UGC Reports Fourth Quarter and Full Year Results
All 2004 Guidance Targets Achieved or Exceeded
DENVER, March 14 – UnitedGlobalCom, Inc. (UGC) (Nasdaq:
UCOMA) today announces operating and financial results for the fourth quarter
and year-ended December 31, 2004.
Highlights for
the fiscal year include:
* Revenue growth of 34% to $2.53 billion
* Operating Cash Flow growth of 40% to $879
million(2)
* Net RGU additions of 552,800 on an organic
basis(3)
* Net loss of $(382) million compared to net
income of $2.0 billion(4)
* Free Cash Flow growth of 272% to $219
million(5)
Mike Fries, President and Chief Executive Officer of UGC
said, "Our 2004 results were excellent across the board, as we achieved or
exceeded all of our public guidance targets. Organic subscriber growth was
robust as we added 552,800 RGUs for the full year, excluding acquisitions,
compared to guidance of 500,000. This solid performance was driven by record
fourth quarter net additions of over 250,000 RGUs. At year-end 2004, we had
over 11.6 million consolidated RGUs and growth remains strong in early 2005.
During the first two months of the year, we've added over 100,000 RGUs."
"On a reported basis, revenue and Operating Cash Flow
(OCF) in fiscal 2004 increased 34% and 40%, respectively, in part due to
favorable foreign currency (FX) movements. Adjusting for FX changes and
excluding acquisitions, our full year organic revenue growth was 10.5%,
modestly ahead of our 10% guidance target. Due to the strong RGU growth we
generated toward the end of the year, our fourth quarter organic revenue growth
accelerated significantly, increasing 4.0% on a sequential basis from the third
quarter. Our full year OCF growth was 20% on an organic basis, consistent with
our guidance on that metric and despite the additional costs associated with
our better than expected subscriber additions. And, excluding approximately $22
million of fourth quarter costs associated with the termination and settlement
of a Dutch programming contract (MovieCo), our organic cash flow growth rate
for the full year would have been 24%."
"We made significant progress on a number of our
strategic initiatives during the fourth quarter, including the launch of our
digital phone (VoIP) services in The Netherlands and Hungary, as well as
successful trials of 30 Mbps broadband Internet speeds and "off-net"
voice and data services outside of our cable footprint. We have added over
55,000 digital phone subscribers since October of last year, and this month we
expect to begin the commercial launch of our digital phone products across
France. In addition, we are planning upcoming launches of digital phone
services in Austria, Norway, Sweden, Belgium, Poland and Czech Republic and, in
total, we expect to have 5.5 million VoIP homes serviceable this Summer."
"Consistent with our strategy of disciplined footprint
expansion, we completed several acquisitions in the quarter, including Irish
pay-TV provider Chorus, an indirect 14% interest in Belgian cable company
Telenet, and in February 2005, we closed the acquisition of Telemach, the
largest cable company in Slovenia. We applied the same disciplined approach to
the purchase of ZoneVision, a global programming company with a significant
presence in Eastern Europe."
"We continue to have strong access to the senior
secured and institutional debt markets, as evidenced by the latest partial
refinancing of our European credit facility. Last week, we closed three new
tranches totaling EUR 3.0 billion, primarily to refinance existing debt. The
total facility size has increased from EUR 3.5 billion to EUR 3.8 billion, of
which EUR 2.8 billion was outstanding at close. We have full access to our
increased revolver capacity of EUR 1.0 billion, which can be used for financing
potential acquisitions and general corporate purposes. The average maturity of
the loan has been extended to approximately 6 years, with no amortization
payments required until 2010. In addition, the average credit spread on the
facility has been reduced to 262 basis points over Euribor."
"Looking ahead to fiscal 2005, we announced today
aggressive guidance targets that we believe position UGC as the fastest growing
public cable company in terms of Operating Cash Flow. Including a full year of
Noos' results in France and, together with other announced acquisitions, we
expect to grow revenue and OCF by 20% on a consolidated basis in 2005. In
addition, driven by data and digital phone launches, we expect to add at least
800,000 net new RGUs, an improvement of 34% compared to last year."
Recent Events
On March 10, 2005, the Chilean Supreme Court dismissed the
appeal challenging the prior regulatory approval of the combination of UGC's
wholly-owned Chilean subsidiary, VTR GlobalCom S.A. ("VTR"), with
Metropolis Intercom S.A. ("Metropolis"). The combination of VTR and
Metropolis had been previously approved, subject to certain conditions, by the
Chilean anti-trust tribunal in October 2004.
On January 18, 2005, Liberty Media International, Inc. (LMI)
(Nasdaq: LBTYA, LBTYB) and UGC announced that the two companies reached an
agreement to combine the businesses under a single entity to be named Liberty
Global, Inc. Liberty Global will be one of the largest owners and operators of
broadband communications systems outside the United States with ownership interests
in companies serving more than 14 million RGUs in 17 countries.
Fiscal 2004 Results
Our significant and consolidated operating subsidiaries in
Europe include UPC Broadband -- our cable television and broadband division
with operations in 13 countries, and chellomedia -- our media and programming
division, which also includes our Competitive Local Exchange Carrier (CLEC),
Priority Telecom. In Latin America, our primary operation is VTR, our cable
television and broadband provider in Chile. Please refer to the end of this
press release for additional segment financial information.
Revenue
Revenue for the year ended December 31, 2004 was $2.53
billion, an increase of 34% or $634 million compared to the same period in
2003. Excluding the impact of foreign exchange rates and the acquisitions of
Noos and Chorus, organic year-over-year revenue growth was approximately 10.5%
for fiscal 2004 as a result of higher average monthly revenue per subscriber
(ARPU) and RGU growth. Please refer to the table on page 11 for additional
information.
Total European revenue increased 34% to $2.2 billion for the
year ended December 31, 2004, primarily due to a 35% increase in our core
triple play operation, UPC Broadband. Revenue in Western Europe increased 18%,
or $215 million (excluding Noos and Chorus) compared to the same period in
2003, while revenue in Central and Eastern Europe increased 30% or $106
million. In Chile, revenue at VTR increased 31% or $70 million for the year
ended December 31, 2004 compared to last year.
Revenue for the three months ended December 31, 2004 was
$775 million, an increase of 50% compared to the same period last year. On a
sequential basis from September 30, 2004, revenue increased 18% or
approximately 71% on an annualized basis. On an organic basis our sequential
revenue growth in the fourth quarter was 4.0%. This represents a meaningful
acceleration of our revenue growth compared to our previous results this year
driven primarily by faster customer growth resulting from aggressive new product
launches.
Average monthly revenue (ARPU) per RGU, excluding
acquisitions, for the three months ended December 31, 2004 was $20.67, an
increase of 16.6% compared to the same period in 2003. Excluding foreign
currency movements, the organic increase in ARPU per RGU was approximately 8%
year-over-year. ARPU per customer relationship was $25.62 for the three months
ended December 31, 2004, a sequential increase of 10% from $23.30 in third
quarter 2004. Excluding foreign currency movements, the organic increase in
ARPU per customer relationships was 4.3% on a sequential basis.
Operating Cash Flow
Operating Cash Flow (OCF) for the year ended December 31,
2004 was $879 million, an increase of 40% compared to the prior year. Excluding
the impact of foreign exchange rate fluctuations and acquisitions, our organic
OCF growth was approximately 20% for the period, in line with our guidance of
20% for the full year. Excluding approximately $22 million of fourth quarter
charges associated with the termination and settlement of a Dutch programming
contract, our organic cash flow growth rate for the full year would have been
24%. Please refer to the table on page 12 for additional information.
Total European OCF increased 36% to $778 million for the
year ended December 31, 2004, primarily due to a 35% increase at UPC Broadband.
OCF in Western Europe increased 39% to $626 million (including Noos and
Chorus), while OCF in Central and Eastern Europe increased 39% to $182 million.
Excluding Noos and Chorus, OCF in Western Europe increased 27% to $573 million.
In Chile, 2004 OCF increased 55% to $109 million as compared to 2003.
For the year ended December 31, 2004, our consolidated OCF
margin was 34.8% compared to 33.2% for the same period last year. However, our
consolidated OCF margin decreased sequentially to 30.8% for fourth quarter
2004, compared to 36.7% in the third quarter. Excluding the results of Noos and
Chorus and approximately $22 million of costs associated with the termination
and settlement of a Dutch programming contract, our fourth quarter overall OCF
margin was 35.8% compared to 36.1% for the same period last year.
Net Income (Loss)
Net loss was $382 million or $(0.50) per share for the year
ended December 31, 2004, which compares with net income of $2.0 billion or
$7.41 per share for the prior year. The 2003 result was due primarily to a $2.2
billion gain related to the extinguishment of debt.
Free Cash Flow and Capital Expenditures
Free Cash Flow (FCF) for the year ended December 31, 2004
was $219 million, a $160 million improvement compared to $59 million of FCF in
2003. The increase was driven by a 78% improvement in cash flow from operating
activities, offset by a 44% increase in reported capital expenditures. For the
three months ended December 31, 2004, FCF was $39 million, a 192% increase or
$25 million improvement compared to the same period last year despite higher
marketing costs associated with the 72% increase in subscriber growth between
the periods.
Capital expenditures for the year ended December 31, 2004
were $480 million (19.0% of revenues) compared to $333 million (17.6% of
revenues) for fiscal year 2003. The primary reason for the increase was higher
spending on customer premise equipment (CPE) due to the significant increase in
RGU growth in fourth quarter 2004 compared to the same period last year, as
well as foreign currency movements.
Balance Sheet, Leverage, and Liquidity
At December 31, 2004, total long-term debt was $4.8 billion
and we had cash and cash equivalents (including short-term liquid investments)
of $1.0 billion. Net debt to annualized Operating Cash Flow(6) or consolidated
leverage ratio was 4.0x compared to 5.4x for the same period in the prior year.
Excluding approximately $22 million of costs associated with the MovieCo
programming contract, our year-end leverage was 3.8x.
In addition to our cash balances, as a result of the partial
refinancing of our European Credit Facility, we currently have EUR 1.0 billion
available under the revolvers. Together with the market value of our interests
in the publicly traded securities of SBS Broadcasting and Austar United, we
have total liquidity of approximately $3.0 billion.
Operating Statistics
Total RGUs were over 11.6 million at December 31, 2004,
including 1.9 million RGUs at Noos and Chorus. Excluding Noos and Chorus, total
RGUs at December 31, 2004 were 9.7 million. Since December 31, 2003, we added 552,800
net new RGUs (excluding acquisitions), which exceeded our full year guidance
target of 500,000 RGUs by 11%.
In terms of net additions by product and excluding
acquisitions, we added a total of 264,800 broadband Internet subscribers during
2004, including 216,800 in Europe. Together with the 211,200 broadband Internet
subscribers we acquired from Noos and Chorus, our total broadband Internet
subscriber base now exceeds 1.4 million. Digital video RGU additions were over
100,000 for the year driven primarily by the success of our digital HITs
product in France. Including the acquisition of Noos' and Chorus' digital
subscribers, we had a total of 725,100 digital subscribers at the end of the
year. Telephony additions were 70,200 for the year including 42,000 during the
fourth quarter following our commercial VoIP launches in The Netherlands and
Hungary, and we had a total of 803,500 telephony subscribers at December 31,
2004.
During the fourth quarter of 2004, we added 254,200 net new
RGUs (excluding acquisitions) which represents the strongest single quarter in
the Company's history and a 72% improvement compared to last year's fourth
quarter. In Europe we added 218,500 RGUs during the fourth quarter and in Chile
we added 35,600 RGUs. We ended 2004 with a backlog of over 60,000 RGUs awaiting
installation which is approximately double our normal backlog due to the strong
demand we are experiencing for our new broadband Internet and VoIP products.
2005 Guidance
In 2005, we expect to generate a significant increase in
customer growth compared to 2004 driven primarily by the continued aggressive
rollout of digital phone services across Europe as well as continued broadband
product innovation. As a result we expect to add 800,000 net new RGUs in 2005,
a 34% increase compared to the 599,000 RGUs that we added in 2004 (which
includes approximately 47,000 net gain at Noos, which we acquired in July of
last year).
We expect revenue to increase 20% for 2005 compared to 2004,
including the impact of announced acquisitions (i.e. Noos, Chorus, Telemach,
and ZoneVision) and assuming an average exchange rate of 1.24 dollars per euro
for the full year. Operating Cash Flow is also expected to increase by 20% on
the same basis.
Capital expenditures for the year are expected to range
between 20% and 22% of sales, an increase from 19% in 2004. The spending
increase is primarily to support such new product launches as digital phone,
and resultant higher RGU growth anticipated this year, as well as to support
the upgrade of approximately 1.0 million new two way homes, primarily in
Central and Eastern Europe. In addition, we expect to continue to be
meaningfully Free Cash Flow positive in fiscal 2005.
About UnitedGlobalCom
UGC is a leading international provider of video, voice, and
broadband Internet services with operations in 16 countries, including 13
countries in Europe. Based on the Company's operating statistics at December
31, 2004, UGC's networks reached approximately 16.0 million homes passed and
served over 11.6 million RGUs, including approximately 9.5 million video
subscribers, 1.4 million broadband Internet subscribers, and 803,500 telephone
subscribers.
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/Metropolis 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/Metropolis 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.
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.
Please visit http://www.unitedglobal.com for further information.
New Basis of Accounting Effective January 1, 2004
On January 5, 2004, Liberty Media Corporation (together with
its subsidiaries "LMC") acquired 8,198,016 shares of Class B common
stock from our founding stockholders in exchange for securities of LMC and cash
(the "Founders Transaction"). Upon completion of this transaction,
the restriction on LMC's right to exercise its voting power over us was
terminated. LMC then had the ability to elect our entire board of directors and
control us. LMC acquired its cumulative interest in us over a period of several
years in separate acquisitions. LMC's largest acquisition of us occurred in
January 2002 whereby its economic and voting interest increased from
approximately 11% and 37%, respectively, to approximately 73% and 94%,
respectively. Because of certain voting and standstill agreements entered into
between LMC and our founding stockholders in connection with this January 2002
transaction, LMC was unable to control us and therefore accounted for its
investment in us under the equity method of accounting. Upon consummation of
the Founders Transaction, our financial statements changed to reflect the push
down of LMC's basis and, as a result, we have a new basis of accounting
effective January 1, 2004. Accordingly, for periods prior to January 1, 2004
the assets and liabilities of UnitedGlobalCom, Inc. and the related
consolidated financial statements are sometimes referred to herein as "UGC
Pre-Founders Transaction," and for periods subsequent to January 1, 2004
the assets and liabilities of UnitedGlobalCom, Inc. and the related
consolidated financial statements are sometimes referred to herein as "UGC
Post-Founders Transaction."
1) Also referred
to as the "Company," "we," "us," "our,"
and
similar terms.
2) Please see
page 14 for an explanation of Operating Cash Flow and
a
reconciliation of Operating Cash Flow to Net Income (Loss).
3) RGUs or
Revenue Generating Units excluding the impact of acquisitions.
Please see
footnote (4) on page 17 for a definition.
Organic growth,
for RGU Net
Gain and Revenue & OCF, excludes acquisitions and the
impact of
foreign exchange rate movements as applicable.
4) Net income in
2003 primarily due to $2.2 billion gain on the
extinguishment of debt.
5) Please see
page 14 for an explanation of Free Cash Flow and a
reconciliation of Free Cash Flow to Net Cash Flows from operating
activities.
6) Represents
net debt / Operating Cash Flow annualized for the three
months ended
December 31, 2004.
UnitedGlobalCom, Inc.
Consolidated Balance Sheets
(In
thousands, except par value and number of shares)
UGC UGC
Post-Founders Pre-Founders
Transaction Transaction
December 31, December 31,
Assets
2004 2003
Current assets:
Cash and cash
equivalents
$1,028,993 $310,361
Restricted
cash
43,640 25,052
Short-term
liquid investments
48,965 2,134
Trade
receivables, net
184,222 140,075
Other receivables 134,110 65,157
Other current
assets, net
98,525 79,542
Total current
assets 1,538,455 622,321
Long-term assets:
Investments in
affiliates,
accounted for
using
the equity
method
345,790 95,238
Other
investments
262,091 206,325
Property and
equipment, net 4,193,095 3,342,743
Goodwill
2,170,705 2,519,831
Intangible
assets, net
445,172 252,236
Other assets,
net
178,989 60,977
Total
assets
$9,134,297 $7,099,671
Liabilities and
Stockholders' Equity
Current
liabilities:
Accounts
payable
$345,535 $225,540
Accrued
liabilities
462,927 302,597
Subscriber
advance
payments and
deposits
332,765 141,108
Accrued
Interest
88,608 102,949
Notes payable,
related party
108,414 102,728
Current portion
of debt 34,325 310,804
Other current
liabilities
49,675 82,149
Other current
liabilities
subject to compromise -- 336,916
Total current
liabilities 1,422,249 1,604,791
Long-term
liabilities:
Long-term
portion of debt
4,844,624 3,615,902
Other long-term
liabilities 375,103 383,725
Total
liabilities
6,641,976 5,604,418
Commitments and
contingencies
Minority
interests in subsidiaries
96,378 22,761
Stockholders'
equity:
Preferred
stock, $0.01 par value,
10,000,000
shares authorized,
nil shares
issued and outstanding
-- --
Class A common
stock, $0.01 par value,
1,000,000,000
shares authorized,
413,206,357
and 287,350,970
shares issued,
respectively 4,132 2,873
Class B common
stock, $0.01 par value,
1,000,000,000
shares authorized,
11,165,777 and
8,870,332 shares issued,
respectively 112 89
Class C common
stock, $0.01 par value,
400,000,000
shares authorized,
379,603,223
and 303,123,542 share
issued and
outstanding, respectively 3,796 3,031
Additional
paid-in capital
2,624,159 5,852,896
Deferred
compensation
(1,851) --
Treasury stock,
at cost
(75,844) (70,495)
Accumulated deficit (382,355) (3,372,737)
Accumulated
other comprehensive
income
(loss)
223,794 (943,165)
Total
stockholders' equity
2,395,943 1,472,492
Total
liabilities and
stockholders' equity
$9,134,297 $7,099,671
UnitedGlobalCom, Inc.
Consolidated
Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share data)
UGC UGC
Post-Founders Pre-Founders
Transaction Transaction
Year Ended Year Ended
December 31, December 31,
2004 2003 2002
Statements of
Operations
Revenue $2,525,446 $1,891,530 $1,515,021
Operating costs
and expenses:
Operating
(1,014,628) (785,132) (789,457)
Selling,
general and
administrative
("SG&A")
(631,585) (477,516) (429,190)
Depreciation
and
amortization
(operating) (935,185) (808,663) (730,001)
Impairment of
long-lived
assets
(operating) (38,915) (402,239) (436,153)
Restructuring
charges
and other
(operating) (29,019) (35,970) (1,274)
Stock-based
compensation (SG&A) (116,661) (38,024) (28,228)
Operating
loss (240,547) (656,014) (899,282)
Interest
income
23,823 13,054 38,315
Interest
expense
(283,280) (327,132) (680,101)
Foreign currency
transaction
gains, net 26,753 153,808 485,938
Realized and
unrealized (losses)
gains on
derivative
instruments,
net (60,237) (35,424) 138,398
Gains on
extinguishment of debt 35,787 2,183,997 2,208,782
Gains on sale of
investments
and other,
net 12,325 279,442 117,262
Other expense,
net (13,455) (43,665) (80,617)
Income (loss)
before income taxes
and other
items (498,831) 1,568,066 1,328,695
Income tax
benefit (expense), net 101,105 (50,344) (201,182)
Minority
interests in losses
(earnings) of
subsidiaries
and other, net 3,062 183,182 (67,103)
Share in results
of affiliates, net 12,309 294,464 (72,142)
Income (loss)
before cumulative
effect of
change in accounting
principle (382,355) 1,995,368 988,268
Cumulative effect
of change
in accounting
principle, net of tax -- -- (1,344,722)
Net income
(loss) $(382,355) $1,995,368 $(356,454)
Earnings per
share:
Basic earnings (loss) per share
before
cumulative effect of change
in accounting
principle $(0.50) $7.41 $2.29
Cumulative
effect of change
in accounting
principle -- -- (3.13)
Basic
earnings (loss) per share
$(0.50) $7.41 $(0.84)
Diluted
earnings (loss) per share
before
cumulative effect of change
in accounting
principle $(0.50) $7.41 $2.29
Cumulative
effect of change in
accounting
principle -- -- (3.12)
Diluted
earnings (loss) per share $(0.50) $7.41 $(0.83)
Statements of
Comprehensive
Income (Loss)
Net income
(loss) $(382,355) $1,995,368 $(356,454)
Other
comprehensive
income (loss):
Foreign
currency
translation
adjustments 195,429 61,440 (864,104)
Change in
fair value of
derivative contracts -- -- 13,443
Reclassification adjustment
for expired
derivative contracts
included in
net income -- 10,616 --
Net
unrealized gains on
available-for-sale securities
56,417 97,318 4,029
Reclassification adjustment for
gains on
available-for-sale
securities
included
in net
income (10,517) -- --
Other -- (194) (77)
Other
comprehensive income (loss)
before income
taxes 241,329 169,180 (846,709)
Provision for
income taxes
related to
net unrealized gains
on
available-for-sale securities (17,535) -- --
Other
comprehensive income (loss)
223,794 169,180 (846,709)
Comprehensive
income (loss) $(158,561) $2,164,548 $(1,203,163)
UnitedGlobalCom, Inc.
Consolidated Statements of Cash Flows
(In thousands)
UGC UGC
Post-Founders Pre-Founders
Transaction Transaction
Year Ended Year Ended
December 31, December 31,
2004 2003 2002
Cash Flows from
Operating
Activities
Net income
(loss) $(382,355) $1,995,368 $(356,454)
Adjustments to
reconcile net
income (loss) to
net cash flows
from operating
activities:
Depreciation
and amortization 935,185 808,663 730,001
Impairment of
long-lived assets,
restructuring
charges and other 67,934 438,209 437,427
Stock-based
compensation 65,827 29,242 28,228
Accretion of
interest on senior
notes and
amortization of
deferred
financing costs 21,588 50,733 234,247
Unrealized
foreign currency
transaction
gains, net (5,526) (116,454) (491,313)
Realized and
unrealized losses
(gains) on
derivative instruments 60,237 35,424 (138,398)
Gain on
extinguishment of debt
(35,787) (2,183,997) (2,208,782)
Gains on sale
of investments
and other,
net (12,325) (279,442) (117,262)
Deferred income
tax (benefit)
expense,
net (130,518) (23,420) 104,068
Minority
interests in (losses)
earnings of
subsidiaries
and other,
net (3,062) (183,182) 67,103
Share in
results of affiliates, net (12,309)
(294,464) 72,142
Cumulative
effect of change
in accounting
principle -- -- 1,344,722
Other non-cash
items 14,755 32,009 102,326
Change in assets
and liabilities:
Change in
receivables
and other assets (72,169)
40,870 46,803
Change in
accounts payable,
accrued
liabilities and other 188,127 42,533 (148,466)
Net cash
flows from
operating
activities 699,602 392,092 (293,608)
Cash Flows from
Investing
Activities
Cash paid for
acquisitions,
net of cash
acquired (710,549) (2,150) (22,617)
Cash paid for
acquisition,
to be refunded
by seller (52,128) -- --
Capital
expenditures
(480,133) (333,124) (335,192)
Purchases of
short-term
liquid
investments
(293,734) (1,000) (117,221)
Proceeds from
sale of
short-term
liquid investments 246,981 45,561 152,405
Restricted cash
released
(deposited),
net (17,298) 24,825 40,357
Investments in
and
loans to affiliates (144,699) (20,931) (2,590)
Proceeds from
sale of
investments in
affiliates 696 45,447 --
Purchase of
interest rate caps (21,442) (9,750) --
Cash paid to
settle
interest rate
swaps (66,411) (58,038) --
Dividends
received from affiliates 17,098 4,714 11,276
Proceeds received
upon
repayment of
debt securities 115,592 -- --
Other 1,826 3,092 16,319
Net cash flows
from
investing
activities (1,404,201) (301,354) (257,263)
Cash Flows from
Financing Activities
Issuance of
common stock 1,076,811 1,354 200,006
Proceeds from
issuance of
convertible
senior notes 604,595 -- --
Proceeds from
notes
payable to
shareholder 5,371 -- 102,728
Proceeds from
issuance of debt 1,547,867 23,161 42,742
Repayments of
debt (1,803,081) (233,506) (321,961)
Financing
costs (62,448)
(2,233) (18,293)
Purchase of
treasury shares (5,349) -- --
Net cash flows
from
financing
activities 1,363,766 (211,224) 5,222
Effects of Exchange
Rates on Cash 59,465 20,662 35,694
Increase
(Decrease) in
Cash and Cash
Equivalents 718,632 (99,824) (509,955)
Cash and Cash
Equivalents,
Beginning of
Year 310,361 410,185 920,140
Cash and Cash
Equivalents,
End of Year $1,028,993 $310,361 $410,185
Revenue
The following table provides an analysis of our revenue by
business segment for the years ended December 31, 2004 and 2003 (in thousands,
except percentages). The first two columns present our consolidated revenue for
each comparative period. The third and fourth columns present the U.S. dollar
change and percent change, respectively, from period to period. The fifth and
sixth columns present the U.S. dollar change and percent change, respectively,
after removing foreign currency translation effects, or "F/X." These
columns demonstrate what the revenue change would have been had exchange rates
remained the same as the comparative period in the prior year. These amounts
are based on the Euro for the Netherlands, Austria, France, Ireland, Belgium,
chellomedia, UGC Europe corporate and other, Norwegian Krone for Norway,
Swedish Krona for Sweden, Hungarian Forint for Hungary, Polish Zloty for
Poland, Czech Koruna for Czech Republic, Slovak Koruna for Slovak Republic,
Romanian Leu for Romania, Chilean Peso for Chile, and U.S. dollars for Brazil,
Peru and other UGC corporate. Certain percentages are denoted as not meaningful
("n/m"). At the bottom of the table we subtract the consolidated
revenue from our material acquisitions in 2004, Noos and Chorus (Ireland), to
present our revenue growth without the results of these new businesses.
Year Ended December 31,
Increase
(Decrease)
Increase Excluding
(Decrease) F/X Effects
Europe (UGC
Europe): 2004 2003 $ % $ %
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%
Operating Cash
Flow
The following table provides an analysis of our Operating
Cash Flow by business segment for the years ended December 31, 2004 and 2003
(in thousands, except percentages). The first two columns present our
consolidated Operating Cash Flow for each comparative period. The third and
fourth columns present the U.S. dollar change and percent change, respectively,
from period to period. The fifth and sixth columns present the U.S. dollar
change and percent change, respectively, after removing foreign currency
translation effects. These columns demonstrate what the Operating Cash Flow
change would have been had exchange rates remained the same as the comparative
period in the prior year. These amounts are based on the Euro for the
Netherlands, Austria, France, Belgium, Ireland, chellomedia, UGC Europe
corporate and other, Norwegian Krone for Norway, Swedish Krona for Sweden,
Hungarian Forint for Hungary, Polish Zloty for Poland, Czech Koruna for Czech Republic,
Slovak Koruna for Slovak Republic, Romanian Leu for Romania, Chilean Peso for
Chile, and U.S. dollars for Brazil, Peru and other UGC corporate. At the bottom
of the table we subtract the consolidated operating cash flow from our material
acquisitions in 2004, Noos and Chorus (Ireland), to present our operating cash
flow growth without the results of these new businesses.
Year Ended December 31,
Increase
(Decrease)
Increase Excluding
(Decrease) F/X Effects
Europe (UGC
Europe): 2004 2003 $ % $ %
UPC Broadband
The
Netherlands $361,265 $267,075 $94,190
35.3% $63,021 23.6%
Austria 111,950 98,278 13,672 13.9%
4,238 4.3%
France (other
than
Noos) 12,905 13,920
(1,015) (7.3%) (2,007)(14.4%)
France
(Noos) 40,785 --
40,785 -- 40,785
--
Norway 37,066 27,913 9,153 32.8%
7,384 26.5%
Sweden 33,421
31,827 1,594 5.0%
(1,225) (3.8%)
Belgium 16,751 12,306 4,445 36.1%
3,003 24.4%
Ireland
(Chorus) 11,795 --
11,795 -- 11,795
--
Total
Western
Europe 625,938
451,319 174,619 38.7%
126,994 28.1%
Hungary 86,418 63,357 23,061 36.4%
15,084 23.8%
Poland 36,315 24,886 11,429 45.9%
9,338 37.5%
Czech
Republic 33,888 24,657 9,231
37.4% 6,699 27.2%
Slovak
Republic 13,766 10,618
3,148 29.6% 1,507
14.2%
Romania 11,978 7,931 4,047 51.0%
3,941 49.7%
Total
Central
and
Eastern
Europe 182,365 131,449
50,916 38.7% 36,569
27.8%
Corporate
and
other (83,604) (46,091) (37,513) (81.4%) (30,594)(66.4%)
Total UPC
Broadband 724,699 536,677
188,022 35.0% 132,969
24.8%
Chellomedia
Priority
Telecom 17,183 14,530
2,653 18.3% 1,090
7.5%
Media 36,335 22,874 13,461 58.8%
10,166 44.4%
Investments (502) (1,033) 531 51.4% 579
56.1%
Total
chellomedia 53,016 36,371
16,645 45.8% 11,835
32.5%
Total
Europe 777,715 573,048
204,667 35.7% 144,804
25.3%
Latin America:
Broadband
Chile
(VTR) 108,752 69,951
38,801 55.5% 26,721
38.2%
Brazil, Peru
and
other 426 87 339 389.7% 339 389.7%
Total Latin
America 109,178 70,038
39,140 55.9% 27,060
38.6%
Corporate and
other (7,660) (14,204)
6,544 46.1% 6,544
46.1%
Total
UGC $879,233 $628,882 $250,351 39.8% $178,408 28.4%
Less Noos
and Chorus $(52,580)
-- $(52,580) --
Total UGC,
excluding
Noos and
Chorus
$197,771 31.4% $ 125,828 20.0%
Supplemental
Financial Information:
Revenue
The table below
highlights Revenue by segment:
12
months 12 months Year/Year
(thousands) Dec-04 Dec-03 Change
UPC Broadband - W
Europe $1,383,598 $1,168,258 18%
UPC Broadband -
C&E Europe 466,017 359,810 30%
Total UPC
Broadband 1,849,615 1,528,068 21%
Chellomedia 244,812 220,321 11%
VTR 299,951
229,835 31%
Other (1) (101,815) (86,694) 17%
Subtotal $2,292,563 $1,891,530 21%
Add: Noos &
Chorus 232,883 0 n.a.
UGC
Consolidated
$2,525,446 $1,891,530 34%
Revenue
The table below
highlights Revenue by segment:
3 months 3 months Year/Year
3 months Sequential
(thousands) Dec-04 Dec-03 Change Sep-04 Change
UPC Broadband
- W Europe $375,014 $315,407 19% $340,859 10%
UPC Broadband
- C&E
Europe 132,614 96,460 37% 116,111 14%
Total UPC
Broadband 507,628 411,867 23% 456,970 11%
Chellomedia 66,238 57,741 15% 61,713 7%
VTR 83,414 68,168 22% 75,096 11%
Other (1) (26,908) (21,912) 23% (24,002) 12%
Subtotal $630,372 $515,864 22% $569,777 11%
Add: Noos &
Chorus 144,197 0 n.a. 88,686 n.a.
UGC
Consolidated $774,569 $515,864 50% $658,463 18%
(1) Primarily
inter-company eliminations, corporate and other, and other
Latin
America broadband.
The following is provided for informational purposes to
highlight revenues in the functional currency of VTR (Chilean Pesos) and the
primary functional currency of UGC Europe (Euros), as follows:
12 months 12 months Year/Year
(thousands,
except for VTR) Dec-04 Dec-03 Change
UPC Broadband - W
Europe EUR 1,113,504 EUR
1,031,659 8%
UPC Broadband -
C&E Europe 374,850 317,740 18%
Total UPC
Broadband 1,488,354 1,349,399 10%
Chellomedia 196,991 194,559 1%
Other (1) (90,756) (83,444) 9%
Subtotal 1,594,589 1,460,514 9%
Add: Noos &
Chorus 185,540 0 n.a.
UGC Europe -
Total EUR 1,780,129 EUR
1,460,514 22%
VTR
(millions)
CP182,541 CP157,676 16%
(thousands, 3 months 3 months Year/Year 3 months
Sequential
except for
VTR) Dec-04 Dec-03 Change Sep-04 Change
UPC Broadband
- W Europe EUR 290,972 EUR 265,288 10%
EUR 278,652 4%
UPC Broadband
- C&E
Europe 102,894 81,035 27% 94,920 8%
Total UPC
Broadband 393,866 346,323 14%
373,572 5%
Chellomedia 51,393 48,514 6% 50,450 2%
Other (1) (22,708) (20,048) 13% (23,394) -3%
Subtotal 422,551 374,789 13% 400,628 5%
Add: Noos &
Chorus 113,039 0 n.a. 72,501 n.m.
UGC Europe
- Total EUR 535,590 EUR 374,789 43%
EUR 473,129 13%
VTR
(millions) CP49,377 CP42,547 16% CP47,177 5%
(1) Primarily
inter-company eliminations and corporate and other.
Operating Cash
Flow
The table below
highlights Operating Cash Flow ("OCF") by segment:
12 months 12 months Year/Year
(thousands) Dec-04 Dec-03 Change
UPC Broadband - W
Europe $573,358 $451,319 27%
UPC Broadband -
C&E Europe 182,365 131,449 39%
Total UPC
Broadband 755,723 582,768 30%
Chellomedia 53,016 36,371 46%
VTR
108,752 69,951 55%
Other (1) (90,838) (60,208) 51%
Subtotal $826,653 $628,882 31%
Add: Noos &
Chorus 52,580 0 n.a.
UGC
Consolidated
$879,233 $628,882 40%
OCF Margin (% of revenues) 34.8% 33.2% 5%
OCF Margin
(without Noos & Chorus)
36.1% 33.2% 8%
3 months 3 months Year/Year
3 months Sequential
(thousands) Dec-04 Dec-03 Change Sep-04 Change
UPC Broadband
- W Europe $143,522 $129,762 11% $149,600 -4%
UPC Broadband
- C&E
Europe 45,620 33,894 35% 47,324 -4%
Total UPC Broadband
189,142 163,656 16% 196,924 -4%
Chellomedia 17,532 9,830 78% 13,988 25%
VTR 33,810 22,067 53% 25,925 30%
Other (1) (36,569) (9,539) 283% (12,911) 183%
Subtotal $203,915 $186,014 10% $223,926 -9%
Add: Noos &
Chorus 34,803 0 n.a. 17,777 n.m.
UGC
Consolidated $238,718 $186,014 28% $241,703 -1%
OCF Margin
(% of
revenues) 30.8% 36.1% -15% 36.7% -16%
OCF Margin
(without Noos
&
Chorus) 32.3% 36.1% -10% 39.3% -18%
(1) Primarily
corporate and other, and other Latin America broadband.
The following is provided for informational purposes to
highlight Operating Cash Flow in the functional currency of VTR (Chilean Pesos)
and the primary functional currency of UGC Europe (Euros), as follows:
12 months 12 months Year/Year
(thousands,
except for VTR) Dec-04 Dec-03 Change
UPC Broadband - W
Europe EUR 461,837 EUR 397,428 16%
UPC Broadband -
C&E Europe 146,896 115,753 27%
Total UPC
Broadband 608,733 513,181 19%
Chellomedia 42,535 32,028 33%
Corporate and
other (66,889) (40,587) 65%
Subtotal 584,379 504,622 16%
Add: Noos &
Chorus 41,801 0 n.a.
UGC Europe -
Total EUR 626,180 EUR 504,622 24%
OCF Margin (% of
revenues) 35.2% 34.6% 2%
OCF Margin
(without Noos & Chorus)
36.6% 34.6% 6%
VTR (in
millions)
CP66,082 CP47,801 38%
OCF Margin (% of
revenues) 36.2% 30.3% 19%
(thousands, 3 months 3 months Year/Year 3 months
Sequential
except for
VTR) Dec-04 Dec-03 Change Sep-04 Change
UPC Broadband
- W Europe EUR 111,358 EUR 109,014 2%
EUR 122,331 -9%
UPC Broadband
- C&E
Europe 35,396 28,253 25% 38,700 -9%
Total UPC
Broadband 146,754 137,267 7%
161,031 -9%
Chellomedia 13,602 8,223 65% 11,432 19%
Corporate and
other (26,324) (5,063) 420%
(12,235) 115%
Subtotal 134,032 140,427 -5% EUR 160,228 -16%
Add: Noos &
Chorus 27,306 0 n.a. 14,495 n.m.
UGC Europe
- Total EUR 161,338 EUR 140,427 15%
EUR 174,723 -8%
OCF Margin
(% of
revenues) 30.1% 37.5% -20% 36.9% -18%
OCF Margin
(without Noos
&
Chorus) 31.7% 37.5%
-15% 40.0% -21%
VTR (in
millions) CP20,015 CP13,815 45% CP16,299 23%
OCF Margin
(% of revenues) 40.5% 32.5% 25% 34.5% 17%
Operating Cash
Flow Definition and Reconciliation
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 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. 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.
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.
The table below
highlights the reconciliation of Operating Cash Flow to
Net income (loss):
3 months 3 months 3 months
12 months 12 months
(thousands) Dec-04 Sep-04 Dec-03 Dec-04 Dec-03
Total segment
Operating
Cash Flow $238,718 $241,703 $186,014 $879,233 $628,882
Depreciation and
amortization (267,887) (235,186)
(210,456) (935,185) (808,663)
Impairment of
long-lived
assets (22,317) 25 (402,680) (38,915) (402,239)
Restructuring
charges and
other (18,270) (1,824)
(29,084) (29,019) (35,970)
Stock-based
compensation (52,767) (12,178)
(9,377) (116,661) (38,024)
Operating
income
(loss) (122,523) (7,460)
(465,583) (240,547) (656,014)
Interest
expenses,
net (71,651) (53,616)
(60,868) (259,457) (314,078)
Gains on
extinguishment
of debt 0 0 0 35,787
2,183,997
Gains (losses)
on sale of
investments
and other,
net 12,096 646 (1,879) 12,325 279,442
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
Income (loss)
before income
taxes and other
items (198,634) (58,425)
(556,350) (498,831) 1,568,066
Other, net 131,025 (11,785) 175,656 116,476 427,302
Net income
(loss) ($67,609) ($70,210)
($380,694) ($382,355) $1,995,368
Free Cash Flow
Definition and Reconciliation
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.
The table below highlights the reconciliation of net cash
flows from operating activities and Free Cash Flow:
12 months 12 months Year/Year
(thousands) Dec-04 Dec-03 Change
Net cash flows
from
operating
activities $699,602 $392,092 78%
Capital
expenditures
(480,133) (333,124) 44%
Free cash flow $219,469 $58,968 272%
3 months 3 months Year/Year
3 months Sequential
(thousands) Dec-04 Dec-03 Change Sep-04 Change
Net cash flows
from operating
activities $226,255 $118,651 91% $175,064 29%
Capital
expenditures (187,576) (105,426) 78% (116,696) 61%
Free cash
flow $38,679 $13,225 192% $58,368 -34%
The following table is provided for informational purposes
only to highlight revenue and Operating Cash Flow of UPC Distribution, B.V.
(UPCD). UPCD is the borrower of record on our European Credit Facility.
Revenue 12 months 9 months 3 months
(in thousands of
Euros) Dec-04 Sept-04 Dec-04
Triple Play:
The
Netherlands 576,853 424,014 152,839
Austria 241,453 180,860 60,593
Belgium 30,156 22,219 7,937
Czech
Republic 64,315 47,659 16,656
Norway 90,452 66,210 24,242
Hungary 174,952
126,970 47,982
France
(excluding Noos) 103,713 76,791 26,922
France
(Noos) 146,400 72,501 73,899
Poland 87,633 62,578 25,055
Sweden 70,877 52,438 18,439
Slovak 26,292 19,438 6,854
Romania 21,658 15,311 6,347
Total Triple Play
UPC
Broadband
1,634,754 1,166,989 467,765
chello
Access 74,455 55,429 19,026
Corporate and
Other 21,122 15,264 5,858
Eliminations (75,205) (55,869) (19,336)
Total UPC
Holding BV 1,655,126 1,181,813 473,313
Operating Cash
Flow 12 months 9 months 3 months
(in thousands of
Euros) Dec-04 Sept-04 Dec-04
Triple Play:
The
Netherlands 290,849 217,785 73,064
Austria 90,276 70,521 19,755
Belgium 13,490 10,172 3,318
Czech
Republic 27,333 21,465 5,868
Norway 29,839 22,291 7,548
Hungary 69,546 51,523 18,023
France
(excluding Noos) 10,428 8,568 1,860
France
(Noos) 32,347 14,495 17,852
Poland 29,259 22,340 6,919
Sweden 26,955 21,142 5,813
Slovak 11,101 8,668 2,433
Romania 9,657 7,504 2,153
Total Triple Play
UPC Broadband 641,080 476,474 164,606
chello
Access 48,031 34,896 13,135
Corporate and
Other 25,630) (20,630) (5,000)
Total UPC
Holding BV 663,481 490,740 172,741
The Revenue and Operating Cash Flow of UPCD for the
twelve-month period ended December 31, 2004 includes twelve months of UPC
Poland and six months of Noos. UPC Poland and Noos were transferred into UPCD
in July 2004. The Operating Cash Flow of UPCD for the twelve and three months
ended December 31, 2004 excludes corporate costs, which primarily relates to
costs on a programming agreement.
Please note that for Q4 2004 chello access has been
contributed into UPCD at December 31, 2004. We are currently reviewing
intercompany arrangements with respect to interactive, arrivo, VOD and other
services to be procured by UPCD from chellomedia. Currently these services are
not settled in cash and as a result are not included in OCF. Total Q4 2004
amount with respect to these service totaled approximately Euro 1.9 million.
The above selected historic financial data of UPCD (the
"Unaudited Data") contained herein are unaudited, were not reviewed
by the Company's certified public accountants and are subject to possible
adjustments. The Unaudited Data represent management accounts prepared by the
management of the Company. While presented with numerical specificity, the
Unaudited Data were not prepared with a view to public disclosure. As such, the
Unaudited Data should not be relied on, although management believes that the
Unaudited Data is accurate.
Consolidated Operating Statistics
The table below
shows operating statistics for UGC on a consolidated basis
(excluding acquisitions):(1)
As of As of As of As of As of
Dec-04 Sep-04 Jun-04 Mar-04 Dec-03
Video
Homes Passed 12,429,600 12,338,500
12,323,500 12,288,800 12,260,100
Basic Analog
Subscribers 7,151,800 7,082,300
7,075,200 7,079,000 7,084,900
Basic
Penetration 57.5% 57.4% 57.4%
57.6% 57.8%
Quarterly Net
Basic Subscriber
Change 69,500 7,100
(3,800) (5,900) 42,400
Digital
Subscribers 239,600 223,100
195,000 161,200 138,700
Digital
Penetration 1.9% 1.8%
1.6% 1.3% 1.1%
Quarterly Net
Digital
Subscriber
Change 16,500 28,100
33,800 22,500 6,400
DTH
Subscribers 249,600 213,800 213,800 204,100 196,900
MMDS
Subscribers 61,400 63,500 63,100
63,000 64,100
Broadband Internet
Broadband
Internet Homes
Serviceable 7,716,500 7,484,900
7,326,900 7,127,100 7,045,000
Broadband
Internet
Subscribers 1,187,500 1,095,000
1,031,000 983,300 922,700
Penetration 15.4% 14.6%
14.1% 13.8% 13.1%
Quarterly Net
Subscriber
Change 92,500 64,000
47,700 60,600 56,200
Telephone
Telephone Homes
Serviceable 5,488,200 4,507,400
4,488,500 4,467,700 4,467,800
Telephone
Subscribers 803,000 761,000
756,700 741,800 732,800
Penetration 14.6% 16.9%
16.9% 16.6% 16.4%
Quarterly Net
Subscriber
Change 42,000 4,300
14,900 9,000 15,100
Total RGUs 9,692,900 9,438,700
9,334,800 9,232,400 9,140,100
Quarterly Net
Subscriber
Change 254,200 103,900
102,400 92,300 147,600
ARPU per RGU
(2) $20.67 $18.96
$18.50 $18.69 $17.72
Constant ARPU
per RGU (3) $20.67 $20.00
$19.77 $19.15 $19.13
Customer
Relationships 7,787,900 7,645,300
7,633,200 7,625,000 7,624,300
ARPU per Customer
Relationship
(4) $25.62 $23.30
$22.51 $22.52 n.a.
Constant ARPU per
Customer
Relationship
(5) $25.62 $24.57
$24.05 $23.07 n.a.
RGUs by region:
Europe
(UGC Europe) 8,651,600 8,433,100
8,358,400 8,286,200 8,214,900
Chile (VTR) 1,009,300 973,700
944,700 914,600 894,000
Other 32,000 31,900 31,700
31,600 31,200
Total RGUs 9,692,900 9,438,700
9,334,800 9,232,400 9,140,100
Growth Growth
vs. 3Q04 vs. 4Q03
Video
Homes Passed 91,100
169,500
Basic Analog
Subscribers
69,500 66,900
Basic
Penetration
n.m. n.m.
Quarterly Net
Basic Subscriber Change
n.m. n.m.
Digital
Subscribers
16,500 100,900
Digital
Penetration
n.m. n.m.
Quarterly Net
Digital Subscriber Change
n.m. n.m.
DTH
Subscribers 35,800 52,700
MMDS
Subscribers
(2,100) (2,700)
Broadband
Internet
Broadband
Internet Homes Serviceable
231,600 671,500
Broadband
Internet Subscribers 92,500
264,800
Penetration
n.m. n.m.
Quarterly Net
Subscriber Change
n.m. n.m.
Telephone
Telephone Homes
Serviceable
980,800 1,020,400
Telephone Subscribers 42,000 70,200
Penetration
n.m. n.m.
Quarterly Net
Subscriber Change
876.7% 178.1%
Total RGUs 254,200 552,800
Quarterly Net
Subscriber Change
n.m. n.m.
ARPU per RGU
(2)
9.0% 16.6%
Constant ARPU per
RGU (3)
3.4% 8.1%
Customer
Relationships
142,600 163,600
ARPU per Customer
Relationship (4)
10.0% n.a.
Constant ARPU per
Customer Relationship (5)
4.3% n.a.
RGUs by region:
Europe (UGC
Europe)
218,500 436,700
Chile (VTR)
35,600 115,300
Other
100 800
Total RGUs 254,200 552,800
(1) The
operating statistics exclude Noos, Chorus and two other minor
acquisitions
which closed in the fourth quarter. Please refer to
page 17 for
definitions regarding the Consolidated Operating
Statistics.
(2) ARPU per RGU
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.
(3) Constant
ARPU per RGU is calculated as follows: average monthly
broadband
revenue converted at the same average exchange rates for
the three
months ended December 31, 2004 for each period as
indicated,
divided by the average of the opening and closing RGUs for
the period.
(4) ARPU per
Customer Relationship is calculated as follows: average
monthly
broadband revenue for the period as indicated, divided by the
average of
the opening and closing Customer Relationships for the
period.
(5) Constant
ARPU per Customer Relationship is calculated as follows:
average
monthly broadband revenue converted at the same average
exchange
rates for the three months ended December 31, 2004 for each
period as
indicated, divided by the average of the opening and
closing
Customer Relationships for the period.
Capital
Expenditures Update
The table below highlights our capital expenditures per NCTA
cable industry guidelines:
12 months 12 months Year/Year
(thousands) Dec-04 Dec-03 Change
Customer Premises
Equipment $146,944 $94,739 55%
Commercial -- -- --
Scaleable
Infrastructure 73,633 42,755 72%
Line
Extensions
31,686 67,104 -53%
Upgrade/Rebuild
48,755 28,430 71%
Support
Capital
92,087 70,670 30%
Noos &
Chorus
53,383 -- n.m.
Intangibles &
Other 33,645 29,426 14%
Total Capital
Expenditures $480,133 $333,124 44%
Capital
Expenditures (% of Revenue)
19.0% 17.6% 8%
3 months 3 months Year/Year
3 months Sequential
(thousands) Dec-04 Dec-03 Change Sep-04 Change
Customer Premises
Equipment $45,271 $21,113 114% $35,193 29%
Commercial -- -- -- -- --
Scaleable
Infrastructure 27,744 18,634 49% 17,214 61%
Line
Extensions 12,096 15,638 -23% 10,317 17%
Upgrade/Rebuild 17,920 12,923 39% 13,597 32%
Support
Capital 32,079 20,137 59% 19,642 63%
Noos &
Chorus 44,397 -- n.m. 8,986 394%
Intangibles &
Other 8,069 16,981 -52% 11,747 -31%
Total Capital
Expenditures $187,576 $105,426 78% $116,696 61%
Capital
Expenditures
(% of
Revenue) 24.2% 20.4% 18% 17.7% 37%
Consolidated Operating Data
31-Dec-04
Two-way
Homes Homes Customer Total
Passed (1) Passed (2) Relationships(3) RGUs (4)
Europe:
The
Netherlands
2,620,000 2,497,800 2,289,000 2,921,700
France 4,580,700 3,316,500
1,612,000 2,382,700
Austria 946,900 943,700
578,000 931,400
Norway 486,600 244,400
341,000 447,800
Sweden 421,600 281,200
292,300 406,000
Ireland 317,300 24,200
202,700 217,500
Belgium 155,500 155,500
148,100 164,800
Total Western
Europe
9,528,600 7,463,300 5,463,100 7,471,900
Poland 1,884,800 569,100
1,000,700 1,047,600
Hungary 1,006,500 675,800
922,200 1,003,400
Czech Republic
729,000 322,200 401,200 428,200
Romania 518,700 3,900
357,100 357,300
Slovak
Republic 413,200 168,800
298,400 306,300
Total Central
and Eastern
Europe 4,552,200 1,739,800
2,979,600 3,142,800
Total
Europe 14,080,800 9,203,100
8,442,700 10,614,700
Latin America:
Chile 1,793,900 1,070,700 636,000 1,009,300
Brazil 15,400 15,400
15,400 16,400
Peru 66,800 30,300
13,900 15,600
Total Latin
America 1,876,100 1,116,400
665,300 1,041,300
Grand
Total 15,956,900 10,319,500
9,108,000 11,656,000
Video
Analog Cable Digital Cable DTH MMDS
Subscribers(5) Subscribers(6) Subscribers(7) Subscribers(8)
Europe:
The
Netherlands
2,285,500 56,700 -- --
France 1,523,200 545,800
-- --
Austria 501,400 35,000 -- --
Norway 341,000 35,400
-- --
Sweden 292,300 37,700
-- --
Ireland 112,900 14,500
-- 89,000
Belgium 134,900 --
-- --
Total Western
Europe 5,191,200 725,100
-- 89,000
Poland 994,200 --
-- --
Hungary 720,900 --
140,400 --
Czech Republic
295,700 -- 90,100 --
Romania 357,000 --
-- --
Slovak
Republic 250,300 -- 14,600 32,200
Total Central
and Eastern
Europe 2,618,100 --
245,100 32,200
Total
Europe 7,809,300 725,100
245,100 121,200
Latin America:
Chile 504,600 --
4,500 13,900
Brazil -- --
-- 15,300
Peru 12,400 --
-- --
Total
Latin
America 517,000 --
4,500 29,200
Grand
Total 8,326,300 725,100
249,600 150,400
Internet
Telephony
Homes
Homes
Serviceable(9) Subscribers(10) Serviceable(11) Subscribers(12)
Europe:
The
Netherlands
2,497,800 397,400 2,250,500 182,100
France 3,316,500 247,100
707,800 66,600
Austria 943,700 242,500
910,400 152,500
Norway 244,400 48,500
151,200 22,900
Sweden 281,200 76,000
-- --
Ireland 14,500 600
24,200 500
Belgium 155,500 29,900
-- --
Total Western
Europe 7,453,600 1,042,000
4,044,100 424,600
Poland 569,100 53,400
-- --
Hungary 675,800 73,200
415,600 68,900
Czech Republic
322,200 42,400 -- --
Romania 3,900 300
-- --
Slovak
Republic 162,100 9,200
-- --
Total Central
and Eastern
Europe 1,733,100 178,500
415,600 68,900
Total
Europe 9,186,700 1,220,500
4,459,700 493,500
Latin America:
Chile 1,070,700 176,300
1,052,700 310,000
Brazil 15,400 1,100
-- --
Peru 30,300 3,200
-- --
Total Latin
America 1,116,400 180,600
1,052,700 310,000
Grand
Total 10,303,100 1,401,100
5,512,400 803,500
(1) "Homes Passed" are homes that can
be connected to our networks
without
further extending the distribution plant, except for DTH and
MMDS homes.
With respect to DTH, we do not count homes passed. With
respect to
MMDS, one home passed is equal to one MMDS subscriber.
(2) "Two-way Homes Passed" are homes
passed by our networks where
customers
can request and receive the installation of a two-way
addressable
set-top converter, cable modem, transceiver and/or voice
port which,
in most cases, allows for the provision of video and
Internet
services and, in some cases, telephony services.
(3) "Customer Relationships" are the
number of customers who receive at
least one
level of service without regard to which service(s) they
subscribe.
(4) "Revenue Generating Unit" 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.
(5) "Analog Cable Subscriber" is
comprised of basic cable video
customers
that are counted on a per connection basis. We have
approximately 1.34 million "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. Commercial
contracts
such as hotels and hospitals are counted on an equivalent
bulk unit
(EBU) 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.
(6) "Digital Cable Subscriber" is a
customer with one or more digital
converter
boxes that receives our digital video service. A Digital
Cable
Subscriber is counted as one Analog Cable Subscriber in column
5 of the
table above whether such customer receives only our digital
video
service or both analog and digital video services.
(7) "DTH Subscriber" is a home or
commercial unit that receives our
video
programming broadcast directly to the home via a
geosynchronous satellite.
(8) "MMDS Subscriber" is a home or
commercial unit that receives our
video
programming via a multipoint microwave (wireless) distribution
system.
(9) "Internet Homes Serviceable" are
homes that can be connected to our
broadband
networks, where customers can request and receive Internet
access
services.
(10) "Internet Subscriber" is a
home or commercial unit with one or more
cable
modems connected to our broadband networks, where a customer
has
requested and is receiving high-speed Internet access services.
(11)
"Telephony Homes Serviceable" are homes that can be connected to our
networks,
where customers can request and receive voice services.
(12)
"Telephony Subscriber" is a home or commercial unit connected to our
networks,
where a customer has requested and is receiving voice
services.
Please visit www.unitedglobal.com for further information or
contact:
Richard S. L. Abbott - Denver
Investor Relations
Phone: (303) 220-6682
Email: ir@unitedglobal.com
Bert Holtkamp
Corporate Communications - Europe
Phone: +31 (0) 778 9447
Email:communications@ugceurope.com
Claire Appleby
Investor Relations - Europe
Phone: +44 20 7 838 2004
Email: ir@ugceurope.com