UPC Holding B.V. Provides Selected Financial Information for the Period Ended June 30, 2009
AMSTERDAM, the Netherlands--(BUSINESS WIRE)--
UPC Holding B.V. ("UPC Holding") is today providing selected,
preliminary unaudited financial and operating information for the three
and six months ended June 30, 2009. UPC Holding is an indirect wholly
owned subsidiary of Liberty Global, Inc. ("Liberty Global") (NASDAQ:
LBTYA)(NASDAQ: LBTYB)(NASDAQ: LBTYK). A copy of this press release will
be posted to the Liberty Global website (www.lgi.com).
In addition, UPC Holding's unaudited condensed consolidated financial
statements with the accompanying notes are expected to be posted prior
to the end of August 2009.
Highlights for the quarter ("Q2") ended June 30, 2009 as compared to the
results for the same period last year (unless noted) include:1
-- Added 32,000 organic RGUs2 to finish the quarter at 15.8 million RGUs
-- Reported revenue of EUR860 million and operating cash flow ("OCF")3 of
EUR405 million
-- Achieved rebased4 growth of 1% on revenue and 5% on OCF
-- Realized an OCF margin5 of 47.0%, representing a 150 basis point
improvement
-- Generated operating income of EUR50 million
-- Completed the sale of our Slovenian operation in mid-July
Financial Results
For both the three and six months ended June 30, 2009, our revenue
decreased 1% to EUR860 million and EUR1.7 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
euro relative to our non-euro functional currencies on a year-over-year
comparison. Adjusting for the effects of foreign currency ("FX")
movements, we achieved revenue growth of 2% for both the three and six
months ended June 30, 2009, as compared to the respective 2008 periods.
Adjusting for the effects of FX and acquisitions, we delivered rebased
revenue growth of 1% and 2% for the three and six months ended June 30,
2009, respectively, as compared to the prior year periods. Our
operations in Poland and Chile posted the strongest rebased results in
both periods, with our operations in Austria, Romania and Hungary
continuing to adversely impact our performance. Similar to recent
quarters, we continue to generate higher revenue from our advanced
services6 portfolio, which is being partially offset by the
effects associated with ARPU7 compression, analog churn, and
general softness in our non-subscription revenue, including revenue from
business-to-business services. Despite these hurdles, we continue to
realize improvement in our ARPU per customer. On a local currency basis
in the second quarter, our UPC Broadband Division ("UPC") and VTR both
realized ARPU per customer increases of approximately 4%, as compared to
the prior year period.
Operating cash flow, for the three and six months ended June 30, 2009,
increased to EUR405 million and EUR797 million, respectively, each
representing a 2% increase over the comparable 2008 period. Adjusting
for both FX and acquisition impacts, we achieved rebased OCF growth of
5% for each of the three-month and six-month periods ended June 30, 2009
as compared to the respective 2008 periods. With respect to the three
months ended June 30, 2009, our rebased growth was driven by Poland and
Ireland, as well as the Netherlands and Switzerland which both realized
improved sequential performances. Rebased OCF growth at VTR of 3% for
the three months ended June 30, 2009 was below historical levels due in
part to the negative effect of U.S dollar-based programming expenses.
For the three and six months ended June 30, 2009, we reported OCF
margins of 47.0% and 46.6%, respectively, reflecting improvements of 150
and 130 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.
During the first half of 2009, UPC posted an OCF margin of 47.7%, a 180
basis point improvement over the prior year period helped by strong
margin improvements in Switzerland (350 bps), the Netherlands (260 bps)
and Ireland (240 bps).
Subscriber Statistics
At June 30, 2009, our 10.2 million customers subscribed to a total of
15.8 million services, represented by 9.5 million video, 3.8 million
broadband internet and 2.5 million telephony RGUs. Reflecting typical
seasonality patterns for the three months ended June 30, 2009, we added
40,000 new RGUs from our continuing operations in the quarter, of which
32,000 were organic additions, and the balance added through small
acquisitions in Austria and Hungary. Of our organic total, telephony and
broadband internet accounted for 66,000 and 64,000 additions,
respectively, and video accounted for a loss of 98,000 RGUs.
Our organic subscriber growth continues to be driven by the success of
our advanced services, which have grown to represent 61% of our total
RGU base. For the three and six months ended June 30, 2009, we
organically added 324,000 and 776,000 advanced service subscriptions,
respectively. For the second quarter, our advanced service organic
additions were led by our operations in Chile, Poland, Romania and
Ireland. Our continued growth in advanced services has resulted in part
from the success of our bundling strategy. We ended the second quarter
with 3.7 million or 36% of our customers taking a multi-product bundle,
which reflects a 10% improvement in bundled customers over the last
twelve months.
Digital cable remains the strongest of our advanced services, as we
added 199,000 and 499,000 organic subscribers in the three and six
months ended June 30, 2009, respectively. These gains represent a
decline of 10% and an increase of 37%, 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 penetration8 in CEE from 8% at June 30,
2008 to 24% at June 30, 2009.
We finished Q2 with nearly 2.8 million digital cable RGUs and
consolidated penetration of 32%, which is a significant increase above
our 20% penetration rate at June 30, 2008. We continue to realize ARPU
uplift from migrating customers from analog to digital and by upselling
digital customers to premium tiers and advanced services. For example,
at 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 DVR9 functionality in all nine UPC
markets, HD in eight markets and VoD in three markets, including the
recent introductions of VoD services in Austria and Switzerland. At UPC,
more than 35% of our digital cable subscriber base now takes a DVR
and/or HD service. In addition, we recently announced an important
partnership with RTL, a key commercial broadcaster in the Netherlands,
which will further differentiate UPC with a richer "catch-up TV" offer
and additional HD feeds of popular channels.
Offsetting our strong growth in digital cable is the ongoing trend of
analog subscriber losses at UPC. In the second quarter, we lost 105,000
organic video subscribers at UPC and gained 7,000 organic video
subscribers at VTR, for a combined loss of 98,000 RGUs. This result is
similar to that realized in the second quarter of 2008.
In terms of the other key advanced products of broadband internet and
telephony, we added a combined total of 130,000 and 289,000 organic RGUs
in the three and six months ended June 30, 2009, respectively. With
respect to next-generation broadband internet, 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. At present,
approximately 50% of our UPC footprint is 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.
Summary of Third-Party Debt and Cash and Cash Equivalents
The following table details UPC Holding's consolidated third-party debt
and cash and cash equivalents as of the indicated periods:
June 30, March 31,
2009 2009
in millions
UPC Broadband Holding Bank Facility EUR 6,209.0 EUR 6,412.0
UPC Holding 7.75% Senior Notes due 2014 384.6 500.0
UPC Holding 8.63% Senior Notes due 2014 230.9 300.0
UPC Holding 8.00% Senior Notes due 2016 300.0 300.0
UPC Holding 9.75% Senior Notes due 2018 373.2 --
UPC Holding 9.875% Senior Notes due 2018 263.4 --
VTR Bank Facility10 331.3 351.9
Other debt, including capital lease obligations 29.5 30.9
Total third-party debt EUR 8,121.9 EUR 7,894.8
Cash and cash equivalents EUR 124.7 EUR 56.6
Restricted cash11 333.4 354.2
Total cash and cash equivalents including restricted EUR 458.1 EUR 410.8
cash
At June 30, 2009, we reported EUR8,122 million of third-party debt and
EUR458 million of cash and cash equivalents, including restricted cash of
EUR333 million. As compared to March 31, 2009, our third-party debt
increased by EUR227 million in the second quarter, primarily as a result
of the issuance of our Senior Notes due 2018. In the first half of 2009,
we opportunistically improved our debt maturity schedule. We have
extended approximately EUR4.0 billion of debt to 2014 - 2018, reflecting
an improvement of generally two to four years depending upon the debt
refinanced. In terms of near-term debt amortizations, approximately 99%
of our consolidated debt at UPC Holding matures in 2013 and beyond.
Borrowing Capacity & Covenant Calculations
As of June 30, 2009, UPC Holding had maximum undrawn commitments under
Facilities I, L and Q of the UPC Broadband Holding Bank Facility of EUR323
million, of which we estimate EUR197 million will be available to borrow
upon completion of our second quarter bank reporting requirements. Based
on the results for June 30, 2009 and subject to the completion of second
quarter bank reporting requirements, (i) the ratio of Senior Debt to
Annualized EBITDA (last two quarters annualized), as defined and
calculated in accordance with the UPC Broadband Holding Bank Facility,
was 3.82x,12 and (ii) the ratio of Total Debt to Annualized
EBITDA (last two quarters annualized), as defined and calculated in
accordance with the UPC Broadband Holding Bank Facility was 4.80x.12
Transaction Update
The following summarizes the transactions that we have completed in 2009:
-- On March 25, 2009, we rolled EUR503 million of our EUR830 million
redrawable Facility L due 2012 into Facility Q due 2014 (EUR267 million)
and Facility R due 2015 (EUR236 million).
o On April 27, 2009, we rolled an additional EUR97 million of Facility L
into Facilities Q and R, such that Facilities Q and R total EUR337
million and EUR263 million, respectively.
-- On April 30, 2009, we exchanged EUR184 million of our Senior Notes due
2014 (EUR115 million of our 7.75% Senior Notes and EUR69 million of our
8.63% Senior Notes) into new 9.75% Senior Notes due 2018. Additionally,
we issued an aggregate principal amount of EUR66 million of additional
Senior Notes due 2018.
-- On May 6, 2009, we rolled EUR1.67 billion of Facility M due 2014 into
Facility S due 2016 and $500 million of Facility N due 2014 into
Facility T due 2016.
o On May 22, 2009, we rolled an additional EUR30 million of Facility M
into Facility S, such that Facility S is now EUR1.7 billion.
-- On May 29, 2009, we issued an aggregate principal amount of $400 million
in 9.875% Senior Notes due 2018 and an incremental EUR150 million in
aggregate principal amount of 9.75% Senior Notes due 2018, generating
over EUR395 million in gross proceeds.
-- On June 3, 2009, we rolled an additional EUR1.24 billion of Facility M
into Facility U due 2017.
UPC Broadband Holding Bank Facility
The following table details the key terms of the UPC Broadband Holding
Bank Facility at June 30, 2009:
As of June 30, 2009
Final Interest Facility Unused Outstanding
Facility maturity rate amount borrowing principal
capacity amount
in millions
Facility I April 1, 2010 E + 2.50% EUR 4813 EUR 48 EUR --
Facility L July 3, 2012 E + 2.25% EUR 23014 175 55
Facility M Dec. 31, E + 2.00% EUR 97116 -- 971
201415
Facility N Dec. 31, L + 1.75% $ 1,400 -- 996
201415
Facility O July 31, 2013 SR + 2.75% HUF 5,963 / PLN -- 48
115
Facility P Sept. 2, 2013 L + 2.75% $ 512 -- 364
Facility Q July 31, E + 2.75% EUR 337 100 237
201417
Facility R Dec. 31, E + 3.25% EUR 263 -- 263
201517
Facility S Dec. 31, E + 3.75% EUR 1,700 -- 1,700
201618
Facility T Dec. 31, L + 3.50% $ 500 -- 356
201618
Facility U Dec. 31, E + 4.00% EUR 1,219 16 -- 1,219
201719
Total EUR 323 EUR 6,209
Disposition of UPC Slovenia
On July 15, 2009, one of our subsidiaries sold 100% of its interest in
UPC Slovenia to Mid Europa Partners for a cash purchase price of EUR119.5
million, before working capital adjustments.
About UPC Holding
UPC Holding connects its customers to the world of entertainment,
communications and information, by offering advanced video, voice and
broadband internet services. As of June 30, 2009, UPC Holding operated
state-of-the-art networks in Europe and Chile, serving 10.2 million
customers in 10 countries.
Disclaimer
This press release contains forward-looking statements, including our
expectations with respect to our future growth prospects, and our
liquidity and access to capital markets, including our borrowing
availability; 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 UPC Holding's services and their 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 a percentage of revenue and achieve assumed margins, 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 Liberty Global's filings
with the Securities and Exchange Commission including Liberty Global's
most recently filed Forms 10-K and 10-Q. These forward-looking
statements speak only as of the date of this release. UPC Holding
expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained herein
to reflect any change in UPC Holding's expectations with regard thereto
or any change in events, conditions or circumstances on which any such
statement is based.
UPC Holding is required under the terms of the indentures for its Senior
Notes to provide certain financial information regarding UPC Holding to
bondholders on a quarterly basis. UPC Broadband Holding B.V. ("UPC
Broadband Holding"), a wholly-owned subsidiary of UPC Holding, is a
borrower and UPC Holding is a guarantor of outstanding indebtedness
under a senior secured credit facility (the "UPC Broadband Holding Bank
Facility") which also requires the provision of certain financial and
related information to the lenders. This press release is being issued
at this time, in connection with those obligations, due to the
contemporaneous release by Liberty Global of its June 30, 2009 results.
The financial information contained herein is preliminary and subject to
change. UPC Holding presently expects to issue its unaudited condensed
consolidated financial statements prior to the end of August 2009, at
which time they will be posted to the investor relations section of the
Liberty Global website (www.lgi.com)
under the fixed income heading. Copies will also be available from the
Trustee for the Senior Notes.
1 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.
2 Please see footnotes to the operating data table 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.
3 Please see page 10 for our definition of operating cash
flow and a reconciliation to operating income.
4 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 and (ii) 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 7 for supplemental
information.
5 OCF margin is calculated by dividing OCF by total revenue
for the applicable period.
6 Advanced services represent our services related to digital
video, including digital cable and direct-to-home ("DTH"), broadband
internet and telephony.
7 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 UPC is not adjusted for currency impacts
unless otherwise noted.
8 Digital penetration is calculated by dividing digital cable
RGUs by the total of digital and analog cable RGUs.
9 The following abbreviations related to digital video
services are defined as follows: DVR - digital video recorder; HD - high
definition and VoD - video-on-demand.
10 An amount equal to the outstanding principal and interest
balance due under the VTR Bank Facility is held in a cash collateral
account that is reflected as restricted cash in our consolidated balance
sheet.
11 Of this amount, EUR331 million and EUR352 million of
restricted cash as of June 30, 2009 and March 31, 2009, respectively,
relates to our VTR Bank Facility.
12 Our covenant calculations are based on debt figures which
take into account currency swaps. Thus, the debt used in the
calculations may differ from the debt balances reported within the
financial statements.
13 The total committed facility amount of Facility I is EUR250
million, however, EUR202 million has been novated to Liberty Global Europe
B.V., which is a direct subsidiary of UPC Broadband Holding, and
therefore, third-party commitments were EUR48 million.
14 The total committed facility amount of Facility L is EUR830
million, however, EUR600 million has been novated to Liberty Global Europe
B.V., and therefore, third-party commitments were EUR230 million.
15 The final maturity date for Facilities M and N is the
earlier of (i) December 31, 2014 and (ii) October 17, 2013, the date
falling 90 days prior to the date on which the UPC Holding Senior Notes
due 2014 fall due, if such Senior Notes have not been repaid, refinanced
or redeemed prior to such date.
16 In July of 2009, the remaining EUR16 million of novations
were completed, after which approximately EUR954 million of Facility M and
EUR1,236 million of Facility U are outstanding.
17 The final maturity dates for Facilities Q and R are the
earlier of (i) July 31, 2014 and December 31, 2015, respectively, and
(ii) October 17, 2013, the date falling 90 days prior to the date on
which the UPC Holding Senior Notes due 2014 fall due, if such Senior
Notes have not been repaid, refinanced or redeemed prior to such date.
18 The final maturity date for Facilities S and T will be the
earlier of (i) December 31, 2016 and (ii) October 17, 2013, the date
falling 90 days prior to the date on which the UPC Holding Senior Notes
due 2014 fall due, if, on such date, such notes are outstanding in an
aggregate principal amount of EUR250 million or more.
19 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 Senior Notes due 2014
fall due, if, on such date, such notes are outstanding in an aggregate
principal amount of EUR250 million or more.
Revenue and Operating Cash Flow
The following tables present preliminary 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 communications services. At June
30, 2009, our operating segments in UPC Holding provided services in ten
countries, consisting of our UPC Broadband Division in Europe and VTR in
Chile. Other Central and Eastern Europe segment includes our operating
segments in the Czech Republic, Poland, Romania and Slovakia.
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 and (ii) 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 three small acquisitions in Europe. 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 four small acquisitions in Europe. 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 Securities and Exchange Commission'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.
The selected financial data contained herein is preliminary and unaudited
and subject to possible adjustments in connection with the
publication of UPC Holding'sJune 30, 2009 unaudited condensed
consolidated financial statements. In each case, the following tables
present (i) the amounts reported by each of our reportable segments for
the comparative periods, (ii) the Euro 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
Three months Increase
ended Increase Increase
(decrease)
June 30, (decrease) (decrease)
excluding FX
2009 2008 EUR % % Rebased %
in millions
UPC
Broadband
Division:
The EUR EUR EUR 4.8 2.4 % 2.4 % --
Netherlands 203.6 198.8
Switzerland 182.4 171.8 10.6 6.2 % (0.4 %) --
Austria 86.8 92.1 (5.3 ) (5.8 %) (5.8 %) --
Ireland 61.9 61.2 0.7 1.1 % 1.1 % --
Total
Western 534.7 523.9 10.8 2.1 % (0.1 %) (0.2 %)
Europe
Hungary 58.3 69.4 (11.1 ) (16.0 %) (3.2 %) --
Other
Central and 138.9 151.8 (12.9 ) (8.5 %) 5.9 % --
Eastern
Europe
Total
Central and 197.2 221.2 (24.0 ) (10.8 %) 3.1 % 2.5 %
Eastern
Europe
Central and
corporate 1.4 1.7 (0.3 ) (17.6 %) (17.6 %) --
operations
Total UPC
Broadband 733.3 746.8 (13.5 ) (1.8 %) 0.8 % 0.5 %
Division
VTR (Chile) 126.8 124.6 2.2 1.8 % 6.6 % 6.6 %
Total UPC EUR EUR EUR (11.3 ) (1.3 %) 1.6 % 1.3 %
Holding 860.1 871.4
Six months ended Increase Increase Increase
June 30, (decrease) (decrease) (decrease)
excluding FX
2009 2008 EUR % % Rebased %
in millions
UPC
Broadband
Division:
The EUR EUR EUR 8.6 2.2 % 2.2 % --
Netherlands 408.1 399.5
Switzerland 364.9 340.0 24.9 7.3 % 0.6 % --
Austria 174.6 185.3 (10.7 ) (5.8 %) (5.8 %) --
Ireland 123.0 120.1 2.9 2.4 % 2.4 % --
Total
Western 1,070.6 1,044.9 25.7 2.5 % 0.3 % 0.1 %
Europe
Hungary 116.8 136.1 (19.3 ) (14.2 %) (1.9 %) --
Other
Central and 273.4 298.0 (24.6 ) (8.3 %) 5.5 % --
Eastern
Europe
Total
Central and 390.2 434.1 (43.9 ) (10.1 %) 3.2 % 2.6 %
Eastern
Europe
Central and
corporate 2.5 3.0 (0.5 ) (16.7 %) (16.7 %) --
operations
Total UPC
Broadband 1,463.3 1,482.0 (18.7 ) (1.3 %) 1.1 % 0.7 %
Division
VTR (Chile) 246.2 249.0 (2.8 ) (1.1 %) 8.1 % 8.1 %
Total UPC EUR EUR EUR (21.5 ) (1.2 %) 2.1 % 1.7 %
Holding 1,709.5 1,731.0
Operating Cash Flow
Three months Increase Increase Increase
ended (decrease) (decrease) (decrease)
June 30, excluding FX
2009 2008 EUR % % Rebased %
in millions
UPC
Broadband
Division:
The EUR EUR EUR 9.1 8.4 % 8.4 % --
Netherlands 116.9 107.8
Switzerland 101.8 88.0 13.8 15.7 % 8.7 % --
Austria 43.4 48.7 (5.3 ) (10.9 %) (10.9 %) --
Ireland 25.9 22.8 3.1 13.6 % 13.6 % --
Total
Western 288.0 267.3 20.7 7.7 % 5.4 % 5.4 %
Europe
Hungary 29.3 35.1 (5.8 ) (16.5 %) (3.8 %) --
Other
Central and 68.6 78.6 (10.0 ) (12.7 %) 1.0 % --
Eastern
Europe
Total
Central and 97.9 113.7 (15.8 ) (13.9 %) (0.5 %) (1.1 %)
Eastern
Europe
Central and
corporate (32.9 ) (37.0 ) 4.1 11.1 % 10.3 % --
operations
Total UPC
Broadband 353.0 344.0 9.0 2.6 % 5.2 % 5.2 %
Division
VTR (Chile) 51.5 52.5 (1.0 ) (1.9 %) 2.9 % 2.9 %
Total EUR EUR EUR 8.0 2.0 % 4.9 % 4.9 %
404.5 396.5
Increase
Six months ended Increase (decrease) Increase
June 30, (decrease) excluding (decrease)
FX
2009 2008 EUR % % Rebased %
in millions
UPC
Broadband
Division:
The EUR 233.9 EUR 218.6 EUR 15.3 7.0 % 7.0 % --
Netherlands
Switzerland 201.9 176.1 25.8 14.7 % 7.5 % --
Austria 87.8 94.3 (6.5 ) (6.9 %) (6.9 %) --
Ireland 49.4 45.4 4.0 8.8 % 8.8 % --
Total
Western 573.0 534.4 38.6 7.2 % 4.9 % 4.8 %
Europe
Hungary 58.7 69.3 (10.6 ) (15.3 %) (3.3 %) --
Other
Central and 137.6 152.4 (14.8 ) (9.7 %) 3.7 % --
Eastern
Europe
Total
Central and 196.3 221.7 (25.4 ) (11.5 %) 1.6 % 0.9 %
Eastern
Europe
Central and
corporate (71.0 ) (75.3 ) 4.3 5.7 % 4.1 % --
operations
Total UPC
Broadband 698.3 680.8 17.5 2.6 % 4.8 % 4.7 %
Division
VTR (Chile) 98.5 102.9 (4.4 ) (4.3 %) 4.7 % 4.7 %
Total EUR 796.8 EUR 783.7 EUR 13.1 1.7 % 4.8 % 4.7 %
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,
related-party fees and allocations, depreciation and amortization, 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,
cash flow from operating activities and other GAAP measures of income or
cash flows. A reconciliation of UPC Holding's total segment operating
cash flow to operating income is presented below.
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
Total segment operating EUR 404.5 EUR 396.5 EUR 796.8 EUR 783.7
cash flow
Stock-based (9.1 ) (9.8 ) (12.5 ) (18.2 )
compensation expense
Related-party fees and 4.9 7.4 10.6 8.1
allocations, net
Depreciation and (264.0 ) (273.7 ) (525.3 ) (541.5 )
amortization
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
* During the second quarter of 2009, we recorded an EUR85
million charge to impair a portion of the goodwill associated with our
Romanian operating segment.
Capital Expenditure Summary
The following table provides UPC Holding capital expenditures for the
indicated periods:
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
in millions
UPC Broadband Division:
The Netherlands EUR 16.6 EUR 24.6 EUR 42.1 EUR 66.3
Switzerland 48.8 45.7 102.9 74.5
Austria 19.3 19.3 39.5 30.7
Ireland 27.9 18.3 50.3 34.7
Total Western Europe 112.6 107.9 234.8 206.2
Hungary 16.6 19.8 27.8 37.5
Other Central and Eastern Europe 44.5 53.3 78.5 96.4
Total Central and Eastern Europe 61.1 73.1 106.3 133.9
Central and corporate operations 11.3 18.4 31.0 36.3
Total UPC Broadband Division 185.0 199.4 372.1 376.4
VTR (Chile) 33.0 28.9 66.4 60.1
Total UPC Holding EUR 218.0 EUR 228.3 EUR 438.5 EUR 436.5
Operating Data Table
Operating Data - June 30, 2009 - UPC Holding B.V. Consolidated
Video Internet Telephony
Customer
Homes Two-way Analog Digital DTH MMDS Homes Homes
Homes Relationships Total Cable Cable Total Subscribers Subscribers
Passed(1) Passed(2) (3) Subscribers Subscribers Serviceable (10) Serviceable (12)
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 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
Eastern
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
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
Total
Continuing 16,402,800 14,194,000 10,203,200 15,790,200 6,108,700 2,835,800 480,100 84,800 9,509,400 14,223,500 3,747,600 13,991,700 2,533,200
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
Total UPC 16,630,400 14,367,400 10,359,900 16,038,400 6,243,800 2,853,000 480,100 89,200 9,666,100 14,396,900 3,806,300 14,165,100 2,566,000
Holding B.V.
Footnotes to Operating Data Table:
(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. We do not count homes
passed for DTH. 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.
(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, 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. 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. 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, 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: UPC Holding B.V.
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