http://www.businesswire.com/news/home/20091104006567/en
AMSTERDAM--(Business Wire)--
UPC Holding B.V. ("UPC Holding") is today providing selected, preliminary
unaudited financial and operating information for the three and nine months
ended September 30, 2009. UPC Holding is an indirect wholly-owned subsidiary of
Liberty Global, Inc. ("Liberty Global") (NASDAQ:LBTYA) (NASDAQ:LBTYB) and
(NASDAQ:LBTYK). A copy of this press release will be posted to the Liberty
Global website (www.lgi.com). In addition, UPC Holding`s unaudited condensed
consolidated financial statements with the accompanying notes are expected to be
posted prior to the end of November 2009.
Highlights for the third quarter ("Q") ended September 30, 2009 as compared to
the results for the same period last year (unless noted) include:1
* Organic RGU2 additions of 59,000 during the quarter, an increase of 84% over
Q2 2009
* Reported revenue of €862 million and operating cash flow ("OCF")3 of €421
million
* Rebased4 growth of 1% on revenue and 4% on OCF
* OCF margin5 of 48.8%, representing a 140 basis point improvement
* Operating income of €149 million, a 7% increase
Financial Results
On a reported basis, we generated revenue of €862 million and €2.57 billion for
the three and nine months ended September 30, 2009, respectively, reflecting a
1% decrease for both periods as compared to the respective 2008 periods. For
both the three and nine month 2009 periods, our revenue was adversely impacted
by the effects of foreign currency ("FX") movements, depressing our reported
growth rates by approximately three percentage points. Adjusting for both the
effects of FX and acquisitions, we delivered 1% and 2% rebased revenue growth
for the three and nine months ended September 30, 2009, as compared to the
respective prior year periods.
With respect to quarterly rebased revenue growth, our UPC Broadband Division
("UPC") achieved rebased growth in the third quarter that exceeded the
comparable growth rate in the second quarter. Our results continue to be
impacted by our Austrian and Hungarian operations. However, our Romanian
operation reported positive revenue growth for the first time in two years.
Similar to recent quarters, we are generating revenue growth from our advanced
services,6 which is being partially offset by the effects associated with
continued ARPU7 compression, analog churn, and declines in our
business-to-business and interconnect revenues. We continue to upsell high-ARPU
advanced services to our customer base, enabling us to generate year-over-year
ARPU per customer increases of 4% for UPC and 3% for VTR in local currency
terms.
For the three and nine months ended September 30, 2009, our OCF increased to
€421 million and €1.22 billion, respectively, each reflecting 2% growth over the
respective prior year periods. For the same comparative periods, we realized
rebased OCF growth of 4% and 5% for the three and nine months ended September
30, 2009, respectively. In the third quarter, our rebased results were supported
by continued double-digit growth from our Polish operation and the strongest
rebased growth quarters of the year from our Chilean and Romanian operations.
Based upon our year-to-date performance and outlook for Q4, we would expect that
our rebased OCF growth in the fourth quarter would be lower than the previous
three quarters,reflecting in part more difficult year-over-year Q4 comparisons
in some markets.
Our consolidated OCF margins were 48.8% and 47.4% for the three and nine months
ended September 30, 2009, respectively, reflecting 140 basis point improvements
over the corresponding prior year periods. Our operating expenses and selling,
general and administrative costs have contributed to our margin improvement, as
they are lower as a percentage of revenue in both 2009 periods versus the three
and nine months ended September 30, 2008. With respect to our third quarter
results, UPC and VTR attained their highest OCF margins of 2009 at 50.1% and
41.5%, respectively, representing 150 and 140 basis point increases,
respectively, over the comparable OCF margins in Q3 2008. Our improvement at UPC
was driven largely by our Western European markets, particularly Switzerland and
the Netherlands.
Subscriber Statistics
Our base of 15.8 million RGUs consists of 9.4 million video, 3.8 million
broadband internet and 2.6 million telephony subscribers at September 30, 2009.
We have increased our RGUs by 313,000 or 2% since September 30, 2008, driven
primarily by organic growth. Over this same timeframe, we have added more than
330,000 multi-play customers, growing our bundled customer base by 10% as
compared to the third quarter ended September 30, 2008. As a result, 37% of our
10.2 million customers now subscribe to two or more products.
In the third quarter, we added 59,000 organic RGUs, consisting of 35,000 Chilean
and 24,000 European organic additions. Our total organic additions reflect an
increase of 84% above our second quarter 2009 organic additions, entirely as a
result of our European performance. Our European markets, which are typically
adversely impacted by the summer holiday season, had a strong third quarter,
improving from an organic loss in Q2 2009 of 11,000 RGUs to an organic gain of
24,000 RGUs in Q3 2009.
Our third quarter organic additions included broadband internet and telephony
additions of 75,000 and 53,000 RGUs, respectively, and video losses of 69,000
RGUs. Organic broadband internet additions were 17% higher than Q2 2009, and
in-line with the 75,000 organic additions gained in Q3 2008. In the third
quarter, the Netherlands and Ireland added 15,000 and 13,000 broadband internet
subscribers, respectively, representing improvements both sequentially and
year-over-year. Furthermore, the Netherlands reported its best broadband
internet quarter since 2007, reflecting early success with its "Fiber Power"
products. We currently have next-generation broadband internet services in seven
of nine UPC markets, four of which launched in September (Switzerland, Czech
Republic, Slovakia, and Poland). Over 60% of UPC`s two-way footprint is now
capable of supporting speeds of 100+ Mbps and we estimate that we are marketing
to approximately 80% of this footprint.
Our third quarter organic video loss compares favorably to Q1 2009 and Q2 2009,
as it was better by 13,000 and 29,000 subscribers, respectively. This result was
aided by VTR`s highest organic gain in 2009 and improved quarterly churn in the
Netherlands, as evidenced by their lowest video loss of the year. At September
30, 2009, our 9.4 million video subscribers consisted of 5.9 million analog
(including MMDS), 3.0 million digital cable, and 483,000 DTH RGUs. In the last
twelve months, digital cable subscribers have grown by 47% or 970,000, resulting
in consolidated digital cable penetration8 of 34%.
For the three and nine months ended September 30, 2009, we added 180,000 and
679,000 digital cable RGUs, respectively, on an organic basis. The latter
represented an increase of 16% over the nine months ended September 30, 2008. As
compared to the corresponding prior year period, our digital cable growth
improvement on a year-to-date basis was led by our Central and Eastern European
("CEE") operations, which grew by 37%, and VTR, which grew by 34%. Within our
digital subscriber base, the digital video recorder ("DVR") continues to appeal
to our customers. At UPC, we have added over 400,000 DVR cable RGUs in the last
twelve months, an increase of approximately 88% since September 30, 2008. We
believe our digital video growth opportunity remains substantial, particularly
at UPC, given its digital penetration of 31% and analog video base of 5.5
million subscribers.
Summary of Third-Party Debt and Cash and Cash Equivalents
The following table details UPC Holding`s consolidated third-party debt and cash
and cash equivalents as of the indicated periods:
September 30, June 30,
2009 2009
in millions
UPC Broadband Holding Bank Facility € 6,182.9 € 6,209.0
UPC Holding 7.75% Senior Notes due 2014 384.6 384.6
UPC Holding 8.63% Senior Notes due 2014 230.9 230.9
UPC Holding 8.00% Senior Notes due 2016 300.0 300.0
UPC Holding 9.75% Senior Notes due 2018 373.5 373.2
UPC Holding 9.875% Senior Notes due 2018 253.0 263.4
VTR Bank Facility9 314.7 331.3
Other debt, including capital lease obligations 30.0 29.5
Total third-party debt € 8,069.6 € 8,121.9
Cash and cash equivalents € 79.4 € 124.7
Restricted cash10 316.7 333.4
Total cash and cash equivalents including restricted cash € 396.1 € 458.1
At September 30, 2009, we reported €8.1 billion of third-party debt and €396
million of cash and cash equivalents, including restricted cash of €317 million.
As compared to June 30, 2009, our third-party debt decreased by €52 million, due
largely to the translation impact associated with our U.S. dollar-denominated
debt, as a result of the euro strengthening relative to the U.S. dollar during
the third quarter. This was partially offset by incremental borrowings under the
bank facility during the quarter. As of September 30, 2009, we had minimal
near-term amortizations, with over 99% of our consolidated debt maturing in 2013
and beyond.
Subsequent to the second quarter, we completed several transactions involving
our bank facility. In September, we rolled €70 million of our redrawable
Facility L commitments due 2012 into €35 million of Facility Q due 2014 and €35
million of Facility T due 2016. During September and October, we also increased
the committed amounts under Facility T by €222 million ($325 million) through
the addition of a $25 million (€17 million) tranche issued at par and a $300
million (€205 million) tranche issued at a discount. We received net proceeds
after discounts of €157 million ($229 million) as of September 30, 2009 and will
receive the remaining €57 million ($84 million) in the fourth quarter. After
completion of the foregoing transactions, total third-party commitments under
Facility T were $876 million (€598 million).
Borrowing Capacity & Covenant Calculations
As of September 30, 2009, UPC Holding had maximum undrawn commitments under
Facilities I, L, Q and T of the UPC Broadband Holding Bank Facility of €456
million, of which we estimate €318 million will be available to borrow upon
completion of our third quarter bank reporting requirements. Based on the
results for September 30, 2009 and subject to the completion of third quarter
bank reporting requirements, (i) the ratio of Senior Debt to Annualized EBITDA
(last two quarters annualized), as defined and calculated in accordance with the
UPC Broadband Holding Bank Facility, was 3.81x,11 and (ii) the ratio of Total
Debt to Annualized EBITDA (last two quarters annualized), as defined and
calculated in accordance with the UPC Broadband Holding Bank Facility was
4.78x.11
UPC Broadband Holding Bank Facility
The following table details the key terms of the UPC Broadband Holding Bank
Facility at September 30, 2009:
As of September 30, 2009
Facility Final Interest Facility Unused Carrying
maturity rate amount12 borrowing value13
capacity
in millions
Facility I April 1, 2010 E + 2.50% € 48 € 48 € -
Facility L July 3, 2012 E + 2.25% € 160 160 -
Facility M Dec. 31, 201414 E + 2.00% € 954 - 954
Facility N Dec. 31, 201414 L + 1.75% $ 1,400 - 956
Facility O July 31, 2013 SR + 2.75%15 HUF 5,963 / PLN 115 - 50
Facility P Sept. 2, 2013 L + 2.75% $ 512 - 349
Facility Q July 31, 201416 E + 2.75% € 372 230 142
Facility R Dec. 31, 201516 E + 3.25% € 263 - 263
Facility S Dec. 31, 201617 E + 3.75% € 1,700 - 1,700
Facility T Dec. 31, 201617 L + 3.50% $ 816 18 533
Facility U Dec. 31, 201718 E + 4.00% € 1,236 - 1,236
Total € 456 € 6,183
Disposition of UPC Slovenia
On July 15, 2009, one of our subsidiaries sold 100% of its interest in UPC
Slovenia to Mid Europa Partners for a cash purchase price of€119.5 million,
before working capital adjustments.
About UPC Holding
UPC Holding connects its customers to the world of entertainment, communications
and information, by offering advanced video, voice and broadband internet
services. As of September 30, 2009, UPC Holding operated state-of-the-art
networks in Europe and Chile, serving 10 million customers in 10 countries.
Disclaimer
This press release contains forward-looking statements, including our
expectations with respect to our 2009 outlook, including our rebased operating
cash flow growth in the fourth quarter, our future growth prospects, and our
liquidity and access to capital markets, including our borrowing availability;
the timing and impact of our roll-out of advanced products and services,
including the success of our EuroDOCSIS 3.0 deployment and our digital cable
growth opportunity; our insight and expectations regarding competitive and
economic factors in our markets; the impact of our M&A activity on our
operations and financial performance; and other information and statements that
are not historical fact. These forward-looking statements involve certain risks
and uncertainties that could cause actual results to differ materially from
those expressed or implied by these statements. These risks and uncertainties
include the continued use by subscribers and potential subscribers of UPC
Holding's services and their willingness to upgrade to our more advanced
offerings, our ability to meet challenges from competition and economic factors,
the continued growth in services for digital television at a reasonable cost,
the effects of changes in technology and regulation, our ability to achieve
expected operational efficiencies and economies of scale, our ability to
generate expected revenue and operating cash flow, control capital expenditures
as measured by a percentage of revenue and achieve assumed margins, the impact
of our future financial performance, or market conditions generally, on the
availability, terms and deployment of capital, as well as other factors detailed
from time to time in Liberty Global's filings with the Securities and Exchange
Commission including Liberty Global`s most recently filed Forms 10-K and 10-Q.
These forward-looking statements speak only as of the date of this release. UPC
Holding expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained herein to
reflect any change in UPC Holding's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
UPC Holding is required under the terms of the indentures for its Senior Notes
to provide certain financial information regarding UPC Holding to bondholders on
a quarterly basis. UPC Broadband Holding B.V. ("UPC Broadband Holding"), a
wholly-owned subsidiary of UPC Holding, is a borrower and UPC Holding is a
guarantor of outstanding indebtedness under a senior secured credit facility
(the "UPC Broadband Holding Bank Facility") which also requires the provision of
certain financial and related information to the lenders. This press release is
being issued at this time, in connection with those obligations, due to the
contemporaneous release by Liberty Global of its September 30, 2009 results. The
financial information contained herein is preliminary and subject to change. UPC
Holding presently expects to issue its unaudited condensed consolidated
financial statements prior to the end of November 2009, at which time they will
be posted to the investor relations section of the Liberty Global website
(www.lgi.com) under the fixed income heading. Copies will also be available from
the Trustee for the Senior Notes.
1 UPC Slovenia was sold on July 15, 2009 and we have treated UPC Slovenia as a discontinued operation in our condensed consolidated financial statements. Thus, the results
of operations and cash flows of UPC Slovenia have been reclassified to discontinued operations for all periods presented. Additionally, we are reporting subscriber
metrics excluding the impact of this discontinued operation.
2 Please see footnotes to the operating data table for the definition of revenue generating units ("RGUs"). Organic figures exclude RGUs of acquired entities at the date of
acquisition but include the impact of changes in RGUs from the date of acquisition. Organic figures represent additions on a net basis.
3 Please see page 10 for our definition of operating cash flow and a reconciliation to operating income.
4 For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during the respective period in 2009, we have adjusted our
historical 2008 revenue and OCF to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2008 and 2009 in the respective 2008 rebased
amounts to the same extent that the revenue and OCF of such entities are included in our 2009 results and (ii) reflect the translation of our 2008 rebased amounts at the
applicable average exchange rates that were used to translate our 2009 results. Please see page 7 for supplemental information.
5 OCF margin is calculated by dividing OCF by total revenue for the applicable period.
6 Advanced services represent our services related to digital video, including digital cable and direct-to-home ("DTH"), broadband internet and telephony.
7 ARPU per customer relationship refers to the average monthly subscription revenue per average customer relationship. ARPU or ARPU per RGU refers to the average monthly
subscription revenue per average RGU. In both cases, the amounts are calculated by dividing the average monthly subscription revenue (excluding installation, late fees
and mobile telephony revenue) for the indicated period, by the average of the opening and closing balances for customer relationships or RGUs, as the case may be, for the
period. The growth rate for ARPU per customer relationship for UPC is not adjusted for currency impacts unless otherwise noted.
8 Digital penetration is calculated by dividing digital cable RGUs by the total of digital and analog cable RGUs.
9 An amount equal to the outstanding principal and interest balance due under the VTR Bank Facility is held in a cash collateral account that is reflected as restricted
cash in our consolidated balance sheet.
10 Of this amount, €315 million and €331 million of restricted cash as of September 30, 2009 and June 30, 2009, respectively, relates to our VTR Bank Facility.
11 Our covenant calculations are based on debt figures which take into account currency swaps. Thus, the debt used in the calculations may differ from the debt balances
reported within the financial statements.
12 Amounts represent total third-party commitments at September 30, 2009 without giving effect to discounts. Certain of the originally committed amounts under Facilities I,
L, M and N have been novated to Liberty Global Europe B.V. and accordingly, such amounts are not included in the table.
13 The Facility T amount includes the impact of discounts.
14 The final maturity date for Facilities M and N is the earlier of (i) December 31, 2014 and (ii) October 17, 2013, the date falling 90 days prior to the date on which the
UPC Holding Senior Notes due 2014 fall due, if such Senior Notes have not been repaid, refinanced or redeemed prior to such date.
15 SR refers to the specified percentage rate per annum determined by the Polish Association of Banking Dealers - Forex Poland or the National Bank of Hungary, as
appropriate for the relevant period.
16 The final maturity dates for Facilities Q and R are the earlier of (i) July 31, 2014 and December 31, 2015, respectively, and (ii) October 17, 2013, the date falling 90
days prior to the date on which the UPC Holding Senior Notes due 2014 fall due, if such Senior Notes have not been repaid, refinanced or redeemed prior to such date.
17 The final maturity date for Facilities S and T will be the earlier of (i) December 31, 2016 and (ii) October 17, 2013, the date falling 90 days prior to the date on which
the UPC Holding Senior Notes due 2014 fall due, if, on such date, such notes are outstanding in an aggregate principal amount of €250 million or more.
18 The final maturity date for Facility U is the earlier of (i) December 31, 2017 and (ii) October 17, 2013, the date falling 90 days prior to the date on which the UPC
Holding Senior Notes due 2014 fall due, if, on such date, such notes are outstanding in an aggregate principal amount of €250 million or more.
Revenue and Operating Cash Flow
The following tables present preliminary revenue and operating cash flow by
reportable segment for the three and nine months ended September 30, 2009, as
compared to the corresponding prior year period. All of the reportable segments
derive their revenue primarily from broadband communications services, including
video, voice and broadband internet services. Certain segments also provide
competitive local exchange carrier and other business-to-business communications
services. At September 30, 2009, our operating segments in UPC Holding provided
services in ten countries, consisting of our UPC Broadband Division in Europe
and VTR in Chile. Other Central and Eastern Europe segment includes our
operating segments in the Czech Republic, Poland, Romania and Slovakia.
During the first quarter of 2009, we changed our reporting such that we no
longer include video-on-demand costs within the central and corporate operations
category of UPC. Instead, we present these costs within the individual operating
segments of UPC. Segment information for all periods presented has been recast
to reflect the reclassification of these costs. Additionally, our reportable
segments have been reclassified for all periods to present UPC Slovenia as a
discontinued operation. Previously, UPC Slovenia was included in our Other
Central and Eastern Europe segment. We present only the reportable segments of
our continuing operations in the following tables.
For purposes of calculating rebased growth rates on a comparable basis for all
businesses that we owned during 2009, we have adjusted our historical revenue
and OCF for the three and nine months ended September 30, 2008 to (i) include
the pre-acquisition revenue and OCF of certain entities acquired during 2008 and
2009 in our rebased amounts for the three and nine months ended September 30,
2008 to the same extent that the revenue and OCF of such entities are included
in our results for the three and nine months ended September 30, 2009 and (ii)
reflect the translation of our rebased amounts for the three and nine months
ended September 30, 2008 at the applicable average exchange rates that were used
to translate our results for the three and nine months ended September 30, 2009.
The acquired entities that have been included in whole or in part in the
determination of our rebased revenue and OCF for the three months ended
September 30, 2008 include one small acquisition in Europe. The acquired
entities that have been included in whole or in part in the determination of our
rebased revenue and OCF for the nine months ended September 30, 2008 include
four small acquisitions in Europe. We have reflected the revenue and OCF of
these acquired entities in our 2008 rebased amounts based on what we believe to
be the most reliable information that is currently available to us (generally
pre-acquisition financial statements), as adjusted for the estimated effects of
(i) any significant differences between generally accepted accounting principles
in the U.S. ("GAAP") and local generally accepted accounting principles, (ii)
any significant effects of post-acquisition purchase accounting adjustments,
(iii) any significant differences between our accounting policies and those of
the acquired entities and (iv) other items we deem appropriate. As we did not
own or operate the acquired businesses during the pre-acquisition periods, no
assurance can be given that we have identified all adjustments necessary to
present the revenue and OCF of these entities on a basis that is comparable to
the corresponding post-acquisition amounts that are included in our historical
2008 results or that the pre-acquisition financial statements we have relied
upon do not contain undetected errors. The adjustments reflected in our 2008
rebased amounts have not been prepared with a view towards complying with
Article 11 of the Securities and Exchange Commission's Regulation S-X. In
addition, the rebased growth percentages are not necessarily indicative of the
revenue and OCF that would have occurred if these transactions had occurred on
the dates assumed for purposes of calculating our rebased 2008 amounts or the
revenue and OCF that will occur in the future. The rebased growth percentages
have been presented as a basis for assessing 2009 growth rates on a comparable
basis, and are not presented as a measure of our pro forma financial performance
for 2008. Therefore, we believe our rebased data is not a non-GAAP financial
measure as contemplated by Regulation G or Item 10 of Regulation S-K.
The selected financial data contained herein is preliminary and unauditedand
subject to possible adjustments in connection with the publication of UPC
Holding`s September 30, 2009 unaudited condensed consolidated financial
statements. In each case, the following tables present (i) the amounts reported
by each of our reportable segments for the comparative periods, (ii) the Euro
change and percentage change from period to period, (iii) the percentage change
from period to period, after removing foreign currency translation effects (FX),
and (iv) the percentage change from period to period on a rebased basis. The
comparisons that exclude FX assume that exchange rates remained constant during
the periods that are included in each table.
Revenue
Three months ended Increase Increase Increase
September 30, (decrease) (decrease) (decrease)
excluding FX
2009 2008 € % % Rebased %
in millions
UPC Broadband Division:
The Netherlands € 201.6 € 197.9 € 3.7 1.9 % 1.9 % -
Switzerland 181.0 170.3 10.7 6.3 % 0.3 % -
Austria 86.2 90.5 (4.3 ) (4.8 %) (4.8 %) -
Ireland 61.6 60.6 1.0 1.7 % 1.7 % -
Total Western Europe 530.4 519.3 11.1 2.1 % 0.2 % 0.2 %
Hungary 59.2 73.2 (14.0 ) (19.1 %) (7.2 %) -
Other Central and Eastern Europe 144.8 156.7 (11.9 ) (7.6 %) 6.8 % -
Total Central and Eastern Europe 204.0 229.9 (25.9 ) (11.3 %) 2.4 % 1.9 %
Central and corporate operations 1.4 1.7 (0.3 ) (17.6 %) (17.6 %) -
Total UPC Broadband Division 735.8 750.9 (15.1 ) (2.0 %) 0.8 % 0.6 %
VTR (Chile) 125.7 119.8 5.9 4.9 % 5.5 % 5.5 %
Total UPC Holding € 861.5 € 870.7 € (9.2) (1.1 %) 1.4 % 1.3 %
Nine months ended Increase Increase Increase
September 30, (decrease) (decrease) (decrease)
excluding FX
2009 2008 € % % Rebased %
in millions
UPC Broadband Division:
The Netherlands € 609.7 € 597.4 € 12.3 2.1 % 2.1 % -
Switzerland 545.9 510.3 35.6 7.0 % 0.5 % -
Austria 260.8 275.8 (15.0 ) (5.4 %) (5.4 %) -
Ireland 184.6 180.7 3.9 2.2 % 2.2 % -
Total Western Europe 1,601.0 1,564.2 36.8 2.4 % 0.2 % 0.2 %
Hungary 176.0 209.3 (33.3 ) (15.9 %) (3.7 %) -
Other Central and Eastern Europe 418.2 454.7 (36.5 ) (8.0 %) 6.0 % -
Total Central and Eastern Europe 594.2 664.0 (69.8 ) (10.5 %) 2.9 % 2.3 %
Central and corporate operations 3.9 4.7 (0.8 ) (17.0 %) (17.0 %) -
Total UPC Broadband Division 2,199.1 2,232.9 (33.8 ) (1.5 %) 1.0 % 0.7 %
VTR (Chile) 371.9 368.8 3.1 0.8 % 7.2 % 7.2 %
Total UPC Holding € 2,571.0 € 2,601.7 € (30.7) (1.2 %) 1.9 % 1.6 %
Operating Cash Flow
Three months ended Increase Increase Increase
September 30, (decrease) (decrease) (decrease)
excluding FX
2009 2008 € % % Rebased %
in millions
UPC Broadband Division:
The Netherlands € 122.2 € 115.4 € 6.8 5.9 % 5.9 % -
Switzerland 103.2 91.6 11.6 12.7 % 6.4 % -
Austria 44.9 47.0 (2.1 ) (4.5 %) (4.5 %) -
Ireland 24.4 23.6 0.8 3.4 % 3.4 % -
Total Western Europe 294.7 277.6 17.1 6.2 % 4.1 % 4.1 %
Hungary 29.2 38.4 (9.2 ) (24.0 %) (12.5 %) -
Other Central and Eastern Europe 78.4 84.4 (6.0 ) (7.1 %) 7.3 % -
Total Central and Eastern Europe 107.6 122.8 (15.2 ) (12.4 %) 1.1 % 0.6 %
Central and corporate operations (33.9 ) (35.3 ) 1.4 4.0 % 3.0 % -
Total UPC Broadband Division 368.4 365.1 3.3 0.9 % 3.8 % 3.8 %
VTR (Chile) 52.2 48.0 4.2 8.8 % 8.9 % 8.9 %
Total € 420.6 € 413.1 € 7.5 1.8 % 4.4 % 4.4 %
Nine months ended Increase Increase Increase
September 30, (decrease) (decrease) (decrease)
excluding FX
2009 2008 € % % Rebased %
in millions
UPC Broadband Division:
The Netherlands € 356.1 € 334.0 € 22.1 6.6 % 6.6 % -
Switzerland 305.1 267.7 37.4 14.0 % 7.1 % -
Austria 132.7 141.3 (8.6 ) (6.1 %) (6.1 %) -
Ireland 73.8 69.0 4.8 7.0 % 7.0 % -
Total Western Europe 867.7 812.0 55.7 6.9 % 4.6 % 4.6 %
Hungary 87.9 107.7 (19.8 ) (18.4 %) (6.4 %) -
Other Central and Eastern Europe 216.0 236.8 (20.8 ) (8.8 %) 5.0 % -
Total Central and Eastern Europe 303.9 344.5 (40.6 ) (11.8 %) 1.4 % 0.7 %
Central and corporate operations (104.9 ) (110.6 ) 5.7 5.2 % 3.8 % -
Total UPC Broadband Division 1,066.7 1,045.9 20.8 2.0 % 4.4 % 4.4 %
VTR (Chile) 150.7 150.9 (0.2 ) (0.1 %) 6.1 % 6.1 %
Total € 1,217.4 € 1,196.8 € 20.6 1.7 % 4.6 % 4.6 %
Operating Cash Flow Definition and Reconciliation
Operating cash flow is not a GAAP measure. Operating cash flow is the primary
measure used by our chief operating decision maker to evaluate segment operating
performance. Operating cash flow is also a key factor that is used by our
internal decision makers to (i) determine how to allocate resources to segments
and (ii) evaluate the effectiveness of our management for purposes of annual and
other incentive compensation plans. As we use the term, operating cash flow is
defined as revenue less operating and SG&A expenses (excluding stock-based
compensation, related-party fees and allocations, depreciation and amortization,
and impairment, restructuring and other operating charges or credits). Other
operating charges or credits include gains and losses on the disposition of
long-lived assets and due diligence, legal, advisory and other third-party costs
directly related to our efforts to acquire controlling interests in entities.
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 that is unaffected by
our capital structure and allows management to (i) readily view operating
trends, (ii) perform analytical comparisons and benchmarking between segments
and (iii) identify strategies to improve operating performance in the different
countries in which we operate. We believe our operating cash flow measure is
useful to investors because it is one of the bases for comparing our performance
with the performance of other companies in the same or similar industries,
although our measure may not be directly comparable to similar measures used by
other companies. Operating cash flow should be viewed as a measure of operating
performance that is a supplement to, and not a substitute for, operating income,
net earnings, cash flow from operating activities and other GAAP measures of
income or cash flows. A reconciliation of UPC Holding`s total segment operating
cash flow to operating income is presented below.
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
in millions
Total segment operating cash flow € 420.6 € 413.1 € 1,217.4 € 1,196.8
Stock-based compensation expense (10.9 ) (10.4 ) (23.4 ) (28.6 )
Related-party fees and allocations, net 4.5 7.4 15.1 15.5
Depreciation and amortization (265.6 ) (269.2 ) (790.9 ) (810.7 )
Impairment, restructuring and other operating charges (credits), net* 0.4 (1.0 ) (89.1 ) (5.9 )
Operating income € 149.0 € 139.9 € 329.1 € 367.1
Capital Expenditure Summary
The following table provides UPC Holding capital expenditures for the indicated periods:
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
in millions
UPC Broadband Division:
The Netherlands € 32.9 € 36.0 € 75.0 € 102.3
Switzerland 44.6 48.0 147.5 122.5
Austria 16.4 19.2 55.9 49.9
Ireland 23.1 18.2 73.4 52.9
Total Western Europe 117.0 121.4 351.8 327.6
Hungary 7.3 13.6 35.1 51.1
Other Central and Eastern Europe 45.0 56.9 123.5 153.3
Total Central and Eastern Europe 52.3 70.5 158.6 204.4
Corporate and other operations 16.5 19.0 47.5 55.3
Total UPC Broadband Division 185.8 210.9 557.9 587.3
VTR (Chile) 24.8 36.0 91.2 96.1
Total UPC Holding € 210.6 € 246.9 € 649.1 € 683.4
* During the second quarter of 2009, we recorded an €85 million charge to impair a portion of the goodwill associated with our Romanian operating segment.
Operating Data Table
Operating Data - September 30, 2009 - UPC Holding B.V. Consolidated
Homes Two-way Customer Video Internet Telephony
Passed(1) Homes Relationships(3)
Passed(2)
Total Analog Cable Digital Cable DTH MMDS Total Homes Subscribers(10) Homes Subscribers(12)
RGUs(4) Subscribers(5) Subscribers(6) Subscribers(7) Subscribers(8) Video Serviceable(9) Serviceable(11)
UPC Broadband Division:
The Netherlands(13) 2,756,600 2,649,800 1,968,600 3,272,300 1,255,300 710,700 - - 1,966,000 2,649,800 707,900 2,603,100 598,400
Switzerland(13) 1,983,300 1,629,000 1,590,300 2,344,600 1,192,100 362,300 - - 1,554,400 1,979,500 485,100 1,977,000 305,100
Austria 1,157,500 1,157,500 721,000 1,238,600 323,600 217,600 - - 541,200 1,157,500 424,300 1,157,500 273,100
Ireland 876,400 572,000 537,000 697,800 169,600 263,500 - 76,800 509,900 572,000 134,900 473,100 53,000
Total Western Europe 6,773,800 6,008,300 4,816,900 7,553,300 2,940,600 1,554,100 - 76,800 4,571,500 6,358,800 1,752,200 6,210,700 1,229,600
Hungary 1,229,400 1,209,500 905,300 1,369,700 476,600 140,600 182,900 - 800,100 1,209,500 325,100 1,211,900 244,500
Romania 2,070,500 1,732,000 1,237,300 1,638,200 872,800 202,900 161,600 - 1,237,300 1,606,600 256,400 1,544,800 144,500
Poland 2,013,100 1,859,100 1,081,500 1,619,800 819,500 193,900 - - 1,013,400 1,859,100 437,800 1,858,200 168,600
Czech Republic 1,313,200 1,203,400 771,700 1,137,800 171,500 361,600 107,600 - 640,700 1,203,400 344,900 1,199,300 152,200
Slovakia 489,400 430,900 286,700 365,200 189,700 53,800 31,100 4,300 278,900 393,000 59,800 393,000 26,500
Total Central and Eastern Europe 7,115,600 6,434,900 4,282,500 6,130,700 2,530,100 952,800 483,200 4,300 3,970,400 6,271,600 1,424,000 6,207,200 736,300
Total UPC Broadband Division 13,889,400 12,443,200 9,099,400 13,684,000 5,470,700 2,506,900 483,200 81,100 8,541,900 12,630,400 3,176,200 12,417,900 1,965,900
VTR (Chile) 2,597,000 1,933,400 1,051,000 2,164,500 389,700 509,000 - - 898,700 1,933,400 645,900 1,920,500 619,900
Total UPC Holding B.V. 16,486,400 14,376,600 10,150,400 15,848,500 5,860,400 3,015,900 483,200 81,100 9,440,600 14,563,800 3,822,100 14,338,400 2,585,800
Footnotes to Operating Data Table:
(1) Homes Passed are homes or residential multiple dwelling units that can be connected to our networks without further extending the distribution plant, except for direct-to
-home (DTH) and Multi-channel Multipoint (microwave) Distribution System (MMDS) homes. Our Homes Passed counts are based on census data that can change based on either
revisions to the data or from new census results. We do not count homes passed for DTH. With respect to MMDS, one MMDS customer is equal to one Home Passed. Due to the
fact that we do not own the partner networks (defined below) used by Cablecom in Switzerland (see note 13) or the unbundled loop and shared access network used by one of
our Austrian subsidiaries, UPC Austria GmbH (Austria GmbH), we do not report homes passed for Cablecom`s partner networks or the unbundled loop and shared access network
used by Austria GmbH.
(2) Two-way Homes Passed are Homes Passed by those sections of our networks that are technologically capable of providing two-way services, including video and internet
services and, in some cases, telephony services. Due to the fact that we do not own the partner networks used by Cablecom in Switzerland or the unbundled loop and shared
access network used by Austria GmbH, we do not report two-way homes passed for Cablecom`s partner networks or the unbundled loop and shared access network used by Austria
GmbH.
(3) Customer Relationships are the number of customers who receive at least one of our video, internet or voice services that we count as Revenue Generating Units (RGUs),
without regard to which, or to how many services they subscribe. To the extent that RGU counts include equivalent billing unit (EBU) adjustments, we reflect corresponding
adjustments to our Customer Relationship counts. Customer Relationships generally are counted on a unique premise basis. Accordingly, if an individual receives our
services in two premises (e.g. primary home and vacation home), that individual will count as two Customer Relationships. We exclude mobile customers from Customer
Relationships.
(4) Revenue Generating Unit is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephony Subscriber.
A home, residential multiple dwelling unit, or commercial unit may contain one or more RGUs. For example, if a residential customer in our Austrian system subscribed to
our digital cable service, telephony service and broadband internet service, the customer would constitute three RGUs. Total RGUs is the sum of Analog Cable, Digital
Cable, DTH, MMDS, Internet and Telephony Subscribers. RGUs generally are counted on a unique premise basis such that a given premise does not count as more than one RGU
for any given service. On the other hand, if an individual receives our service in two premises (e.g. a primary home and a vacation home), that individual will count as
two RGUs. Each bundled cable, internet or telephony service is counted as a separate RGU regardless of the nature of any bundling discount or promotion. Non-paying
subscribers are counted as subscribers during their free promotional service period. Some of these subscribers may choose to disconnect after their free service period.
Services offered without charge on a permanent basis (e.g. VIP subscribers, free service to employees) are not counted as RGUs.
(5) Analog Cable Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our analog cable service over our broadband network. In Europe, we
have approximately 464,800 "lifeline" customers that are counted on a per connection basis, representing the least expensive regulated tier of basic cable service, with
only a few channels.
(6) Digital Cable Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our digital cable service over our broadband network or through a
partner network. We count a subscriber with one or more digital converter boxes that receives our digital cable service as just one subscriber. A Digital Cable Subscriber
is not counted as an Analog Cable Subscriber. As we migrate customers from analog to digital cable services, we report a decrease in our Analog Cable Subscribers equal to
the increase in our Digital Cable Subscribers. Individuals who receive digital cable service through a purchased digital set-top box but do not pay a monthly digital
service fee are only counted as Digital Cable Subscribers to the extent we can verify that such individuals are subscribing to our analog cable service. We include 41,400
of these subscribers in the Digital Cable Subscribers reported for Cablecom. Subscribers to digital cable services provided by Cablecom over partner networks receive
analog cable services from the partner networks as opposed to Cablecom.
(7) DTH Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video programming broadcast directly via a geosynchronous satellite.
(8) MMDS Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video programming via a multi-channel multipoint (microwave)
distribution system.
(9) Internet Homes Serviceable are Two-way Homes Passed that can be connected to our network, or a partner network with which we have a service agreement, for the provision
of broadband internet services if requested by the customer or building owner. With respect to Austria GmbH, we do not report as Internet Homes Serviceable those homes
served either over an unbundled loop or over a shared access network.
(10) Internet Subscriber is a home, residential multiple dwelling unit or commercial unit that receives internet services over our networks, or that we service through a
partner network. Our Internet Subscribers in Austria include 78,800 residential digital subscriber line (DSL) subscribers of Austria GmbH that are not serviced over our
networks. Our Internet Subscribers do not include customers that receive services from dial-up connections.
(11) Telephony Homes Serviceable are Two-way Homes Passed that can be connected to our network, or a partner network with which we have a service agreement, for the provision
of telephony services if requested by the customer or building owner. With respect to Austria GmbH, we do not report as Telephony Homes Serviceable those homes served
over an unbundled loop rather than our network.
(12) Telephony Subscriber is a home, residential multiple dwelling unit or commercial unit that receives voice services over our networks, or that we service through a partner
network. Telephony Subscribers exclude mobile telephony subscribers. Our Telephony Subscribers in Austria include 46,000 residential subscribers of Austria GmbH that are
not serviced over our networks.
(13) Pursuant to service agreements, Cablecom and, to a much lesser extent, the Netherlands offer digital cable, broadband internet and telephony services over networks owned
by third-party cable operators (partner networks). A partner network RGU is only recognized if there is a direct billing relationship with the customer. Homes Serviceable
for partner networks represent the estimated number of homes that are technologically capable of receiving the applicable service within the geographic regions covered by
the applicable service agreements. Internet and Telephony Homes Serviceable with respect to partner networks have been estimated by Cablecom. These estimates may change
in future periods as more accurate information becomes available. At September 30, 2009, Cablecom`s partner networks account for 83,600 Customer Relationships, 120,100
RGUs, 47,600 Digital Cable Subscribers, 350,600 Internet Homes Serviceable, 348,100 Telephony Homes Serviceable, 44,100 Internet Subscribers, and 28,400 Telephony
Subscribers. In addition, partner networks account for 460,200 digital cable homes serviceable that are not included in Homes Passed or Two-way Homes Passed in our
September 30, 2009 subscriber table.
Additional General Notes to Tables:
With respect to Chile, residential multiple dwelling units with a discounted pricing structure for video, broadband internet or telephony services are counted on an EBU
basis. With respect to commercial establishments, such as bars, hotels and hospitals, to which we provide video and other services primarily for the patrons of such
establishments, the subscriber count is generally calculated on an EBU basis by our subsidiaries. EBU is calculated by dividing the bulk price charged to accounts in an
area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. On a business-to-business basis, certain of
our subsidiaries provide data, telephony and other services to businesses, primarily in the Netherlands, Switzerland, Austria, Ireland, and Romania. We generally do not
count customers of these services as subscribers, customers or RGUs.
While we take appropriate steps to ensure that subscriber statistics are presented on a consistent and accurate basis at any given balance sheet date, the variability
from country to country in (i) the nature and pricing of products and services, (ii) the distribution platform, (iii) billing systems, (iv) bad debt collection experience
and (v) other factors add complexity to the subscriber counting process. We periodically review our subscriber counting policies and underlying systems to improve the
accuracy and consistency of the data reported. Accordingly, we may from time to time make appropriate adjustments to our subscriber statistics based on those reviews.
Subscriber information for acquired entities is preliminary and subject to adjustment until we have completed our review of such information and determined that it is
presented in accordance with our policies.
UPC Holding B.V.
Investor Relations
Christopher Noyes, +1 303-220-6693
Molly Bruce, +1 303-220-4202
K.C. Dolan, +1 303-220-6686
Corporate Communications
Bert Holtkamp, +31 20-778-9447
Copyright Business Wire 2009
