.5 million organic digital
video, broadband and voice subscribers, a 10% increase over the same
period in 2008. Most of these additions came from our digital cable
services which continue to gain momentum as we enhance our digital
offerings. For example, we launched VoD6 services in Austria
and Switzerland in Q2 and recently announced an important partnership
between UPC and RTL, a key commercial broadcaster in the Netherlands.
This collaboration will serve as a model for us in other markets and, in
Holland, will further differentiate UPC with a richer 'catch-up TV'
offer and additional HD feeds of popular channels."
"We are encouraged by the potential for our next-generation broadband
services, as '3.0' technology enables us to offer downstream speeds
vastly superior to our DSL-based competition. In late Q2, we launched
100+ Mbps, 'Fiber Power' products in the capital cities of Austria and
Hungary and completed our national roll-out in the Netherlands. In
mid-June, we also repositioned our broadband products in Holland to make
them more affordable as part of our bundling strategy. Early results in
the Netherlands have been positive, as we have seen an increase of
approximately 30% in broadband sales since the repricing, with over 75%
of new customers taking speeds of at least 25 Mbps. In Europe, we are
rapidly expanding the availability of our '3.0' services, which should
help drive RGU growth during the fall 2009 selling season."
"Also during Q2, we strengthened our balance sheet through over $5.5
billion of maturity extensions, as well as opportunistic financings. We
ended the quarter with a consolidated liquidity position of $3.1
billion, including over $1.2 billion of liquidity accessible to the
parent company.7 We also remained active under our stock
buyback program, having purchased over $250 million of equity so far in
2009, and we recently approved another $250 million increase to our
buyback program. With our growth outlook, liquidity position, and
commitment to stock repurchases, we continue on the path to creating
substantial shareholder value."
Disposition of UPC Slovenia
On July 15, 2009, we completed the sale of UPC Slovenia to Mid Europa
Partners for a cash purchase price of EUR119.5 million ($167.9 million),
before working capital adjustments. In our condensed consolidated
financial statements, UPC Slovenia is classified as a discontinued
operation. Therefore, our revenue, OCF, FCF and subscriber metrics
exclude UPC Slovenia's results for all periods presented.8
Subscriber Statistics
At June 30, 2009, our 16.7 million customers subscribed to a total of
26.6 million services, represented by 15.3 million video, 6.4 million
broadband internet and 4.9 million telephony RGUs. We added 206,000 new
RGUs from our continuing operations in the quarter, of which 198,000
were organic additions, and the balance added through small acquisitions
in Austria and Hungary. Of our organic total, telephony and broadband
internet accounted for 150,000 and 128,000 additions, respectively, and
video accounted for a loss of 80,000 RGUs.
Our organic subscriber growth continues to be driven by the success of
our advanced services,9 which have grown to represent 70% of
our total RGU base. For the three and six months ended June 30, 2009, we
organically added 650,000 and 1.5 million advanced service
subscriptions, respectively, which reflect a 4% decrease and a 10%
increase, respectively, over the comparable prior year periods. In both
2009 periods, Telenet's advanced service additions grew approximately
70% as compared to the corresponding 2008 periods, capitalizing on an
expanded digital footprint and bundled product offerings. Our continued
growth in advanced services across LGI has resulted in part from the
success of our bundling strategy. We ended the second quarter with 6.6
million or 40% of our customers taking a multi-product bundle, which
reflects a 15% improvement in bundled customers over the last twelve
months.
Digital cable remains the strongest of our advanced services, as we
added 370,000 and 865,000 organic subscribers in the three and six
months ended June 30, 2009, respectively. These gains represent
improvements of 10% and 42%, respectively, over the corresponding prior
year periods. For the fifth consecutive quarter, our Central and Eastern
European ("CEE") operations posted the highest regional total for
organic digital cable additions. As a result, we have increased digital
penetration10 in CEE from 8% at June 30, 2008, to 24% at June
30, 2009.
We finished Q2 with nearly 6.0 million digital cable RGUs and
consolidated penetration of 43%, which is a significant increase above
our 30% penetration rate at June 30, 2008. We continue to realize ARPU11
uplift from migrating customers from analog to digital and by upselling
digital customers to premium tiers and advanced services. For example,
at our UPC Broadband Division ("UPC"), we estimate that on average our
digital cable ARPU is more than 90% higher than our analog ARPU. This
ARPU uplift is driven in part by the fact that we now offer DVR
functionality in all nine UPC markets, HD in eight markets and VoD in
three markets. At UPC, more than 35% of our digital cable subscriber
base is taking a DVR and/or HD service.
Offsetting our strong growth in digital cable is the ongoing trend of
analog subscriber losses at both UPC and Telenet. These two operations
were responsible for LGI's organic loss of 80,000 video subscribers in
the second quarter. However, as compared to the first quarter of 2009,
we experienced 16,000 fewer organic video subscriber losses. This
improvement was driven largely by stronger sequential results at J:COM,
which added 20,000 video subscribers in Q2 as compared to a small loss
in Q1, as well as better performances at VTR and Austar.
In terms of the other key advanced products of broadband internet and
telephony, we added a combined total of 278,000 and 586,000 organic RGUs
in the three and six months ended June 30, 2009, respectively. Our
second quarter results were slightly below the previous four quarter
average of 305,000 organic additions for broadband internet and
telephony, due in part to seasonality trends in Europe. With respect to
next-generation broadband internet, approximately 50% of UPC's two-way
footprint is now capable of supporting speeds of 100+ Mbps. With our
recent and forthcoming EuroDOCSIS 3.0 broadband internet launches, we
are poised to reinvigorate broadband subscriber growth and drive market
share gains, as well as voice growth through repositioned bundling
programs.
Revenue
For both the three and six months ended June 30, 2009, our revenue
decreased 2% to $2.65 billion and $5.22 billion, respectively, as
compared to the corresponding prior year periods. Underlying our
reported decline for both periods in 2009 is the unfavorable impact of
the strengthening U.S. dollar relative to our functional currencies on a
year-over-year comparison. Adjusting for the effects of foreign currency
("FX") movements, we achieved revenue growth of 8% for both the three
and six months ended June 30, 2009, as compared to the respective 2008
periods. This expansion largely reflects a combination of organic growth
and the positive effect of acquisitions completed by J:COM and Telenet
in late 2008.
Adjusting for the effects of FX and acquisitions, we delivered 4%
rebased revenue growth for both the second quarter and first half of
2009, as compared to the same periods last year. Our operations in
Poland, Australia, Belgium and Chile posted strong rebased results in
both periods, with our operations in Austria, Romania and Hungary
continuing to adversely impact our consolidated rebased performance.
Similar to recent quarters, we continue to generate higher revenue from
our advanced services portfolio, which is being partially offset by the
effects associated with ARPU compression, analog churn, and general
softness in our non-subscription revenue, including revenue from
business-to-business services.
Our consolidated ARPU per customer was $44.81 for the three months ended
June 30, 2009, reflecting a decline of 5% on a reported basis, as
compared to the prior year three month period. Adjusting for FX, we
estimate consolidated ARPU per customer would have increased by
approximately 5%. In terms of our reporting segments, both VTR and UPC
posted local currency ARPU per customer growth of 4%, and Telenet and
J:COM, both adversely impacted by 2008 acquisitions, realized relatively
flat ARPU per customer on a year-over-year basis.
Operating Cash Flow
Operating cash flow, for the three and six month periods ended June 30,
2009, increased to $1.17 billion and $2.29 billion, respectively,
reflecting a 2% increase over the comparable 2008 periods. Adjusting for
FX, we realized OCF growth of 12% on both a quarterly and year-to
date-basis, as compared to the corresponding prior year periods.
Furthermore, adjusting for both FX and acquisition impacts, we achieved
rebased OCF growth of 8% for each of the three and six month periods
ending June 30, 2009, as compared to the respective 2008 periods.
Driving our results in both periods were our operations in Poland,
Belgium and Australia, each of which delivered rebased OCF growth in
excess of 14%. With respect to the second quarter, our consolidated
rebased growth was further helped by improved organic performances in
Japan, Belgium, the Netherlands and Switzerland, as compared to first
quarter results. Based upon our year-to-date performance and outlook for
the second half of the year, we are reconfirming our 2009 OCF guidance
for 5-7% rebased growth.
For the three and six months ended June 30, 2009, we reported
consolidated OCF margins of 44.1% and 43.9%, respectively, reflecting
improvements of 190 and 170 basis points, respectively, over the
comparable 2008 periods. Our continued year-over-year margin improvement
stems largely from increased operational leverage, derived as we grow
and scale our business, and the positive impact of our cost containment
efforts. For the six months ended June 30, 2009, UPC, Telenet and J:COM
posted OCF margins of 47.7%, 51.3% and 43.0%, respectively, reflecting
year-over-year increases of 180, 340, and 220 basis points,
respectively. Conversely, VTR posted an OCF margin of 40.1%, down 120
basis points from the prior year, due in part to the negative effect of
U.S. dollar-based programming expenses.
Net Loss Attributable to LGI Stockholders
For the three and six months ended June 30, 2009, we realized net losses
attributable to LGI stockholders of $93 million ($0.34 per diluted
share) and $392 million ($1.43 per diluted share), respectively. This
compares to net earnings attributable to LGI stockholders of $428
million ($1.11 per diluted share) and $273 million ($0.55 per diluted
share) for the three and six months ended June 30, 2008, respectively.
The net losses in both 2009 periods were largely driven by increases in
realized and unrealized losses on derivative instruments (predominantly
non-cash) that were only partially offset by lower interest and income
taxes.
Capital Expenditures and Free Cash Flow
Our capital expenditures declined by 2% from $561 million for the three
months ended June 30, 2008 to $549 million for the three months ended
June 30, 2009. For the six months ended June 30, 2008 and 2009, capital
expenditures were flat at $1.1 billion for both periods, although
adjusting for FX, our 2009 capital expenditures would have been higher
than 2008. As a percentage of revenue, capital expenditures were 21% for
both the three and six months ended June 30, 2009, as compared to 21%
and 20% for the three and six months ended June 30, 2008, respectively.
Of our capital expenditures for the six months ended June 30, 2009,
approximately 62% related to customer premise equipment and scalable
infrastructure, 23% related to line extensions and network upgrade and
rebuild activity, and the remaining 15% related primarily to support
capital.
As compared to the respective prior year periods, our second quarter
2009 FCF improved by 7% to $332 million and our year-to-date FCF
improved by 15% to $496 million. The improvement in FCF over the first
half of 2009 as compared to the prior year period in 2008 was due
primarily to a $67 million increase in cash provided from the operating
activities of our continuing operations. Our FCF growth was also
marginally helped by FX. In terms of our FCF conversion ratio,12
we improved to 22% for the six months ended June 30, 2009, as compared
to 19% for the six months ended June 30, 2008. We are on track to
achieve our full-year guidance target for FCF and would expect our FCF
in the second half of 2009 to be heavily weighted towards the fourth
quarter.
Leverage and Liquidity
At June 30, 2009, we reported $20.7 billion of debt and $2.2 billion of
cash and cash equivalents (including restricted cash related to our debt
instruments), resulting in net debt13 of $18.5 billion. In
comparison to the first quarter, our debt balance increased
approximately $1.5 billion due largely to FX translation, as many of our
local currencies strengthened against the U.S. dollar, and to net
borrowings of approximately $485 million. These two drivers also
positively impacted our cash position, as we experienced an increase of
approximately $685 million over Q1 2009. As compared to our reported
first quarter of 2009, our gross and net leverage ratios14
increased slightly at June 30, 2009, to 4.4x and 4.0x, respectively,
from 4.3x and 3.9x, respectively.
In the first half of 2009, we opportunistically improved our debt
maturity schedule at our key UPC borrowing group, as approximately 99%
of our debt at this group now matures in 2013 and beyond. At this credit
pool, we have extended over $5.5 billion of debt to 2014 - 2018,
reflecting an improvement of generally two to four years depending upon
the debt refinanced. Since we reported our first quarter results in
early May, we have announced and completed the following transactions at
this credit pool:
-- On May 29, 2009, we generated over $550 million in gross proceeds
through U.S. dollar and Euro denominated issuances of senior notes due
2018; and
-- On June 3, 2009, we rolled EUR1.2 billion of Facility M due 2014 into a
new Facility U due 2017.15
Due in part to the debt transactions noted above, our consolidated
liquidity position of $3.1 billion at quarter-end increased by
approximately $840 million over March 31, 2009 levels. The $3.1 billion
breaks down as follows: $1.8 billion of unrestricted cash, including
$854 million at the parent and our non-operating subsidiaries and $899
million at our operating subsidiaries; and $1.3 billion of unused
borrowing capacity, as represented by the maximum undrawn commitment
under each of our credit facilities, including those at UPC Broadband
Holding, Telenet and J:COM.16 Approximately 34% of our unused
borrowing capacity is at the UPC Broadband Holding credit facility and
upon completion of our second quarter bank reporting requirement, we
estimate that approximately EUR197 million ($276 million) of the EUR323
million ($454 million) of capacity will be available at UPC Broadband
Holding.
About Liberty Global
Liberty Global is the leading international cable operator offering
advanced video, voice and broadband internet services to connect its
customers to the world of entertainment, communications and information.
As of June 30, 2009, Liberty Global operated state-of-the-art networks
that served approximately 17 million customers across 14 countries
principally located in Europe, Japan, Chile, and Australia. Liberty
Global's operations also include significant programming businesses such
as Chellomedia in Europe.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including our expectations with respect to our 2009 outlook, including
FCF and RGU growth in the balance of 2009, our future growth prospects,
including our continued ability to generate free cash flow, expand our
RGUs and increase our ARPU per customer, and our liquidity and access to
capital markets, including our borrowing availability and ability to
repay near-term debt amortizations; our expectations with respect to our
collaboration with RTL and ability to develop similar relationships with
broadcasters in other markets; our expectations with respect to the
timing and impact of our roll-out of advanced products and services,
including our EuroDOCSIS 3.0 deployment; our insight and expectations
regarding competitive and economic factors in our markets; the impact of
our M&A activity on our operations and financial performance; and other
information and statements that are not historical fact. These
forward-looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from those expressed or
implied by these statements. These risks and uncertainties include the
continued use by subscribers and potential subscribers of the Company's
services and willingness to upgrade to our more advanced offerings, our
ability to meet challenges from competition and economic factors, the
continued growth in services for digital television at a reasonable
cost, the effects of changes in technology and regulation, our ability
to achieve expected operational efficiencies and economies of scale, our
ability to generate expected revenue and operating cash flow, control
capital expenditures as measured by percentage of revenue and achieve
assumed margins, our ability to access cash of our subsidiaries and the
impact of our future financial performance, or market conditions
generally, on the availability, terms and deployment of capital, as well
as other factors detailed from time to time in the Company's filings
with the Securities and Exchange Commission ("SEC") including our most
recently filed Forms 10-K and 10-Q. These forward-looking statements
speak only as of the date of this release. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein to reflect
any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based.
For more information, please visit www.lgi.com.
1 For purposes of calculating rebased growth rates on a
comparable basis for all businesses that we owned during the respective
period in 2009, we have adjusted our historical 2008 revenue and OCF to
(i) include the pre-acquisition revenue and OCF of certain entities
acquired during 2008 and 2009 in the respective 2008 rebased amounts to
the same extent that the revenue and OCF of such entities are included
in our 2009 results, (ii) exclude the pre-disposition revenue and OCF of
certain entities that were disposed of during 2008 from our rebased
amounts to the same extent that such entities were excluded from our
results in 2009 and (iii) reflect the translation of our 2008 rebased
amounts at the applicable average exchange rates that were used to
translate our 2009 results. Please see page 9 for supplemental
information.
2 Please see page 12 for our operating cash flow definition
and the required reconciliation.
3 OCF margin is calculated by dividing OCF by total revenue
for the applicable period.
4 Please see page 19 for the definition of revenue generating
units ("RGUs"). Organic figures exclude RGUs of acquired entities at the
date of acquisition but include the impact of changes in RGUs from the
date of acquisition. Organic figures represent additions on a net basis.
5 Free cash flow or FCF is defined as net cash provided by
the operating activities of our continuing operations less capital
expenditures of our continuing operations, each as reported in our
consolidated statements of cash flows. Please see page 14 for more
information on FCF and the required reconciliation.
6 The following abbreviations related to digital video
services are defined as follows: DVR - digital video recorder; HD - high
definition and VoD - video-on-demand.
7 Consolidated liquidity position refers to the total of our
cash and cash equivalents and the maximum undrawn commitment under each
of our credit facilities (other than the VTR Bank Facility). Liquidity
accessible to the parent refers to the total of our cash at the parent
and our non-operating subsidiaries, cash at UPC Holding B.V., and its
subsidiaries, and the amount available to borrow at our UPC Broadband
Holding credit facility upon completion of our second quarter bank
reporting requirements.
8 UPC Slovenia was sold on July 15, 2009, and we have treated
UPC Slovenia as a discontinued operation in our condensed consolidated
financial statements. As a result, the results of operations and cash
flows of UPC Slovenia have been reclassified to discontinued operations
for all periods presented. Additionally, we are reporting subscriber
metrics excluding the impact of this discontinued operation.
9 Advanced services represent our services related to digital
video, including digital cable and direct-to-home ("DTH"), broadband
internet and telephony.
10 Digital penetration is calculated by dividing digital
cable RGUs by the total of digital and analog cable RGUs.
11 ARPU per customer relationship refers to the average
monthly subscription revenue per average customer relationship. ARPU or
ARPU per RGU refers to the average monthly subscription revenue per
average RGU. In both cases, the amounts are calculated by dividing the
average monthly subscription revenue (excluding installation, late fees
and mobile telephony revenue) for the indicated period, by the average
of the opening and closing balances for customer relationships or RGUs,
as the case may be, for the period. The growth rate for ARPU per
customer relationship for LGI and UPC is not adjusted for currency
impacts unless otherwise noted.
12 FCF conversion ratio is defined as FCF divided by OCF.
Please see pages 12 and 14 for more information on OCF and FCF.
13 Total debt includes capital lease obligations. Total cash
and cash equivalents includes $476 million of restricted cash that is
related to our debt instruments. Net debt is defined as total debt less
cash and cash equivalents including our restricted cash balances related
to our debt instruments.
14 Our gross and net leverage ratios are defined as total
debt and net debt to last quarter annualized operating cash flow.
15 The final maturity date for Facility U is the earlier of
(i) December 31, 2017, and (ii) October 17, 2013, the date falling 90
days prior to the date on which the UPC Holding B.V. Senior Notes due
2014 fall due, if, on such date, such notes are outstanding in an
aggregate principal amount of EUR250 million or more.
16 The $1.3 billion amount reflects the aggregate unused
borrowing capacity, as represented by the maximum undrawn commitments
under our subsidiaries' applicable facilities without regard to covenant
compliance calculations. This amount excludes approximately $256 million
related to unused borrowing capacity associated with the VTR Bank
Facility. Pursuant to the deposit arrangements with the lender in
relation to the VTR Bank Facility, we are required to fund a cash
collateral account in an amount equal to the outstanding principal and
interest under the VTR Bank Facility.
Liberty Global, Inc.
Condensed Consolidated Balance Sheets
June 30, December 31,
2009 2008
in millions
ASSETS
Current assets:
Cash and cash equivalents $ 1,752.9 $ 1,374.0
Trade receivables, net 820.4 1,002.8
Deferred income taxes 232.0 280.8
Derivative instruments 105.1 193.6
Current assets of discontinued operations 8.6 --
Other current assets 400.2 382.5
Total current assets 3,319.2 3,233.7
Restricted cash 470.8 470.8
Investments 1,011.1 979.8
Property and equipment, net 11,719.5 12,035.4
Goodwill 12,932.4 13,144.7
Intangible assets subject to amortization, net 2,130.4 2,405.0
Long-term assets of discontinued operations 181.2 --
Other assets, net 1,617.0 1,716.7
Total assets $ 33,381.6 $ 33,986.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 725.6 $ 735.0
Deferred revenue and advance payments from subscribers 779.6 918.4
and others
Current portion of debt and capital lease obligations 516.3 513.0
Derivative instruments 657.7 441.7
Accrued interest 121.7 142.4
Current liabilities of discontinued operations 8.8 --
Other accrued and current liabilities 1,414.8 1,491.6
Total current liabilities 4,224.5 4,242.1
Long-term debt and capital lease obligations 20,209.1 19,989.9
Deferred tax liabilities 786.8 902.7
Long-term liabilities of discontinued operations 20.2 --
Other long-term liabilities 2,275.2 2,356.7
Total liabilities 27,515.8 27,491.4
Commitments and contingencies
Equity:
Total Liberty Global, Inc. stockholders 2,829.2 3,393.0
Noncontrolling interests 3,036.6 3,101.7
Total equity 5,865.8 6,494.7
Total liabilities and equity $ 33,381.6 $ 33,986.1
Liberty Global, Inc.
Condensed Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions, except per share amounts
Revenue $ 2,653.0 $ 2,713.7 $ 5,215.9 $ 5,308.9
Operating costs and
expenses:
Operating (other than
depreciation and 995.9 1,058.1 1,972.4 2,075.1
amortization) (including
stock-based compensation)
Selling, general and
administrative (SG&A) 522.1 552.6 1,012.2 1,079.0
(including stock-based
compensation)
Depreciation and 709.7 740.0 1,403.3 1,440.3
amortization
Impairment, restructuring
and other operating charges, 123.4 3.3 124.2 1.9
net
2,351.1 2,354.0 4,512.1 4,596.3
Operating income 301.9 359.7 703.8 712.6
Non-operating income
(expense):
Interest expense (212.8 ) (290.7 ) (423.0 ) (570.3 )
Interest and dividend income 6.6 16.9 28.1 51.8
Realized and unrealized
gains (losses) on derivative (398.5 ) 406.4 (545.6 ) 71.0
instruments, net
Foreign currency transaction 258.6 210.4 84.8 383.0
gains, net
Realized and unrealized
gains due to changes in fair 87.3 22.8 67.2 44.8
values of certain
investments and debt, net
Losses on debt modifications (24.3 ) -- (24.3 ) --
Share of results of (1.1 ) 0.3 1.0 2.8
affiliates, net
Other income (expense), net (1.9 ) 1.2 (1.1 ) 0.7
(286.1 ) 367.3 (812.9 ) (16.2 )
Earnings (loss) from
continuing operations before 15.8 727.0 (109.1 ) 696.4
income taxes
Income tax expense (17.2 ) (189.2 ) (139.1 ) (290.0 )
Earnings (loss) from (1.4 ) 537.8 (248.2 ) 406.4
continuing operations
Earnings from discontinued 2.4 4.4 5.5 9.2
operations, net of taxes
Net earnings (loss) 1.0 542.2 (242.7 ) 415.6
Net earnings attributable to (94.1 ) (114.0 ) (149.1 ) (143.0 )
noncontrolling interests
Net earnings (loss)
attributable to Liberty $ (93.1 ) $ 428.2 $ (391.8 ) $ 272.6
Global, Inc. stockholders
Earnings (loss) per share
attributable to Liberty
Global, Inc.
stockholders:
Basic:
Continuing operations $ (0.35 ) $ 1.32 $ (1.44 ) $ 0.80
Discontinued operations 0.01 0.01 0.01 0.02
$ (0.34 ) $ 1.33 $ (1.43 ) $ 0.82
Diluted:
Continuing operations $ (0.35 ) $ 1.10 $ (1.44 ) $ 0.53
Discontinued operations 0.01 0.01 0.01 0.02
$ (0.34 ) $ 1.11 $ (1.43 ) $ 0.55
Liberty Global, Inc.
Condensed Consolidated Statements of Cash Flows
Six months ended
June 30,
2009 2008
in millions
Cash flows from operating activities:
Net earnings (loss) $ (242.7 ) $ 415.6
Earnings from discontinued operations (5.5 ) (9.2 )
Earnings (loss) from continuing operations (248.2 ) 406.4
Adjustments to reconcile earnings (loss) from
continuing operations to net cash provided 1,839.4 1,120.3
by operating activities
Net cash provided by operating activities 1,591.2 1,526.7
Cash flows from investing activities:
Capital expended for property and equipment (1,081.9 ) (1,077.7 )
Cash paid in connection with acquisitions, net of (3.3 ) (135.5 )
cash acquired
Other investing activities, net (6.5 ) 18.6
Net cash used by investing activities of (9.3 ) (6.6 )
discontinued operations
Net cash used by investing activities (1,101.0 ) (1,201.2 )
Cash flows from financing activities:
Borrowings of debt 1,087.1 853.7
Repayments and repurchases of debt and capital lease (846.4 ) (446.2 )
obligations
Repurchase of Liberty Global, Inc. common stock (206.9 ) (1,613.7 )
Payment of financing costs (61.7 ) (19.7 )
Other financing activities, net (40.0 ) 8.2
Net cash used by financing activities (67.9 ) (1,217.7 )
Effect of exchange rates on cash (43.4 ) 67.6
Net increase (decrease) in cash and cash
equivalents:
Continuing operations 374.4 (825.1 )
Discontinued operations 4.5 0.5
Net increase (decrease) in cash and cash equivalents 378.9 (824.6 )
Cash and cash equivalents, beginning of period 1,374.0 2,035.5
Cash and cash equivalents, end of period $ 1,752.9 $ 1,210.9
Cash paid for interest $ 404.1 $ 725.5
Net cash paid for taxes $ 123.3 $ 73.7
Revenue and Operating Cash Flow
The following tables present revenue and operating cash flow by
reportable segment for the three and six months ended June 30, 2009, as
compared to the corresponding prior year period. All of the reportable
segments derive their revenue primarily from broadband communications
services, including video, voice and broadband internet services.
Certain segments also provide competitive local exchange carrier and
other business-to-business services and J:COM provides certain
programming distribution services. At June 30, 2009, our operating
segments in the UPC Broadband Division provided services in nine
European countries (excluding Slovenia). Our Other Central and Eastern
Europe segment includes our operating segments in the Czech Republic,
Poland, Romania and Slovakia. Telenet, J:COM and VTR provide broadband
communications services in Belgium, Japan and Chile, respectively. Our
corporate and other category includes (i) Austar, (ii) other less
significant consolidated operating segments that provide broadband
communications services in Puerto Rico and video programming and other
services in Europe and Argentina and (iii) our corporate category.
Intersegment eliminations primarily represent the elimination of
intercompany transactions between our broadband communications and
programming operations, primarily in Europe.
During the first quarter of 2009, we changed our reporting such that we
no longer include video-on-demand costs within the central and corporate
operations category of UPC. Instead, we present these costs within the
individual operating segments of UPC. Segment information for all
periods presented has been recast to reflect the reclassification of
these costs. Additionally, our reportable segments have been
reclassified for all periods to present UPC Slovenia as a discontinued
operation. Previously, UPC Slovenia was included in our Other Central
and Eastern Europe segment. We present only the reportable segments of
our continuing operations in the following tables.
For purposes of calculating rebased growth rates on a comparable basis
for all businesses that we owned during 2009, we have adjusted our
historical revenue and OCF for the three and six months ended June 30,
2008, to (i) include the pre-acquisition revenue and OCF of certain
entities acquired during 2008 and 2009 in our rebased amounts for the
three and six months ended June 30, 2008, to the same extent that the
revenue and OCF of such entities are included in our results for the
three and six months ended June 30, 2009, (ii) exclude the
pre-disposition revenue and OCF of certain entities that were disposed
of during 2008 from our rebased amounts for the six months ended June
30, 2008, to the same extent that such entities were excluded from our
results for the six months ended June 30, 2009, and (iii) reflect the
translation of our rebased amounts for the three and six months ended
June 30, 2008, at the applicable average exchange rates that were used
to translate our results for the three and six months ended June 30,
2009. The acquired entities that have been included in whole or
in part in the determination of our rebased revenue and OCF for the
three months ended June 30, 2008, include Interkabel, Mediatti, four
small acquisitions in Europe and two small acquisitions in Japan. The
acquired entities that have been included in whole or in part in the
determination of our rebased revenue and OCF for the six months ended
June 30, 2008, include Interkabel, Mediatti, five small acquisitions in
Europe and four small acquisitions in Japan. Additionally, the disposed
entity that was excluded from the determination of our rebased revenue
and OCF for the six months ended June 30, 2008, was Chellomedia's
Liveshop operation. In terms of acquired entities, we have reflected the
revenue and OCF of these acquired entities in our 2008 rebased amounts
based on what we believe to be the most reliable information that is
currently available to us (generally pre-acquisition financial
statements), as adjusted for the estimated effects of (i) any
significant differences between generally accepted accounting principles
in the U.S. ("GAAP") and local generally accepted accounting principles,
(ii) any significant effects of post-acquisition purchase accounting
adjustments, (iii) any significant differences between our accounting
policies and those of the acquired entities and (iv) other items we deem
appropriate. As we did not own or operate the acquired businesses during
the pre-acquisition periods, no assurance can be given that we have
identified all adjustments necessary to present the revenue and OCF of
these entities on a basis that is comparable to the corresponding
post-acquisition amounts that are included in our historical 2008
results or that the pre-acquisition financial statements we have relied
upon do not contain undetected errors. The adjustments reflected in our
2008 rebased amounts have not been prepared with a view towards
complying with Article 11 of the SEC's Regulation S-X. In
addition, the rebased growth percentages are not necessarily indicative
of the revenue and OCF that would have occurred if these transactions
had occurred on the dates assumed for purposes of calculating our
rebased 2008 amounts or the revenue and OCF that will occur in the
future. The rebased growth percentages have been presented as a basis
for assessing 2009 growth rates on a comparable basis, and are
not presented as a measure of our pro forma financial performance for
2008. Therefore, we believe our rebased data is not a non-GAAP measure
as contemplated by Regulation G or Item 10 of Regulation S-K.
In each case, the following tables present (i) the amounts reported by
each of our reportable segments for the comparative period, (ii) the
U.S. dollar change and percentage change from period to period, (iii)
the percentage change from period to period, after removing foreign
currency translation effects (FX), and (iv) the percentage change from
period to period on a rebased basis. The comparisons that exclude FX
assume that exchange rates remained constant during the periods that are
included in each table.
Revenue
Increase
Three months ended Increase (decrease) Increase
June 30, (decrease) excluding (decrease)
FX
2009 2008 $ % % Rebased %
in millions, except % amounts
UPC
Broadband
Division:
The $ 277.4 $ 310.6 $ (33.2 ) (10.7 ) 2.4 --
Netherlands
Switzerland 248.7 268.5 (19.8 ) (7.4 ) (0.4 ) --
Austria 118.2 143.9 (25.7 ) (17.9 ) (5.8 ) --
Ireland 84.4 95.6 (11.2 ) (11.7 ) 1.1 --
Total
Western 728.7 818.6 (89.9 ) (11.0 ) (0.1 ) (0.2 )
Europe
Hungary 79.6 108.5 (28.9 ) (26.6 ) (3.2 ) --
Other
Central and 189.3 237.4 (48.1 ) (20.3 ) 5.9 --
Eastern
Europe
Total
Central and 268.9 345.9 (77.0 ) (22.3 ) 3.1 2.5
Eastern
Europe
Central and
corporate 2.1 2.9 (0.8 ) (27.6 ) (23.8 ) --
operations
Total UPC
Broadband 999.7 1,167.4 (167.7 ) (14.4 ) 0.8 0.5
Division
Telenet 400.5 387.9 12.6 3.2 18.4 7.4
(Belgium)
J:COM 839.1 691.1 148.0 21.4 12.9 4.7
(Japan)
VTR (Chile) 172.7 194.6 (21.9 ) (11.3 ) 6.6 6.6
Corporate 259.1 294.8 (35.7 ) (12.1 ) 6.6 --
and other
Intersegment (18.1 ) (22.1 ) 4.0 18.1 7.0 --
eliminations
Total LGI $ 2,653.0 $ 2,713.7 $ (60.7 ) (2.2 ) 7.5 3.7
Increase
Six months ended Increase (decrease) Increase
June 30, (decrease) excluding (decrease)
FX
2009 2008 $ % % Rebased %
in millions, except % amounts
UPC
Broadband
Division:
The $ 544.3 $ 611.7 $ (67.4 ) (11.0 ) 2.2 --
Netherlands
Switzerland 486.8 520.9 (34.1 ) (6.5 ) 0.6 --
Austria 232.8 283.7 (50.9 ) (17.9 ) (5.8 ) --
Ireland 164.2 184.0 (19.8 ) (10.8 ) 2.4 --
Total
Western 1,428.1 1,600.3 (172.2 ) (10.8 ) 0.3 0.1
Europe
Hungary 155.9 208.5 (52.6 ) (25.2 ) (1.9 ) --
Other
Central and 364.7 456.6 (91.9 ) (20.1 ) 5.5 --
Eastern
Europe
Total
Central and 520.6 665.1 (144.5 ) (21.7 ) 3.2 2.6
Eastern
Europe
Central and
corporate 4.3 5.6 (1.3 ) (23.2 ) (13.5 ) --
operations
Total UPC
Broadband 1,953.0 2,271.0 (318.0 ) (14.0 ) 1.1 0.7
Division
Telenet 777.1 762.3 14.8 1.9 17.0 6.3
(Belgium)
J:COM 1,702.1 1,370.4 331.7 24.2 13.0 4.4
(Japan)
VTR (Chile) 328.5 381.1 (52.6 ) (13.8 ) 8.1 8.1
Corporate 492.0 569.9 (77.9 ) (13.7 ) 7.2 --
and other
Intersegment (36.8 ) (45.8 ) 9.0 19.7 8.0 --
eliminations
Total LGI $ 5,215.9 $ 5,308.9 $ (93.0 ) (1.8 ) 7.7 3.7
Operating Cash Flow
Increase
Three months ended Increase (decrease) Increase
June 30, (decrease) excluding (decrease)
FX
2009 2008 $ % % Rebased %
in millions, except % amounts
UPC
Broadband
Division:
The $ 159.2 $ 168.4 $ (9.2 ) (5.5 ) 8.4 --
Netherlands
Switzerland 138.9 137.5 1.4 1.0 8.7 --
Austria 59.0 76.0 (17.0 ) (22.4 ) (10.9 ) --
Ireland 35.3 35.7 (0.4 ) (1.1 ) 13.6 --
Total
Western 392.4 417.6 (25.2 ) (6.0 ) 5.4 5.4
Europe
Hungary 40.1 55.1 (15.0 ) (27.2 ) (3.8 ) --
Other
Central and 93.6 123.2 (29.6 ) (24.0 ) 1.0 --
Eastern
Europe
Total
Central and 133.7 178.3 (44.6 ) (25.0 ) (0.5 ) (1.1 )
Eastern
Europe
Central and
corporate (44.9 ) (58.2 ) 13.3 22.9 9.9 --
operations
Total UPC
Broadband 481.2 537.7 (56.5 ) (10.5 ) 5.1 5.2
Division
Telenet 208.4 189.9 18.5 9.7 25.7 15.0
(Belgium)
J:COM 356.5 275.8 80.7 29.3 20.3 10.6
(Japan)
VTR (Chile) 70.2 81.9 (11.7 ) (14.3 ) 2.9 2.9
Corporate 52.6 60.7 (8.1 ) (13.3 ) 8.5 --
and other
Total $ 1,168.9 $ 1,146.0 $ 22.9 2.0 12.2 8.3
Increase
Six months ended Increase (decrease) Increase
June 30, (decrease) excluding (decrease)
FX
2009 2008 $ % % Rebased %
in millions, except % amounts
UPC
Broadband
Division:
The $ 311.9 $ 334.7 $ (22.8 ) (6.8 ) 7.0 --
Netherlands
Switzerland 269.4 269.8 (0.4 ) (0.1 ) 7.5 --
Austria 117.0 144.4 (27.4 ) (19.0 ) (6.9 ) --
Ireland 66.1 69.6 (3.5 ) (5.0 ) 8.8 --
Total
Western 764.4 818.5 (54.1 ) (6.6 ) 4.9 4.8
Europe
Hungary 78.4 106.2 (27.8 ) (26.2 ) (3.3 ) --
Other
Central and 183.3 233.6 (50.3 ) (21.5 ) 3.7 --
Eastern
Europe
Total
Central and 261.7 339.8 (78.1 ) (23.0 ) 1.6 0.9
Eastern
Europe
Central and
corporate (94.4 ) (115.2 ) 20.8 18.1 3.7 --
operations
Total UPC
Broadband 931.7 1,043.1 (111.4 ) (10.7 ) 4.7 4.6
Division
Telenet 399.0 364.8 34.2 9.4 25.5 14.5
(Belgium)
J:COM 732.3 559.4 172.9 30.9 19.1 9.3
(Japan)
VTR (Chile) 131.6 157.5 (25.9 ) (16.4 ) 4.7 4.7
Corporate 96.1 113.3 (17.2 ) (15.2 ) 11.8 --
and other
Total $ 2,290.7 $ 2,238.1 $ 52.6 2.4 12.0 7.7
Operating Cash Flow Definition and Reconciliation
Operating cash flow is not a GAAP measure. Operating cash flow is the
primary measure used by our chief operating decision maker to evaluate
segment operating performance and to decide how to allocate resources to
segments. As we use the term, operating cash flow is defined as revenue
less operating and SG&A expenses (excluding stock-based compensation,
depreciation and amortization, provisions for litigation, and
impairment, restructuring and other operating charges or credits). Other
operating charges or credits include gains and losses on the disposition
of long-lived assets and, effective with our adoption of SFAS 141(R),
due diligence, legal, advisory and other third-party costs directly
related to our efforts to acquire controlling interests in entities. We
believe operating cash flow is meaningful because it provides investors
a means to evaluate the operating performance of our segments and our
company on an ongoing basis using criteria that is used by our internal
decision makers. Our internal decision makers believe operating cash
flow is a meaningful measure and is superior to other available GAAP
measures because it represents a transparent view of our recurring
operating performance and allows management to (i) readily view
operating trends, (ii) perform analytical comparisons and benchmarking
between segments and (iii) identify strategies to improve operating
performance in the different countries in which we operate. For example,
our internal decision makers believe that the inclusion of impairment
and restructuring charges within operating cash flow would distort the
ability to efficiently assess and view the core operating trends in our
segments. In addition, our internal decision makers believe our measure
of operating cash flow is important because analysts and investors use
it to compare our performance to other companies in our industry.
However, our definition of operating cash flow may differ from cash flow
measurements provided by other public companies. Operating cash flow
should be viewed as a measure of operating performance that is a
supplement to, and not a substitute for, operating income, net earnings
(loss), cash flow from operating activities and other GAAP measures of
income or cash flows. A reconciliation of total segment operating cash
flow to our earnings (loss) from continuing operations before income
taxes is presented below.
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
Total segment operating $ 1,168.9 $ 1,146.0 $ 2,290.7 $ 2,238.1
cash flow
Stock-based compensation (33.9 ) (43.0 ) (59.4 ) (83.3 )
expense
Depreciation and (709.7 ) (740.0 ) (1,403.3 ) (1,440.3 )
amortization
Impairment, restructuring
and other operating (123.4 ) (3.3 ) (124.2 ) (1.9 )
charges, net
Operating income 301.9 359.7 703.8 712.6
Interest expense (212.8 ) (290.7 ) (423.0 ) (570.3 )
Interest and dividend 6.6 16.9 28.1 51.8
income
Realized and unrealized
gains (losses) on (398.5 ) 406.4 (545.6 ) 71.0
derivative instruments,
net
Foreign currency 258.6 210.4 84.8 383.0
transaction gains, net
Realized and unrealized
gains due to changes in 87.3 22.8 67.2 44.8
fair values of certain
investments and debt, net
Losses on debt (24.3 ) -- (24.3 ) --
modifications
Share of results of (1.1 ) 0.3 1.0 2.8
affiliates, net
Other income (expense), (1.9 ) 1.2 (1.1 ) 0.7
net
Earnings (loss) from
continuing operations $ 15.8 $ 727.0 $ (109.1 ) $ 696.4
before income taxes
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent
balances of our consolidated debt, capital lease obligations and cash
and cash equivalents at June 30, 2009:
Capital Debt and Cash
Debt Lease Capital Lease and Cash
Obligations Obligations Equivalents2
in millions
LGI and its non-operating $ 2,295.6 $ -- $ 2,295.6 $ 853.5
subsidiaries
UPC Holding (excluding 10,914.0 31.1 10,945.1 115.3
VTR)
Telenet 2,877.1 434.7 3,311.8 216.6
J:COM 1,909.7 657.0 2,566.7 412.1
VTR 465.5 0.7 466.2 60.0
Austar 685.4 -- 685.4 75.7
Chellomedia 277.8 -- 277.8 12.0
Liberty Puerto Rico 176.8 -- 176.8 5.4
Other operating -- -- -- 2.3
subsidiaries
Total LGI $ 19,601.9 $ 1,123.5 $ 20,725.4 $ 1,752.9
1 Except as otherwise indicated, the amounts reported in the table include the
named entity and its subsidiaries.
2 Excludes $476 million of restricted cash related to our debt instruments.
Capital Expenditures and Capital Lease Additions
The following table highlights our capital expenditures per category, as
well as capital lease additions for the indicated periods:
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
Customer premises equipment $ 268.8 $ 237.1 $ 545.3 $ 468.2
Scalable infrastructure 66.4 93.6 120.7 154.2
Line extensions 58.7 38.7 101.9 79.6
Upgrade/rebuild 77.4 95.4 152.6 172.6
Support capital 74.6 91.1 156.2 191.7
Other including Chellomedia 3.4 4.7 5.2 11.4
Total capital expenditures $ 549.3 $ 560.6 $ 1,081.9 $ 1,077.7
("capex")
Capital expenditures $ 549.3 $ 560.6 $ 1,081.9 $ 1,077.7
Capital lease additions 51.0 30.2 98.2 71.6
Total capex and capital leases $ 600.3 $ 590.8 $ 1,180.1 $ 1,149.3
As % of revenue
Capital expenditures 20.7 % 20.7 % 20.7 % 20.3 %
Capex and capital leases 22.6 % 21.8 % 22.6 % 21.6 %
Free Cash Flow Definition and Reconciliation
FCF is defined as net cash provided by the operating activities of our
continuing operations less the capital expenditures of our continuing
operations, each as reported in our consolidated statements of cash
flows. Adjusted FCF represents FCF less the non-cash capital lease
additions of our continuing operations. FCF and Adjusted FCF are not
GAAP measures of liquidity.
We believe that our presentation of FCF and Adjusted FCF provides useful
information to our investors because these measures can be used to gauge
our ability to service debt and fund new investment opportunities. FCF
should not be understood to represent our ability to fund discretionary
amounts, as we have various mandatory and contractual obligations,
including debt repayments, which are not deducted to arrive at this
amount. Investors should view FCF as a supplement to, and not a
substitute for, GAAP measures of liquidity included in our consolidated
cash flow statements. The following table highlights the reconciliation
of our continuing operations' net cash provided by operating activities
to FCF and FCF to Adjusted FCF for the indicated periods:
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
Net cash provided by $ 881.5 $ 870.4 $ 1,577.4 $ 1,510.4
operating activities
Capital expenditures (549.3 ) (560.6 ) (1,081.9 ) (1,077.7 )
FCF $ 332.2 $ 309.8 $ 495.5 $ 432.7
FCF $ 332.2 $ 309.8 $ 495.5 $ 432.7
Capital lease additions (51.0 ) (30.2 ) (98.2 ) (71.6 )
Adjusted FCF $ 281.2 $ 279.6 $ 397.3 $ 361.1
ARPU per Customer Relationship Table3
The following table provides ARPU per customer relationship for the
indicated periods:
Three months ended June 30,
2009 2008 % Change
UPC Broadband EUR 23.51 EUR 23.23 1.2 %
Telenet EUR 35.17 EUR 34.96 0.6 %
J:COM JPY 7,236 JPY 7,274 (0.5 %)
VTR CLP 28,727 CLP 27,493 4.5 %
Liberty Global Consolidated $ 44.81 $ 47.10 (4.9 %)
3 ARPU per customer relationship refers to the average monthly
subscription revenue per average customer relationship and is
calculated by dividing the average monthly subscription revenue
(excluding installation, late fees and mobile telephony revenue) for
the indicated period, by the average of the opening and closing
balances for customer relationships for the period. Customer
relationships of entities acquired during the period are normalized.
ARPU per customer relationship for UPC Broadband and Liberty Global
Consolidated are not adjusted for currency impacts.
Customer Breakdown and Bundling
The following table provides information on the geography of our
customer base and highlights our customer bundling metrics at June 30,
2009, March 31, 2009, and June 30, 2008:
June 30, March 31, June 30, Q2'09 / Q1'09 Q2'09 / Q2'08
2009 2009 2008 (% Change) (% Change)
Total
Customers
UPC 9,164,400 9,258,200 9,425,900 (1.0)% (2.8)%
Broadband
Telenet 2,374,000 2,386,200 1,977,400 (0.5)% 20.1%
J:COM 3,219,200 3,181,200 2,759,600 1.2% 16.7%
VTR 1,038,800 1,031,200 1,017,700 0.7% 2.1%
Other 857,600 848,100 811,700 1.1% 5.7%
Liberty
Global 16,654,000 16,704,900 15,992,300 (0.3)% 4.1%
Consolidated
Total
Single-Play 10,046,100 10,247,100 10,264,800 (2.0)% (2.1)%
Customers
Total
Double-Play 3,240,000 3,197,200 2,986,900 1.3% 8.5%
Customers
Total
Triple-Play 3,367,900 3,260,600 2,740,600 3.3% 22.9%
Customers
%
Double-Play
Customers
UPC 16.8% 16.4% 15.9% 2.4% 5.7%
Broadband
Telenet 22.7% 22.5% 26.1% 0.9% (13.0)%
J:COM 28.0% 28.0% 27.4% 0.0% 2.2%
VTR 20.8% 20.6% 18.5% 1.0% 12.4%
Liberty
Global 19.5% 19.1% 18.7% 2.1% 4.3%
Consolidated
%
Triple-Play
Customers
UPC 16.1% 15.6% 13.3% 3.2% 21.1%
Broadband
Telenet 25.5% 24.2% 18.2% 5.4% 40.1%
J:COM 25.7% 25.2% 25.7% 2.0% 0.0%
VTR 42.1% 40.9% 39.6% 2.9% 6.3%
Liberty
Global 20.2% 19.5% 17.1% 3.6% 18.1%
Consolidated
RGUs per
Customer
Relationship
UPC 1.49 1.48 1.43 0.7% 4.2%
Broadband
Telenet 1.74 1.71 1.62 1.8% 7.4%
J:COM 1.79 1.78 1.79 0.6% 0.0%
VTR 2.05 2.02 1.98 1.5% 3.5%
Liberty
Global 1.60 1.58 1.53 1.3% 4.6%
Consolidated
Fixed Income Overview
The following tables provide preliminary financial information for UPC
Holding B.V. ("UPC Holding") and Chellomedia Programming Financing
HoldCo B.V. ("Chellomedia Programming") and are subject to completion of
the respective financial statements and to finalization of the
respective compliance certificates for the second quarter of 2009.
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
UPC Holding:
Revenue EUR 860.1 EUR 871.4 EUR 1,709.5 EUR 1,731.0
OCF 404.5 396.5 796.8 783.7
Chellomedia
Programming:
Revenue EUR 50.0 EUR 55.1 EUR 101.0 EUR 103.8
OCF 11.1 14.0 24.0 27.1
Debt, Cash and Leverage at June 30, 20094
Total Debt and Cash and Senior
Capital Lease Cash Leverage Total Leverage
Obligations5 Equivalents6
in millions
UPC Holding EUR 8,121.9 EUR 124.7 3.82x 4.80x
Chellomedia 197.8 7.8 3.80x 3.80x
Programming
4 In the covenant calculations for UPC Holding, we utilize debt figures
that take into account currency swaps. Reported OCF and debt may differ
from what is used in the calculation of the respective covenants. The
ratios for each of the two entities are based on June 30, 2009 results,
and are subject to completion of our second quarter bank reporting
requirements. The ratios for each entity are defined and calculated in
accordance with the applicable credit agreement. As defined and
calculated in accordance with the UPC Broadband Holding Bank Facility,
senior leverage refers to Senior Debt to Annualized EBITDA (last two
quarters annualized) and total leverage refers to Total Debt to
Annualized EBITDA (last two quarters annualized) for UPC Holding. For
Chellomedia Programming, senior leverage refers to Senior Net Debt to
Annualized EBITDA (last two quarters annualized) and total leverage
refers to Total Net Debt to Annualized EBITDA (last two quarters
annualized).
5Debt for UPC Holding reflects only third-party debt. Debt for
Chellomedia Programming reflects third-party debt and a loan payable to
a related-party of EUR7 million.
6 Excludes restricted cash.
Operating Cash Flow Definition and Reconciliations
Operating cash flow is not a GAAP measure. Operating cash flow is the
primary measure used by our chief operating decision makers to evaluate
operating performance and to decide how to allocate resources. As we use
the term, operating cash flow is defined as revenue less operating and
SG&A expenses (excluding stock-based compensation, depreciation and
amortization, and other charges or credits outlined in the respective
tables below). Investors should view operating cash flow as a measure of
operating performance that is a supplement to, and not a substitute for,
operating income, net earnings, cash flow from operating activities and
other GAAP measures of income or cash flows. The following tables
provide the appropriate reconciliations:
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
UPC Holding in millions
Total segment operating EUR 404.5 EUR 396.5 EUR 796.8 EUR 783.7
cash flow
Stock-based compensation (9.1 ) (9.8 ) (12.5 ) (18.2 )
expense
Depreciation and (264.0 ) (273.7 ) (525.3 ) (541.5 )
amortization
Related-party fees and 4.9 7.4 10.6 8.1
allocations, net
Impairment,
restructuring and other (85.9 ) (2.3 ) (89.5 ) (4.9 )
operating charges, net
Operating income EUR 50.4 EUR 118.1 EUR 180.1 EUR 227.2
Chellomedia Programming
Total segment operating EUR 11.1 EUR 14.0 EUR 24.0 EUR 27.1
cash flow
Stock-based compensation (0.2 ) (0.1 ) (0.4 ) (0.2 )
expense
Depreciation and (4.3 ) (4.3 ) (8.7 ) (8.4 )
amortization
Related-party management (1.8 ) (1.2 ) (4.6 ) (1.2 )
fees
Impairment,
restructuring and other (1.1 ) (0.3 ) (1.4 ) (0.3 )
operating charges
Operating income EUR 3.7 EUR 8.1 EUR 8.9 EUR 17.0
Consolidated Operating Data - June 30, 2009
Video Internet Telephony
Two-way Customer Analog Digital DTH MMDS Homes Homes
Homes Homes Total Cable Cable Total Subscribers Subscribers
Relationships Subscribers Subscribers Serviceable (10) Serviceable (12)
Passed(1) Passed(2) (3) RGUs(4) Subscribers Subscribers (7) (8) Video (9) (11)
(5) (6)
UPC
Broadband
Division:
The 2,753,000 2,648,100 1,989,200 3,272,400 1,299,400 687,000 -- -- 1,986,400 2,648,100 693,000 2,601,200 593,000
Netherlands
Switzerland 1,961,200 1,616,600 1,587,400 2,344,200 1,195,400 356,800 -- -- 1,552,200 1,806,600 484,900 1,804,600 307,100
(13)
Austria 1,154,100 1,154,100 724,800 1,239,200 336,700 208,300 -- -- 545,000 1,154,100 425,900 1,154,100 268,300
Ireland 875,900 552,800 542,400 684,100 187,500 251,000 -- 80,200 518,700 552,800 121,600 448,500 43,800
Total
Western 6,744,200 5,971,600 4,843,800 7,539,900 3,019,000 1,503,100 -- 80,200 4,602,300 6,161,600 1,725,400 6,008,400 1,212,200
Europe
Hungary 1,225,500 1,202,200 923,300 1,382,300 511,400 124,300 182,900 -- 818,600 1,202,200 324,300 1,204,700 239,400
Romania 2,069,900 1,706,500 1,248,300 1,639,500 912,900 179,600 155,800 -- 1,248,300 1,581,100 250,700 1,519,300 140,500
Poland 2,004,600 1,825,900 1,082,900 1,602,200 855,400 160,400 -- -- 1,015,800 1,825,900 425,600 1,824,700 160,800
Czech 1,308,200 1,198,400 776,100 1,131,400 187,500 353,100 111,100 -- 651,700 1,198,400 334,800 1,194,300 144,900
Republic
Slovakia 485,600 418,300 290,000 365,100 205,000 42,700 30,300 4,600 282,600 383,200 58,000 383,200 24,500
Total
Central and
Eastern 7,093,800 6,351,300 4,320,600 6,120,500 2,672,200 860,100 480,100 4,600 4,017,000 6,190,800 1,393,400 6,126,200 710,100
Europe
Total UPC
Broadband 13,838,000 12,322,900 9,164,400 13,660,400 5,691,200 2,363,200 480,100 84,800 8,619,300 12,352,400 3,118,800 12,134,600 1,922,300
Division
Telenet 2,781,300 2,781,300 2,374,000 4,123,200 1,519,900 854,100 -- -- 2,374,000 2,781,300 1,055,200 2,781,300 694,000
(Belgium)
J:COM 12,466,300 12,466,300 3,219,200 5,777,200 396,200 2,178,400 -- -- 2,574,600 12,466,300 1,536,400 11,679,900 1,666,200
(Japan)
The
Americas:
VTR (Chile) 2,564,800 1,871,100 1,038,800 2,129,800 417,500 472,600 -- -- 890,100 1,871,100 628,800 1,857,100 610,900
Puerto Rico 347,000 347,000 128,600 210,200 -- 90,600 -- -- 90,600 347,000 74,400 347,000 45,200
Total The 2,911,800 2,218,100 1,167,400 2,340,000 417,500 563,200 -- -- 980,700 2,218,100 703,200 2,204,100 656,100
Americas
Austar 2,499,200 -- 729,000 729,000 -- -- 728,700 -- 728,700 30,400 300 -- --
(Australia)
Total
Continuing 34,496,600 29,788,600 16,654,000 26,629,800 8,024,800 5,958,900 1,208,800 84,800 15,277,300 29,848,500 6,413,900 28,799,900 4,938,600
Operations
Discontinued
Operations - 227,600 173,400 156,700 248,200 135,100 17,200 -- 4,400 156,700 173,400 58,700 173,400 32,800
Slovenia
Grand Total 34,724,200 29,962,000 16,810,700 26,878,000 8,159,900 5,976,100 1,208,800 89,200 15,434,000 30,021,900 6,472,600 28,973,300 4,971,400
Subscriber Variance Table - June 30, 2009 vs. March 31, 2009
Video Internet Telephony
Homes Two-way Customer Analog Digital DTH MMDS Homes Homes
Homes Total Cable Cable Total Subscribers Subscribers
Passed Relationships Subscribers Subscribers Serviceable (10) Serviceable (12)
(1) Passed (3) RGUs(4) Subscribers Subscribers (7) (8) Video (9) (11)
(2) (5) (6)
UPC
Broadband
Division:
The 4,900 5,200 (26,700) (18,700) (43,200) 16,500 -- -- (26,700) 5,200 3,900 23,100 4,100
Netherlands
Switzerland 86,900 267,800 (4,200) (6,000) (2,500) (2,500) -- -- (5,000) 267,800 (300) 267,800 (700)
Austria 5,500 5,500 (6,400) 5,900 (14,500) 11,300 -- -- (3,200) 5,500 (1,300) 5,500 10,400
Ireland (600) 25,400 (7,300) 8,700 (18,100) 11,000 -- (3,400) (10,500) 25,400 10,200 29,800 9,000
Total
Western 96,700 303,900 (44,600) (10,100) (78,300) 36,300 -- (3,400) (45,400) 303,900 12,500 326,200 22,800
Europe
Hungary 16,000 18,400 (16,000) (6,600) (31,800) 16,900 1,100 -- (13,800) 18,400 800 18,400 6,400
Romania 100 6,100 (15,300) (800) (48,100) 32,300 400 -- (15,400) 6,100 5,400 6,100 9,200
Poland 5,500 21,900 (2,400) 17,200 (40,900) 37,800 -- -- (3,100) 21,900 15,100 36,300 5,200
Czech 3,600 3,600 (10,500) (1,300) (29,900) 18,500 (5,500) -- (16,900) 3,600 6,600 11,400 9,000
Republic
Slovakia (600) 11,200 (5,000) (1,000) (11,400) 7,600 (600) (600) (5,000) 10,600 2,100 10,600 1,900
Total
Central and
Eastern 24,600 61,200 (49,200) 7,500 (162,100) 113,100 (4,600) (600) (54,200) 60,600 30,000 82,800 31,700
Europe
Total UPC
Broadband 121,300 365,100 (93,800) (2,600) (240,400) 149,400 (4,600) (4,000) (99,600) 364,500 42,500 409,000 54,500
Division
Telenet 6,200 6,200 (12,200) 46,400 (86,000) 73,800 -- -- (12,200) 6,200 30,100 6,200 28,500
(Belgium)
J:COM 86,300 86,300 38,000 103,600 (73,200) 93,100 -- -- 19,900 86,300 32,600 167,600 51,100
(Japan)(6)
The
Americas:
VTR (Chile) 24,500 40,200 7,600 43,000 (42,600) 49,700 -- -- 7,100 40,200 23,300 40,700 12,600
Puerto Rico 800 800 3,000 9,400 -- 4,100 -- -- 4,100 800 1,200 800 4,100
Total The 25,300 41,000 10,600 52,400 (42,600) 53,800 -- -- 11,200 41,000 24,500 41,500 16,700
Americas
Austar 6,200 -- 6,500 6,500 -- -- 6,500 -- 6,500 -- -- -- --
(Australia)
Total
Continuing 245,300 498,600 (50,900) 206,300 (442,200) 370,100 1,900 (4,000) (74,200) 498,000 129,700 624,300 150,800
Operations
Discontinued
Operations - 2,000 2,600 (1,800) 3,500 (5,200) 3,000 -- 400 (1,800) 2,600 1,500 2,600 3,800
Slovenia
Grand Total 247,300 501,200 (52,700) 209,800 (447,400) 373,100 1,900 (3,600) (76,000) 500,600 131,200 626,900 154,600
ORGANIC
GROWTH
SUMMARY:
UPC
Broadband 28,700 87,800 (99,800) (11,000) (245,800) 149,200 (4,600) (4,000) (105,200) 87,200 40,600 131,700 53,600
Division
Telenet 6,200 6,200 (12,200) 46,400 (86,000) 73,800 -- -- (12,200) 6,200 30,100 6,200 28,500
(Belgium)
J:COM 86,300 86,300 38,000 103,600 (73,200) 93,100 -- -- 19,900 86,300 32,600 167,600 51,100
(Japan)
The Americas 25,300 41,000 10,600 52,400 (42,600) 53,800 -- -- 11,200 41,000 24,500 41,500 16,700
Austar 6,200 -- 6,500 6,500 -- -- 6,500 -- 6,500 -- -- -- --
(Australia)
Organic
Change from 152,700 221,300 (56,900) 197,900 (447,600) 369,900 1,900 (4,000) (79,800) 220,700 127,800 347,000 149,900
Continuing
Operations
Organic
Change from 2,000 2,600 (1,800) 3,500 (5,200) 3,000 -- 400 (1,800) 2,600 1,500 2,600 3,800
Discontinued
Operations
Total
Organic 154,700 223,900 (58,700) 201,400 (452,800) 372,900 1,900 (3,600) (81,600) 223,300 129,300 349,600 153,700
Change
ADJUSTMENTS:
Acquisition
- Feldbach 2,000 2,000 1,300 1,400 1,200 -- -- -- 1,200 2,000 200 2,000 --
(Austria)
Acquisition
- Heves & 13,400 13,400 4,700 7,000 4,200 200 -- -- 4,400 13,400 1,700 13,400 900
Nograd
(Hungary)
Total Q2 15,400 15,400 6,000 8,400 5,400 200 -- -- 5,600 15,400 1,900 15,400 900
acquisitions
Q2 2009
Slovakia (2,200) -- -- -- -- -- -- -- -- -- -- -- --
adjustment
Q2 2009
Switzerland 79,400 261,900 -- -- -- -- -- -- -- 261,900 -- 261,900 --
adjustment
Net 92,600 277,300 6,000 8,400 5,400 200 -- -- 5,600 277,300 1,900 277,300 900
adjustments
Net Adds
(Reductions)
from 245,300 498,600 (50,900) 206,300 (442,200) 370,100 1,900 (4,000) (74,200) 498,000 129,700 624,300 150,800
Continuing
Ops.
Net Adds
(Reductions)
from 2,000 2,600 (1,800) 3,500 (5,200) 3,000 -- 400 (1,800) 2,600 1,500 2,600 3,800
Discontinued
Ops.
Total Net
Adds 247,300 501,200 (52,700) 209,800 (447,400) 373,100 1,900 (3,600) (76,000) 500,600 131,200 626,900 154,600
(Reductions)
Footnotes for Operating Data and Subscriber Variance Tables
(1) Homes Passed are homes or residential multiple dwelling units that
can be connected to our networks without further extending the
distribution plant, except for direct-to-home (DTH) and Multi-channel
Multipoint (microwave) Distribution System (MMDS) homes. Our Homes
Passed counts are based on census data that can change based on either
revisions to the data or from new census results. With the exception of
Austar, we do not count homes passed for DTH. With respect to Austar, we
count all homes in the areas that Austar is authorized to serve as Homes
Passed. With respect to MMDS, one MMDS customer is equal to one Home
Passed. Due to the fact that we do not own the partner networks (defined
below) used by Cablecom in Switzerland (see note 13) or the unbundled
loop and shared access network used by one of our Austrian subsidiaries,
UPC Austria GmbH (Austria GmbH), we do not report homes passed for
Cablecom's partner networks or the unbundled loop and shared access
network used by Austria GmbH.
(2) Two-way Homes Passed are Homes Passed by those sections of our
networks that are technologically capable of providing two-way services,
including video and internet services and, in some cases, telephony
services. Due to the fact that we do not own the partner networks used
by Cablecom in Switzerland or the unbundled loop and shared access
network used by Austria GmbH, we do not report two-way homes passed for
Cablecom's partner networks or the unbundled loop and shared access
network used by Austria GmbH.
(3) Customer Relationships are the number of customers who receive at
least one of our video, internet or voice services that we count as
Revenue Generating Units (RGUs), without regard to which, or to how many
services they subscribe. To the extent that RGU counts include
equivalent billing unit (EBU) adjustments, we reflect corresponding
adjustments to our Customer Relationship counts. Customer Relationships
generally are counted on a unique premise basis. Accordingly, if an
individual receives our services in two premises (e.g. primary home and
vacation home), that individual will count as two Customer
Relationships. We exclude mobile customers from Customer Relationships.
(4) Revenue Generating Unit is separately an Analog Cable Subscriber,
Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet
Subscriber or Telephony Subscriber. A home, residential multiple
dwelling unit, or commercial unit may contain one or more RGUs. For
example, if a residential customer in our Austrian system subscribed to
our digital cable service, telephony service and broadband internet
service, the customer would constitute three RGUs. Total RGUs is the sum
of Analog Cable, Digital Cable, DTH, MMDS, Internet and Telephony
Subscribers. RGUs generally are counted on a unique premise basis such
that a given premise does not count as more than one RGU for any given
service. On the other hand, if an individual receives our service in two
premises (e.g., a primary home and a vacation home), that individual
will count as two RGUs. Each bundled cable, internet or telephony
service is counted as a separate RGU regardless of the nature of any
bundling discount or promotion. Non-paying subscribers are counted as
subscribers during their free promotional service period. Some of these
subscribers may choose to disconnect after their free service period.
Services offered without charge on a permanent basis (e.g. VIP
subscribers, free service to employees) are not counted as RGUs.
(5) Analog Cable Subscriber is a home, residential multiple dwelling
unit or commercial unit that receives our analog cable service over our
broadband network. In Europe, we have approximately 482,800 "lifeline"
customers that are counted on a per connection basis, representing the
least expensive regulated tier of basic cable service, with only a few
channels.
(6) Digital Cable Subscriber is a home, residential multiple dwelling
unit or commercial unit that receives our digital cable service over our
broadband network or through a partner network. We count a subscriber
with one or more digital converter boxes that receives our digital cable
service as just one subscriber. A Digital Cable Subscriber is not
counted as an Analog Cable Subscriber. As we migrate customers from
analog to digital cable services, we report a decrease in our Analog
Cable Subscribers equal to the increase in our Digital Cable
Subscribers. Individuals who receive digital cable service through a
purchased digital set-top box but do not pay a monthly digital service
fee are only counted as Digital Cable Subscribers to the extent we can
verify that such individuals are subscribing to our analog cable
service. We include 38,700 of these subscribers in the Digital Cable
Subscribers reported for Cablecom. Subscribers to digital cable services
provided by Cablecom over partner networks receive analog cable services
from the partner networks as opposed to Cablecom. The increase in
J:COM's Digital Cable Subscribers during the three months ended June 30,
2009 includes 3,200 RGUs that were added when J:COM began charging its
employees a discounted rate for digital cable television services.
(7) DTH Subscriber is a home, residential multiple dwelling unit or
commercial unit that receives our video programming broadcast directly
via a geosynchronous satellite.
(8) MMDS Subscriber is a home, residential multiple dwelling unit or
commercial unit that receives our video programming via a multi-channel
multipoint (microwave) distribution system.
(9) Internet Homes Serviceable are Two-way Homes Passed that can be
connected to our network, or a partner network with which we have a
service agreement, for the provision of broadband internet services if
requested by the customer or building owner. With respect to Austria
GmbH, we do not report as Internet Homes Serviceable those homes served
either over an unbundled loop or over a shared access network.
(10) Internet Subscriber is a home, residential multiple dwelling unit
or commercial unit that receives internet services over our networks, or
that we service through a partner network. Our Internet Subscribers in
Austria include 79,200 residential digital subscriber line (DSL)
subscribers of Austria GmbH that are not serviced over our networks. Our
Internet Subscribers do not include customers that receive services from
dial-up connections.
(11) Telephony Homes Serviceable are Two-way Homes Passed that can be
connected to our network, or a partner network with which we have a
service agreement, for the provision of telephony services if requested
by the customer or building owner. With respect to Austria GmbH, we do
not report as Telephony Homes Serviceable those homes served over an
unbundled loop rather than our network.
(12) Telephony Subscriber is a home, residential multiple dwelling unit
or commercial unit that receives voice services over our networks, or
that we service through a partner network. Telephony Subscribers exclude
mobile telephony subscribers. Our Telephony Subscribers in Austria
include 43,000 residential subscribers of Austria GmbH that are not
serviced over our networks.
(13) Pursuant to service agreements, Cablecom offers digital cable,
broadband internet and telephony services over networks owned by
third-party cable operators (partner networks). A partner network RGU is
only recognized if Cablecom has a direct billing relationship with the
customer. Homes Serviceable for partner networks represent the estimated
number of homes that are technologically capable of receiving the
applicable service within the geographic regions covered by Cablecom's
service agreements. Internet and Telephony Homes Serviceable with
respect to partner networks have been estimated by Cablecom. These
estimates may change in future periods as more accurate information
becomes available. Cablecom's partner network information generally is
presented one quarter in arrears such that information included in our
June 30, 2009 subscriber table is based on March 31, 2009 data. In our
June 30, 2009 subscriber table, Cablecom's partner networks account for
82,700 Customer Relationships, 117,800 RGUs, 47,400 Digital Cable
Subscribers, 190,000 Internet Homes Serviceable, 188,000 Telephony Homes
Serviceable, 42,800 Internet Subscribers, and 27,600 Telephony
Subscribers. In addition, partner networks account for 373,800 digital
cable homes serviceable that are not included in Homes Passed or Two-way
Homes Passed in our June 30, 2009 subscriber table.
Additional General Notes to Tables:
With respect to Chile, Japan and Puerto Rico, residential multiple
dwelling units with a discounted pricing structure for video, broadband
internet or telephony services are counted on an EBU basis. With respect
to commercial establishments, such as bars, hotels and hospitals, to
which we provide video and other services primarily for the patrons of
such establishments, the subscriber count is generally calculated on an
EBU basis by our subsidiaries (with the exception of Telenet, which
counts commercial establishments on a per connection basis). EBU is
calculated by dividing the bulk price charged to accounts in an area by
the most prevalent price charged to non-bulk residential customers
in that market for the comparable tier of service. Telenet leases a
portion of its network under a long-term capital lease arrangement. This
table includes operating statistics for Telenet's owned and leased
networks. On a business-to-business basis, certain of our subsidiaries
provide data, telephony and other services to businesses, primarily in
the Netherlands, Switzerland, Austria, Ireland, Belgium and Romania. We
generally do not count customers of these services as subscribers,
customers or RGUs.
While we take appropriate steps to ensure that subscriber statistics are
presented on a consistent and accurate basis at any given balance sheet
date, the variability from country to country in (i) the nature and
pricing of products and services, (ii) the distribution platform, (iii)
billing systems, (iv) bad debt collection experience and (v) other
factors add complexity to the subscriber counting process. We
periodically review our subscriber counting policies and underlying
systems to improve the accuracy and consistency of the data reported.
Accordingly, we may from time to time make appropriate adjustments to
our subscriber statistics based on those reviews. Subscriber information
for acquired entities is preliminary and subject to adjustment until we
have completed our review of such information and determined that it is
presented in accordance with our policies.
Source: Liberty Global Inc.
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