Filed by UnitedGlobalCom, Inc. pursuant to

Rule 425 under the Securities Act of 1933

Subject Company:  UnitedGlobalCom, Inc.

Commission File No. 000-49658

Subject Company:  Liberty Media International, Inc.

Commission File No. 000-50671

 


 


 

 

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UnitedGlobalCom, Inc.

 

[GRAPHIC]

 

Fiscal Year End 2004

Investor Call

March 14, 2005

 

[LOGO]

 



Safe Harbor”

 

[GRAPHIC]

 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

 

Forward Looking Statements: Except for historical information contained herein, this press release contains forward-looking statements, including guidance given for 2005. The statements about the Company’s proposed merger with Liberty Media International (“LMI”) and the proposed VTR/Metrópolis combination are also forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 our ability to complete the proposed merger with LMI by obtaining the approval of holders of a majority of the aggregate voting power of our shares not beneficially owned by LMI, Liberty Media Corporation (“Liberty”) or any of their respective subsidiaries or any of the executive officers of directors of LMI, Liberty or the Company and satisfaction of other conditions necessary to close the merger, satisfaction of the conditions necessary to complete the proposed VTR/Metrópolis combination, continued use by subscribers and potential subscribers of the Company’s services, changes in the technology and competition, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and achieve assumed margins including, to the extent annualized figures imply forward-looking projections, continued performance comparable with the period annualized, as well as other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission. 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 guidance and other 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.

 

Please refer to the Appendix at the end of this presentation, as well as the Company’s Press Release dated March 14, 2005 and SEC filings, for definitions of the following terms which are used herein including: Operating Cash Flow (OCF), Free Cash Flow, Revenue Generating Units (RGUs), and Average Revenue per Unit (ARPU), as well as a GAAP reconciliation of non-GAAP financial measures.

 

March 14, 2005

 

[LOGO]

 

2



Additional Information

 

UnitedGlobalCom, Inc. (“UGC”) and Liberty Media International, Inc. (“LMI”) have filed a preliminary Joint Proxy Statement relating to their proposed merger as well as a related Schedule 13E-3. Liberty Global, Inc. (“Liberty Global”) plans to shortly file a Registration Statement on Form S-4 which will contain a Prospectus/Joint Proxy Statement with respect to the proposed merger. UGC AND LMI STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ THESE DOCUMENTS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS WHEN AVAILABLE) BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Investors may obtain these documents free of charge at the SEC’s website at www.sec.gov. In addition, copies of the Prospectus/Joint Proxy Statement and other related documents filed by the parties to the merger may be obtained free of charge by directing a request to UnitedGlobalCom, Inc., 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237, Attention: Investor Relations Department, telephone: 303-770-4001.

 

Participants in Solicitation

 

UGC and its directors and executive officers may be deemed to be participants in the solicitation of proxies from UGC’s stockholders in connection with the special meeting of stockholders to be held to approve the merger with LMI through the formation of a new holding company to be named Liberty Global. Information concerning UGC’s directors and executive officers and their direct and indirect interests in UGC and LMI is set forth in UGC’s and LMI’s preliminary Joint Proxy Statement filed with the SEC on February 14, 2005. A definitive proxy statement will be mailed to UGC stockholders when available. Stockholders may obtain these documents (when available) free of charge at the SEC’s website at www.sec.gov. In addition, copies of the definitive Prospectus/Joint Proxy Statement (when available) may be obtained free of charge by directing a request to UnitedGlobalCom, Inc., 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237, Attention: Investor Relations Department, telephone: 303-770-4001. UGC STOCKHOLDERS SHOULD READ THE PROSPECTUS/JOINT PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS CAREFULLY BEFORE MAKING ANY VOTING DECISION BECAUSE IT CONTAINS IMPORTANT INFORMATION.

 

3



Agenda

 

•     2004 Highlights

 

•     Summary of Results

 

•     Strategic & Product Update

 

•     2005 Guidance

 

•     Q&A

 

4



2004 Highlights

 

[GRAPHIC]

 

                  Guidance targets achieved or exceeded

 

                  Significant increase in RGU growth

 

                  Unprecedented new product activity

 

                  Improvement in networks and systems

 

                  Disciplined approach to M&A

 

                  Organizational structure simplified

 

                  Balance sheet strengthened

 

                  External factors (e.g. competition, regulatory) evolved as expected

 

5



2004 Results

 

 

 

Guidance

 

Result

 

 

 

 

 

 

 

Net Adds (RGUs)(1)

 

500,000

 

552,800

 

Revenue Growth (organic)(1)

 

10

%

10.5

%

OCF Growth (organic)(1)

 

20

%+

20

%(2)

OCF Result (millions)

 

$

850

m

$

879

m

Capex% of Revenue

 

20

%

19

%

Average FX Rate ($/€)

 

1.20

 

1.24

 

 


(1)         For RGU Net Adds, Revenue Growth and OCF Growth, figures are “organic” and exclude acquisitions (e.g. Noos) and the impact of f/x rates as applicable. See appendix for detailed calculations.

(2)         Organic OCF growth was 24% excluding approximately $22 million fourth quarter costs associated with the MovieCo contract termination and settlement.

 

6



Track Record of Growth

 

2000

7.9m RGUs (1)

 

Net Adds (2)

 

 

 

 

 

 

 

[CHART]

 

[CHART]

 

 

 

 

 

 

2004

11.6m RGUs

 

 

 

 

 

 

 

 

 

[CHART]

 

 

 

 

                  2.1m advanced service RGUs added since 2000

 

                  4-fold increase in data subscribers since 2000

 

                  75% increase in net adds over 2003

 

                  Telephony & digital growth accelerating

 


(1)          Excludes the RGUs for certain businesses that are currently not consolidated but were as of 2000 (e.g., Austar, UPC Poland DTH and UPC Germany, etc.)

(2)          Excludes the impact of acquisitions which closed during 2004, Noos (July ‘04), Chorus (Dec ‘04), as well as two other minor acquisitions in Austria (Oct ‘04) and Romania (Dec ‘04).

 

7



Revenue(1)

 

[CHART]

 

                  24% CAGR in $’s

                  10%+ organic growth last 2 yrs

                  4% sequential growth Q3 to Q4

 

OCF(1)

 

[CHART]

 

                  Best in class organic growth

                  Over $1 billion Q4 annualized(2)

                  Strong FCF

 


(1)          For Revenues and OCF, represents amount as reported and includes the impact of disposed, deconsolidated, closed and/or acquired businesses for each period as highlighted in yellow (e.g., Austar and UPC Poland DTH were deconsolidated in 2001 and Noos and Chorus were acquired during 2004). Please refer to Appendix for a reconciliation of OCF with Net income (loss).

(2)          Excludes approximately $22 million of fourth quarter costs associated with MovieCo contract termination and settlement. See Appendix for details.

 

8



Agenda

 

                  2004 Highlights

 

                  Summary of Results

 

                  Strategic & Product Update

 

                  2005 Guidance

 

                  Q&A

 

9



RGU Results

 

 

 

Actual at
Dec 31, ‘04

 

Organic Net Additions

 

 

 

 

Q4 ‘04

 

FY ‘04

 

RGUs by Product

 

 

 

 

 

 

 

Internet

 

1,187,500

 

92,500

 

264,800

 

Telephone

 

803,000

 

42,000

 

70,200

 

DTH

 

249,600

 

35,800

 

52,700

 

Digital

 

239,600

 

16,500

 

100,900

 

Analog Cable (1)

 

7,213,200

 

67,400

 

64,200

 

Acquisitions (2) 

 

1,963,100

 

 

 

Total RGUs

 

11,656,000

 

254,200

 

552,800

 

 

 

 

 

 

 

 

 

RGUs by Region

 

 

 

 

 

 

 

Europe

 

8,651,600

 

218,500

 

436,700

 

Chile

 

1,009,300

 

35,600

 

115,300

 

Other

 

32,000

 

100

 

800

 

Acquisitions (2)

 

1,963,100

 

 

 

Total RGUs

 

11,656,000

 

254,200

 

552,800

 

 


(1)          Includes MMDS subscribers.

(2)          Represents the acquisitions which closed during 2004, Noos (July ’04), Chorus (Dec ’04), as well as two other minor acquisitions in Austria (Oct ’04) and Romania (Dec ’04).

 

“RGUs” - Please see Appendix for definition.

 

10



 

Financial Results

 

(In US$ Millions)

 

FYE
2004

 

FYE
2003

 

Yr/Yr
%

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,525

 

$

1,892

 

34

%

Operating Expenses

 

1,646

 

1,263

 

30

%

Operating Cash Flow

 

$

879

 

$

629

 

40

%

% Margin

 

34.8

%

33.2

%

160

Bps

Capital Expenditures

 

$

480

 

$

333

 

44

%

Capex (% of Rev.)

 

19.0

%

17.6

%

 

Free Cash Flow

 

$

219

 

$

59

 

271

%

 

“Operating Cash Flow” - Please see Appendix for a definition and reconciliation with net income (loss).

“Free Cash Flow” – Please see Appendix for a definition and additional information.

 

11



 

Revenue Detail

 

 

 

FYE

 

FYE

 

Yr/Yr

 

Organic

 

(In US$ Millions)

 

2004

 

2003

 

%

 

Growth (3)

 

 

 

 

 

 

 

 

 

 

 

Western Europe (1)

 

$

1,384

 

$

1,168

 

18

%

8.3

%

 

 

 

 

 

 

 

 

 

 

C & E Europe

 

466

 

360

 

30

%

18.5

%

 

 

 

 

 

 

 

 

 

 

UPC Broadband

 

1,850

 

1,528

 

21

%

10.7

%

 

 

 

 

 

 

 

 

 

 

chello & Other (2)

 

132

 

126

 

5

%

2.5

%

 

 

 

 

 

 

 

 

 

 

Total Europe

 

$

1,982

 

$

1,654

 

20

%

9.6

%

 

 

 

 

 

 

 

 

 

 

Chile & Other

 

311

 

238

 

31

%

16.6

%

 

 

 

 

 

 

 

 

 

 

Noos & Chorus

 

233

 

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

Total UGC

 

$

2,525

 

$

1,892

 

34

%

10.5

%

 


(1)          Excludes Noos and Chorus which were acquired in July and December 2004, respectively (included in separate line below).

(2)          Other includes chellomedia, intercompany eliminations and corporate and other.

(3)          The organic growth figures presented are based on what the growth would have been had exchange rates remained the same in FYE 2004 as FYE 2003. For Total UGC excludes impact of acquisitions (Noos and Chorus). Please see Appendix for detailed calculations.

 

12



OCF Detail (1)

 

 

 

FYE

 

FYE

 

Yr/Yr

 

Organic

 

(In US$ Millions)

 

2004

 

2003

 

%

 

Growth (4)

 

 

 

 

 

 

 

 

 

 

 

Western Europe (2)

 

$

573

 

$

451

 

27

%

16.5

%

 

 

 

 

 

 

 

 

 

 

C & E Europe

 

182

 

132

 

38

%

27.8

%

 

 

 

 

 

 

 

 

 

 

UPC Broadband

 

755

 

583

 

30

%

19.0

%

 

 

 

 

 

 

 

 

 

 

Other (3)

 

(31

)

(10

)

210

%

193.0

%

 

 

 

 

 

 

 

 

 

 

Total Europe

 

$

724

 

$

573

 

26

%

16.1

%

 

 

 

 

 

 

 

 

 

 

Chile & Other

 

102

 

56

 

82

%

60.2

%

 

 

 

 

 

 

 

 

 

 

Noos & Chorus

 

53

 

 

n.a.

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

Total UGC

 

$

879

 

$

629

 

40

%

20.0

%

 


(1)          “Operating Cash Flow” - Please see Appendix for a definition and reconciliation with net income (loss), as well as a more detailed summary of OCF by segment.

(2)          Excludes Noos and Chorus which were acquired in July and December 2004, respectively (included in separate line below).

(3)          Other includes chellomedia and corporate and other.

(4)          The organic growth figures presented are based on what the growth would have been had exchange rates remained the same in FYE 2004 as FYE 2003 and exclude Noos and Chorus. Please see Appendix for detailed calculations.

 

13



Operating Efficiency

 

Annual percentage change in Revenue, Opex and SG&A(1)

 

[CHART]

 


(1)          All calculated on an organic basis, excluding acquisitions and FX movements.

 

14



Capital Expenditures

 

Decline in annual capex spend, and as a percentage of revenue

 

[CHART]

 


(1)          Excludes capital expenditures of approximately $53 million related to acquisitions (Noos and Chorus).

 

15



Leverage & Liquidity

 

 

 

Pro Forma(4)

 

As of

 

As of

 

(US$’s millions)

 

Dec-04

 

Dec-04

 

Dec-03

 

 

 

 

 

 

 

 

 

Total Debt

 

$

4,987

 

$

4,987

 

$

4,352

 

 

 

 

 

 

 

 

 

Total Cash

 

1,051

 

1,122

 

338

 

 

 

 

 

 

 

 

 

Net Debt

 

$

3,936

 

$

3,866

 

$

4,014

 

 

 

 

 

 

 

 

 

Net Debt / LQA OCF (1)

 

3.8

x

4.0

x

5.4

 

 

 

 

 

 

 

 

Additional Liquidity

 

 

 

 

 

 

 

Bank Revolver (2)

 

$

1,342

 

$

909

 

$

551

 

Marketable Securities (3)

 

562

 

562

 

469

 

Total

 

1,904

 

1,471

 

1,020

 

 

 

 

 

 

 

 

 

Total Liquidity

 

$

2,955

 

$

2,593

 

$

1,357

 

 


(1)          Represents net debt / Operating Cash Flow annualized for the three months ended as of the date indicated. See Appendix for details.

(2)          Represents the availability of Tranche A under European credit facility for FYE ’03 and ’04. Pro forma amount represents the availability of Tranches A & I (Euro 1 billion) per partial refinancing of the facility in March 2005 based on current spot rate of US$1.342 per Euro.

(3)          Market values of SBS and Austar as of March 9, 2005.

(4)          Pro forma for costs associated with the MovieCo contract termination and settlement in Q4 of approximately $22mm, as well as a reduction in cash of $71mm related to payment of all accrued expenses.

 

16



Bank Financing(1)

 

 

 

January ‘04

 

Today

 

 

 

 

 

 

 

Average Spread

 

437 bps

 

262 bps

 

 

 

 

 

 

 

Repayments to 2010 (2)

 

€2.4b

 

€0

 

 

 

 

 

 

 

Average Maturity

 

3.2 yrs

 

6.0 yrs

 

 

 

 

 

 

 

Covenant Headroom

 

10%

 

20%+

 

 

 

(amortizes below <3x)

 

(no amortization <4x)

 

 

 

 

 

 

 

Acquisition Flexibility

 

Limited

 

Unlimited

 

 

 

 

 

(up to 4.0x leverage)

 

 

 

 

 

 

 

Revolver Capacity

 

€667m

 

€1,000m

 

 


(1)          All facts and figures relate to our European Credit Facility

 

(2)          Repayments based on required amortizations (excluding Tranche A, the revolver) prior to the partial refinancing in March 2005.

 

17



Agenda

 

•     2004 Highlights

 

•     Summary of Results

 

•     Strategic & Product Update

 

•     2005 Guidance

 

•     Q&A

 

18



 

European Product Strategy

 

Digital Home

 

Video

Voice

Data

Content Leadership

Price Leadership

Product Leadership

“Best Content –

“Beat on Price –

“Meet on Price –

Go Digital”

More Features”

Beat on Speed”

 

Mobile

Off Footprint

4 – Play

National Coverage

“Take your home

“Compete head-to-

with you”

head w/Telcos”

 

19



VoIP Update

 

                  Over 100,000 sales since Q4 launch

                  58,000 net adds with 20,000+ backlog

                  Aggressive roll-out schedule for Europe

 

Weekly VoIP Sales in The Netherlands

 

[CHART]

 

20



 

Data Update

 

                  Increasing speeds on core products

                  Bundling with VoIP

                  265,000 net adds in 2004 – momentum continues

                  ARPU approximately $40

 

Monthly Data Sales in Europe

 

[CHART]

 

21



Recent Developments

 

                  Closed Telenet, Chorus, Telemach, and Zone Vision acquisitions

 

                  Completed €3.0 billion partial refinancing of European credit facility

 

                  Favorable Supreme Court ruling in Chile re: merger of VTR and Metropolis Intercom

 

                  Merger agreement between UGC and LMI

 

22



2004 M&A Activity

 

Deal

 

Country

 

RGUs
(000’s)

 

Indicative
Multiple
(1)

 

Rationale

 

 

 

 

 

 

 

 

 

 

 

Noos

 

France

 

1,700

 

7.3

x

Consolidation

 

 

 

 

 

 

 

 

 

 

 

Telemach

 

Slovenia

 

110

 

8.2

x

New market

 

 

 

 

 

 

 

 

 

 

 

Chorus

 

Ireland

 

200

 

6.9

x

New market

 

 

 

 

 

 

 

 

 

 

 

Telenet

 

Belgium

 

2,500

 

7.8

x

Strategic

 

 

Content Investments: Zone Vision; Canal+

 


(1) Please refer to our prior press releases for further details on the valuations of these transactions.

 

23



UGC / LMI Merger

 

                  Announced January 18, 2005

                  Proxy filed February 14, 2005

                  Expected to close mid to late 2nd quarter

 

Liberty Global

 

Rationale

 

 

 

 

 

Scale

 

 

 

[GRAPHIC]

[GRAPHIC]

 

Simplicity

 

 

 

 

[GRAPHIC]

[GRAPHIC]

 

Liquidity

 

 

 

 

[GRAPHIC]

[GRAPHIC]

 

Growth

 

24



Agenda

 

•     2004 Highlights

 

•     Summary of Results

 

•     Strategic & Product Update

 

•     2005 Guidance

 

•     Q&A

 

25



 

2005 Highlights

 

[GRAPHIC]

 

                  Accelerating subscriber growth driven by aggressive VoIP deployments and continued strong demand for broadband Internet

 

                  Double-digit revenue growth primarily driven by volume increase

 

                  Strong OCF growth but flat margins due to full year of Noos’ results and lower margin content businesses

 

                  Higher capital spending to support unit growth, CEE upgrade, and key product initiatives

 

                  Free cash flow positive in 2005 although growth limited due to capex increase

 

26



2005 Guidance

 

 

 

2004
Actual(2)

 

2005
Guidance

 

Net Adds (U.S. method)(1)

 

599,000

 

800,000

 

 

 

 

 

 

 

Net Adds (new method)(1)

 

479,000

 

600,000

 

 

 

 

 

 

 

Revenue Growth

 

34

%

20

%

 

 

 

 

 

 

OCF Growth

 

40

%

20

%

 

 

 

 

 

 

Capex% of Revenue

 

19

%

20-22

%

 

 

 

 

 

 

Average FX Rate ($/€)

 

1.24

 

1.24

 

 


(1)          RGU net gain counts a digital video subscriber as one digital RGU and one analog RGU. The “new method” eliminates this double count whereby a digital subscriber is no longer also included in the analog count.

(2)          RGU Net Gain for 2004 includes subscribers added at Noos.

 

27



Conclusion

 

                  Solid 2004 results across the board

 

                  4th quarter momentum continued into 2005

 

                  Aggressive 2005 game plan and guidance

 

                  Focus on operating efficiency and capital discipline

 

                  Exploit strategic opportunities wisely

 

                  Premier broadband cable investment

 

28



 

UnitedGlobalCom, Inc.

 

[GRAPHIC]

 

Fiscal Year End 2004

Investor Call

March 14, 2005

 

[LOGO]

 

 



Appendix

 

[GRAPHIC]

 

Operating Cash Flow Definition

 

Operating Cash Flow is the primary measure used by our chief operating decision makers 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, selling, general and administrative expenses (excluding depreciation and amortization, impairment of long-lived assets, restructuring charges and other and stock-based compensation). 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 readily view operating trends, perform analytical comparisons and benchmarking between segments in the different countries in which we operate and identify strategies to improve operating performance. For example, our internal decision makers believe that the inclusion of impairment and restructuring charges within Operating Cash Flow distorts their 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. We reconcile the total of the reportable segments’ Operating Cash Flow to our consolidated net income as presented in our consolidated statements of operations, because we believe consolidated net income is the most directly comparable financial measure to total segment operating performance. Investors should view Operating Cash Flow as a supplement to, and not a substitute for, operating income, net income, cash flow from operating activities and other GAAP measures of income as a measure of operating performance.

 

March 14, 2005

 

[LOGO]

 

30



Other Definitions

 

                  Revenue Generating Unit (“RGU”) is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephony Subscriber. A home may contain one or more RGUs. For example, if a residential customer in our Austrian system subscribed to our analog cable service, digital cable service, telephony service and high-speed broadband Internet access service, the customer would constitute four RGUs. “Total RGUs” is the sum of Analog, Digital Cable, DTH, MMDS, Internet and Telephony Subscribers. In some cases, non-paying subscribers are counted as subscribers during their free promotional service period. Some of these subscribers choose to disconnect after their free service period.

 

                  Average Revenue Per Unit (“ARPU”) is calculated as follows: average monthly broadband revenue for the period as indicated, divided by the average of the opening and closing RGUs for the period.

 

31



Non-GAAP Reconciliations

 

Reconciliation of Operating Cash Flow to Net Income (Loss) (1)

 

(thousands)

 

3 months
Dec-04

 

3 months
Sep-04

 

3 months
Dec-03

 

12 months
Dec-04

 

12 months
Dec-03

 

12 months
Dec-02

 

12 months
Dec-01

 

12 months
Dec-00

 

Total segment Operating Cash Flow

 

$

238,718

 

$

241,703

 

$

186,014

 

$

879,233

 

$

628,882

 

$

296,374

 

$

(191,243

)

$

(368,464

)

Depreciation and amortization

 

(267,887

)

(235,186

)

(210,456

)

(935,185

)

(808,663

)

(730,001

)

(1,147,176

)

(815,522

)

Impairment of long-lived assets

 

(22,317

)

25

 

(402,680

)

(38,915

)

(402,239

)

(436,153

)

(1,320,942

)

 

Restructuring charges and other

 

(18,270

)

(1,824

)

(29,084

)

(29,019

)

(35,970

)

(1,274

)

(204,127

)

0

 

Stock-based compensation

 

(52,767

)

(12,178

)

(9,377

)

(116,661

)

(38,024

)

(28,228

)

(8,818

)

43,183

 

Operating income (loss)

 

(122,523

)

(7,460

)

(465,583

)

(240,547

)

(656,014

)

(899,282

)

(2,872,306

)

(1,140,803

)

Interest expense, net

 

(71,651

)

(53,616

)

(60,868

)

(259,457

)

(314,078

)

(641,786

)

(966,134

)

(795,486

)

Gains on extinguishment of debt

 

 

 

 

35,787

 

2,183,997

 

2,208,782

 

3,447

 

0

 

Gains (losses) on sale of investments & other net

 

12,096

 

646

 

(1,879

)

12,325

 

279,442

 

117,262

 

(416,803

)

6,194

 

Realized and unrealized (losses) gains on foreign currency transactions and derivative instruments and other expenses, net

 

(16,556

)

2,005

 

(28,020

)

(46,939

)

74,719

 

543,719

 

(413,704

)

(98,326

)

Income (loss) before income taxes and other items

 

(198,634

)

(58,425

)

(556,350

)

(498,831

)

1,568,066

 

1,328,695

 

(4,665,500

)

(2,028,421

)

Other, net

 

131,025

 

(11,785

)

175,656

 

116,476

 

427,302

 

(1,685,149

)

170,791

 

807,531

 

Net income (loss)

 

$

(67,609

)

$

(70,210

)

$

(380,694

)

$

(382,355

)

$

1,995,368

 

$

(356,454

)

$

(4,494,709

)

$

(1,220,890

)

 


(1)                                  We are unable to provide a reconciliation of forecasted Operating Cash Flow to the most directly comparable GAAP measure, net income (loss), because certain items are out of our control and/or cannot be reasonably predicted.  For example, it is impractical to: (1) estimate future fluctuations in interest rates on our variable-rate debt facilities; (2) estimate the fluctuations in exchange rates relative to the U.S. dollar and its impact on our results of operations; (3) estimate the financial results of our non-consolidated affiliates; and (4) estimate changes in circumstances that lead to gains and/or losses such as sales of investments in affiliates and other assets. Any and/or all of these items could be significant to our financial results.

 

32



Non-GAAP Reconciliations

 

Free Cash Flow is not a GAAP measure of liquidity. We define Free Cash Flow as net cash flows from operating activities less capital expenditures. We believe our presentation of free cash flow provides useful information to our investors because it can be used to gauge our ability to service debt and fund new investment opportunities. Investors should view free cash flow as a supplement to, and not a substitute for, GAAP cash flows from operating, investing and financing activities as a measure of liquidity.

 

Reconciliation of Free Cash Flow

 

(thousands)

 

3 months
Dec-04

 

3 months
Sep-04

 

3 months
Dec-03

 

12 months
Dec-04

 

12 months
Dec-03

 

Net cash flows from operating activities

 

$

226,255

 

$

175,064

 

$

118,651

 

$

699,602

 

$

392,092

 

Capital expenditures

 

(187,576

)

(116,696

)

(105,426

)

(480,133

)

(333,124

)

Free cash flow

 

$

38,679

 

$

58,368

 

$

13,225

 

$

219,469

 

$

58,968

 

 

33



Pro-Forma Leverage

 

 

 

FYE ‘03

 

FYE ‘04

 

Q4 ‘03

 

Q1 ‘04

 

Q2 ‘04

 

Q3 ‘04

 

Q4 ‘04

 

Debt Summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UPC Broadband Bank Facility

 

$

3,698,586

 

$

3,927,830

 

$

3,698,586

 

$

3,584,272

 

$

3,224,816

 

$

3,495,406

 

$

3,927,830

 

UGC Convertible Notes

 

 

681,850

 

 

 

609,830

 

621,813

 

681,850

 

UPC Polska Notes

 

317,372

 

 

317,372

 

 

 

 

 

UPC Polska 2007 Notes

 

 

 

 

101,701

 

101,701

 

 

 

VTR Bank Facility

 

123,000

 

97,941

 

123,000

 

93,198

 

88,586

 

83,972

 

97,941

 

Telenet Notes

 

 

87,821

 

 

 

 

 

87,821

 

Old UGC Senior Notes

 

24,627

 

24,627

 

24,627

 

24,627

 

24,627

 

24,627

 

24,627

 

Notes payable, related party

 

102,728

 

108,414

 

102,728

 

 

 

 

108,414

 

Subject to compromise: short term debt

 

5,099

 

 

5,099

 

 

 

 

 

Other

 

80,493

 

58,880

 

80,493

 

74,198

 

55,980

 

60,653

 

58,880

 

Total Debt

 

$

4,351,905

 

$

4,987,363

 

$

4,351,905

 

$

3,877,996

 

$

4,105,540

 

$

4,286,471

 

$

4,987,363

 

Less: UPC Polska notes (1)

 

(322,471

)

 

(322,471

)

 

 

 

 

Add: UPC Polska note (2)

 

101,701

 

 

101,701

 

 

 

 

 

Less: Notes Payable, related party (3)

 

(102,728

)

 

(102,728

)

 

 

 

 

Less: VTR Global Com (4)

 

(25,233

)

 

(25,233

)

 

 

 

 

Add: Euro Convertible (5)

 

630,279

 

 

630,279

 

605,400

 

 

 

 

Add: Noos Acquisition (6)

 

 

 

 

 

127,042

 

 

 

Pro-Forma Debt

 

$

4,633,453

 

$

4,987,363

 

$

4,633,453

 

$

4,483,396

 

$

4,232,582

 

$

4,286,471

 

$

4,987,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash & cash equivalents

 

$

310,361

 

$

1,028,993

 

$

310,361

 

$

1,275,785

 

$

1,368,677

 

$

981,638

 

$

1,028,993

 

Restricted cash

 

25,052

 

43,640

 

25,052

 

18,169

 

20,237

 

23,367

 

43,640

 

Short-term liquid investments

 

2,134

 

48,965

 

2,134

 

19,621

 

207,194

 

111,536

 

48,965

 

Total Cash

 

337,547

 

1,121,598

 

337,547

 

1,313,575

 

1,596,108

 

1,116,541

 

1,121,598

 

Rights Offering and Liberty Preemptive Rights (3)

 

1,075,385

 

 

1,075,385

 

 

 

 

 

Less: VTR Global Com (4)

 

(25,233

)

 

(25,233

)

 

 

 

 

Less: UPC Polska payment (2)

 

(81,361

)

 

(81,361

)

 

 

 

 

Add: Euro Convertible (5)

 

617,673

 

 

617,673

 

593,292

 

 

 

 

Less: Noos Acquisition (6)

 

 

 

 

 

(514,130

)

 

 

Less: Cinenova/Movieco Settlement (7)

 

 

(70,651

)

 

 

 

 

(70,651

)

Pro-Forma Cash

 

$

1,924,011

 

$

1,050,947

 

$

1,924,011

 

$

1,906,867

 

$

1,081,978

 

$

1,116,541

 

$

1,050,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt

 

$

4,014,358

 

$

3,865,765

 

$

4,014,358

 

$

2,564,421

 

$

2,509,432

 

$

3,169,930

 

$

3,865,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro-Forma Net Debt

 

$

2,709,442

 

$

3,936,416

 

$

2,709,442

 

$

2,576,529

 

$

3,150,603

 

$

3,169,930

 

$

3,936,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow (“OCF”)

 

$

628,882

 

$

879,233

 

$

186,014

 

$

204,284

 

$

194,528

 

$

241,703

 

$

238,718

 

Add: Noos Operating Cash Flow (6)

 

 

 

 

 

26,129

 

 

 

Add: Cinenova/Movieco Settlement (7)

 

 

27,206

 

 

 

 

 

21,995

 

Pro-Forma Operating Cash Flow (“OCF”)

 

$

628,882

 

$

906,439

 

$

186,014

 

$

204,284

 

$

220,657

 

$

241,703

 

$

260,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt / Annualized OCF (OCF * 4)

 

6.4

x

4.4

x

5.4

x

3.1

x

3.2

x

3.3

x

4.0

x

Pro Forma Net Debt / Pro-Forma Annualized OCF

 

4.3

x

4.3

x

3.6

x

3.2

x

3.6

x

3.3

x

3.8

x

 


(1)                                  Represents the sum of all of the notes outstanding of UPC Polska (UPC Polska restructuring completed in February 2004) per UGC’s filings.

 

(2)                                  Per the final terms and conditions of the UPC Polska restructuring, completed in February 2004, virtually all existing debt was cancelled and in exchange UPC Polska issued to the third party bondholders $101.7 million in new 9.0% senior notes, and paid $81.4 million in cash.

 

(3)                                  Includes proceeds of approximately $1.02 billion from the rights offering completed in February 2004, as well as the net proceeds from Liberty of $157 million when Liberty exercised its preemptive right for certain transactions (e.g., UGC Europe exchange offer) less cancellation of the Notes Payable to Liberty for $103 million.

 

(4)                                  VTR was required to make a loan repayment of over $25 million as per the loan agreement.

 

(5)                                  UGC received net proceeds of Euro 490mm (Euro 500mm par value) from its recent convertible offering (US$ equivalent based on F/X spot rates as of the reporting dates as indicated).

 

(6)                                  The acquisition of Noos, which closed on July 1, 2004, was originally valued at EUR 615 million. The final purchase price was subject to an audit of Noos’ financial information. Please refer to our 10K as of Dec. 31, 2004 for further details.

 

(7)                                  Represents the settlement of the MovieCo/Cinenova contract in Dec. ’04. Total costs in Q4 ’04 of approximately $22mm, as well as a reduction in cash of $71mm related to payment of all accrued expenses. Please refer to our 10K as of Dec. 31, 2004 for further details.

 

34



Supplemental Information

 

 

 

For the 3 months ended

 

For the 12 months ended

 

(amounts in thousands)

 

Dec-04

 

Dec-03

 

Dec-04

 

Dec-03

 

 

 

 

 

 

 

 

 

 

 

Interest Expense Breakdown:

 

 

 

 

 

 

 

 

 

Cash Pay:

 

 

 

 

 

 

 

 

 

UPC Broadband Bank Facility

 

$

(52,789

)

$

(55,468

)

$

(220,516

)

$

(254,900

)

UGC Convertible Notes

 

(2,836

)

 

(7,971

)

 

VTR Bank Facility

 

(1,656

)

(2,087

)

(6,863

)

(9,373

)

Old UGC Senior Notes

 

(2,877

)

(720

)

(2,963

)

(2,375

)

UPC and subsidiaries senior notes and other (1)

 

(10,386

)

(1,918

)

(23,379

)

(9,751

)

Total

 

(70,544

)

(60,193

)

(261,692

)

(276,399

)

 

 

 

 

 

 

 

 

 

 

Non-Cash:

 

 

 

 

 

 

 

 

 

Amortization of deferred financing costs

 

(7,827

)

(3,125

)

(21,388

)

(21,268

)

Senior discount notes accretion and other (1)

 

(200

)

(1

)

(200

)

(29,465

)

Total

 

(8,027

)

(3,126

)

(21,588

)

(50,733

)

 

 

 

 

 

 

 

 

 

 

Total Interest Expense

 

$

(78,571

)

$

(63,319

)

$

(283,280

)

$

(327,132

)

 

 

 

 

 

 

 

 

 

 

Summary of Working Capital Changes: (2)

 

 

 

 

 

 

 

 

 

Change in receivables and other assets

 

$

(57,339

)

$

(28,591

)

$

(72,169

)

$

40,870

 

Change in accounts payable, acc. liabilities & other

 

117,174

 

74,893

 

188,127

 

42,533

 

Total

 

$

59,835

 

$

46,302

 

$

115,958

 

$

83,403

 

 


(1)                                  Includes UPC Polska, which per the final terms and conditions of the UPC Polska restructuring (completed in February 2004), virtually all existing debt was cancelled and in exchange UPC Polska issued to the third party bondholders $101.7 million in new 9.0% senior notes, and paid $81.1 million in cash.  In addition, the $101.7 million notes were repaid in full in July 2004 with proceeds from the UPC Broadband Bank Facility.

 

(2)                                  Please refer to management’s discussion and analysis of financial condition and results of operations for interest expense and Statement of Cash Flows for working capital changes per UGC’s 10K as of December 31, 2004 as well as other 10Q’s filed for previous quarters.

 

35



Supplemental Information - Revenue

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

Increase (Decrease)

 

Excluding F/X Effects

 

 

 

2004

 

2003

 

$

 

%

 

$

 

%

 

Europe (UGC Europe):

 

 

 

 

 

 

 

 

 

 

 

 

 

UPC Broadband

 

 

 

 

 

 

 

 

 

 

 

 

 

The Netherlands

 

$

716,932

 

$

592,223

 

$

124,709

 

21.1

%

$

60,999

 

10.3

%

Austria

 

299,874

 

260,162

 

39,712

 

15.3

%

13,268

 

5.1

%

France (excluding Noos)

 

128,862

 

113,946

 

14,916

 

13.1

%

3,532

 

3.1

%

France (Noos)

 

183,930

 

 

183,930

 

 

183,930

 

 

Norway

 

112,378

 

95,284

 

17,094

 

17.9

%

11,815

 

12.4

%

Sweden

 

88,080

 

75,057

 

13,023

 

17.4

%

5,104

 

6.8

%

Belgium

 

37,472

 

31,586

 

5,886

 

18.6

%

2,558

 

8.1

%

Ireland (Chorus)

 

48,953

 

 

48,953

 

 

48,953

 

 

Total Western Europe

 

1,616,481

 

1,168,258

 

448,223

 

38.4

%

330,159

 

28.3

%

Hungary

 

217,507

 

165,450

 

52,057

 

31.5

%

31,105

 

18.8

%

Poland

 

108,979

 

85,356

 

23,623

 

27.7

%

16,388

 

19.2

%

Czech Republic

 

79,905

 

63,348

 

16,557

 

26.1

%

10,262

 

16.2

%

Slovak Republic

 

32,671

 

25,467

 

7,204

 

28.3

%

3,209

 

12.6

%

Romania

 

26,955

 

20,189

 

6,766

 

33.5

%

5,532

 

27.4

%

Total Central and Eastern Europe

 

466,017

 

359,810

 

106,207

 

29.5

%

66,496

 

18.5

%

Corporate and other

 

26,273

 

32,563

 

(6,290

)

(19.3

)%

(8,173

)

(25.1

)%

Total UPC Broadband

 

2,108,771

 

1,560,631

 

548,140

 

35.1

%

388,482

 

24.9

%

chellomedia

 

 

 

 

 

 

 

 

 

 

 

 

 

Priority Telecom

 

118,956

 

121,330

 

(2,374

)

(2.0

)%

(12,982

)

(10.7

)%

Media

 

125,016

 

98,463

 

26,553

 

27.0

%

15,459

 

15.7

%

Investments

 

840

 

528

 

312

 

59.1

%

239

 

45.3

%

Total chellomedia

 

244,812

 

220,321

 

24,491

 

11.1

%

2,716

 

1.2

%

Intercompany eliminations

 

(138,983

)

(127,055

)

(11,928

)

(9.4

)%

381

 

0.3

%

Total Europe

 

2,214,600

 

1,653,897

 

560,703

 

33.9

%

391,579

 

23.7

%

Latin America:

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

 

 

 

 

 

 

 

 

 

 

 

 

Chile (VTR)

 

299,951

 

229,835

 

70,116

 

30.5

%

36,314

 

15.8

%

Brazil, Peru and other

 

7,883

 

7,789

 

94

 

1.2

%

94

 

1.2

%

Total Latin America

 

307,834

 

237,624

 

70,210

 

29.5

%

36,408

 

15.3

%

Corporate and other

 

3,012

 

9

 

3,003

 

n.m.

 

3,003

 

n.m.

 

Total UGC

 

$

2,525,446

 

$

1,891,530

 

$

633,916

 

33.5

%

$

430,990

 

22.8

%

Less Noos and Chorus

 

 

 

 

 

$

(232,883

)

 

$

(232,883

)

 

Total UGC, excluding Noos and Chorus

 

.

 

 

 

$

401,033

 

21.2

%

$

198,107

 

10.5

%

 

36



Supplemental Information - Revenue

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

Increase (Decrease)

 

Excluding F/X Effects

 

 

 

2003

 

2002

 

$

 

%

 

$

 

%

 

Europe (UGC Europe):

 

 

 

 

 

 

 

 

 

 

 

 

 

UPC Broadband

 

 

 

 

 

 

 

 

 

 

 

 

 

The Netherlands

 

$

592,223

 

$

459,044

 

$

133,179

 

29.0

%

$

35,346

 

7.7

%

Austria

 

260,162

 

198,189

 

61,973

 

31.3

%

19,026

 

9.6

%

France (excluding Noos)

 

113,946

 

92,441

 

21,505

 

23.3

%

2,681

 

2.9

%

Norway

 

95,284

 

76,430

 

18,854

 

24.7

%

8,407

 

11.0

%

Sweden

 

75,057

 

52,560

 

22,497

 

42.8

%

9,829

 

18.7

%

Belgium

 

31,586

 

24,646

 

6,940

 

28.2

%

1,725

 

7.0

%

Total Western Europe

 

1,168,258

 

903,310

 

264,948

 

29.3

%

77,014

 

8.5

%

Hungary

 

165,450

 

124,046

 

41,404

 

33.4

%

20,095

 

16.2

%

Poland

 

85,356

 

76,090

 

9,266

 

12.2

%

5,402

 

7.1

%

Czech Republic

 

63,348

 

44,337

 

19,011

 

42.9

%

9,976

 

22.5

%

Slovak Republic

 

25,467

 

18,852

 

6,615

 

35.1

%

1,866

 

9.9

%

Romania

 

20,189

 

16,119

 

4,070

 

25.2

%

4,803

 

29.8

%

Total Central and Eastern Europe

 

359,810

 

279,444

 

80,366

 

28.8

%

42,142

 

15.1

%

Germany

 

 

28,069

 

(28,069

)

 

(28,069

)

 

Corporate and other

 

32,563

 

35,139

 

(2,576

)

(7.3

)%

(8,504

)

(24.2

)%

Total UPC Broadband

 

1,560,631

 

1,245,962

 

314,669

 

25.3

%

82,583

 

6.6

%

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