UGC Reports First Quarter 2004 Results DENVER, May 10
/PRNewswire-FirstCall/ -- UnitedGlobalCom, Inc. ("UGC")(1) , today
announces operating and financial results for the first quarter
ended March 31, 2004. Highlights for the first quarter compared to
the same period in the prior year include: * Revenue increase of
26% to $547 million * Operating Cash Flow(2) increase of 67% to
$204 million * Operating Cash Flow margin of 37% compared to 28% *
Net loss of $(150) million compared to net income of $17 million *
Net RGU increase of 92,300, a 90% increase compared to first
quarter 2003 RGU growth * Free Cash Flow(3) increase of 111% to $36
million Executive Summary We are pleased to announce results for
the quarter ended March 31, 2004. Revenue increased 26% to $547
million compared to the same period last year and Operating Cash
Flow reached a new high of $204 million in the first quarter, a
year-over-year increase of 67%. Net loss was $(150) million for the
first quarter ended 2004 compared to net income of $17 million for
the same period last year, primarily as a result of less favorable
foreign currency exchange movements on fewer U.S. dollar
denominated debt securities. Subscriber growth was robust in the
first quarter 2004 as we added 92,300 net new RGUs, including
60,600 Internet subscribers. This represents a 90% increase from
our net gain during last year's first quarter. In Europe, Internet
subscribers during the period increased by 50,800 or 22%
sequentially from the seasonally strong fourth quarter. At March
31, 2004, total RGUs exceeded 9.2 million. Mike Fries, President
and Chief Executive Officer of UGC said, "This was a strong first
quarter for us financially, operationally and strategically. We
made good progress on our key priority of driving top-line growth.
Revenue increased 26% year-on-year, and while the majority of this
increase was attributable to the strong euro, we demonstrated good
organic growth at the operating company level. Our rate increase
initiatives in the Netherlands are moving in the right direction
and customer growth was ahead of budget in nearly every country and
product. In particular, Internet subscriber growth accelerated from
the seasonally strong fourth quarter as a result of our aggressive
tiering and pricing campaigns. While the European high-speed
Internet market remains very competitive, we continue to see higher
than expected demand as dial-up customers convert to broadband."
"We are also making good progress on launching new services across
all of our core product groups. Earlier this year we expanded our
digital TV reach in France with a head end-in-the-sky (or HITS)
service, which has significantly outperformed our sales
expectations. We are live with our VOIP trial in the Netherlands
and have moved up our commercial launch dates to late summer. And
our recent bundling initiatives continue to drive RGUs and ARPU per
customer. As of March 31, our ARPU per customer in Europe ranged
from a high of more than EUR 35.00 per month in Austria to an
average of EUR 16.78 across the entire platform." "Operating Cash
Flow reached a record $204 million for the quarter which, despite a
slightly stronger euro than forecasted, puts us well on track to
meet our full-year guidance of $800 million. We continue to benefit
from organizational, operating and network efficiencies, all of
which helped to push our Operating Cash Flow margins to 37%, up
from 28% one year ago." "To help fund these initiatives and
accelerate our broader goal of prudently expanding our footprint in
Europe, we recently completed the issuance of a EUR 500 million
convertible bond with a coupon of 1.75% and an effective conversion
price at the issue date of $12.00 per share. Together with the $1.0
billion of rights offering proceeds received in February, we now
have cash and equivalents of more than $1.9 billion and a net debt
to annualized operating cash flow ratio of 3.1x. As previously
announced, we propose to use a portion of this cash to facilitate a
partial refinancing of our bank debt in Europe which will, among
other benefits, reduce our borrowing costs and improve our free
cash flow." Recent Events Update On Dutch Analog Video Rate
Increase: Recently we announced that we would increase rates for
analog video customers in The Netherlands towards a standard rate,
effective January 1, 2004. As previously reported, we have been
enjoined from, or have voluntarily waived, implementing these rate
increases in certain cities within The Netherlands. Thus far, we
have reached agreement with several municipalities including the
municipality of Amsterdam, allowing us to increase our standard
cable tariffs from EUR 11.36 to EUR 15.20 throughout the course of
the year. We are currently negotiating with other municipalities
and expect a satisfactory resolution. UGC Completes EUR 500 million
Convertible Debt Offering: On April 6, 2004, we successfully
completed the sale of EUR 500 million aggregate principal amount of
1 3/4% Convertible Senior Notes due April 15, 2024 (the "Notes"),
for gross proceeds of EUR 500 million. The Notes are convertible
into shares of UGC's Class A common stock at an initial conversion
price of EUR 9.7561 per share, which was equivalent to a conversion
price of $12.00 per share on the date of issue. European Bank
Facility Refinancing: On April 19, 2004, we announced that we are
in discussions with our lenders about refinancing a portion of the
outstanding amount under the UPC Distribution Bank Facility. We
have proposed to use up to EUR 450 million of our cash on hand to
facilitate a refinancing that would, among other things, reduce
interest rates on the indebtedness under the facility and provide
us with additional flexibility to finance a portion of the Noos
acquisition and other potential acquisitions with debt. First
Quarter 2004 Results Our significant and consolidated operating
subsidiaries in Europe include UPC Broadband -- our cable
television and broadband division with operations in 11 countries,
and chellomedia -- our media and programming division, which also
includes our CLEC, Priority Telecom. In Latin America, our primary
operation is VTR GlobalCom (VTR), our cable television and
broadband provider in Chile. Please refer to the Financial
Highlights and Consolidated Financial Statements section at the end
of this press release for additional segment information. Revenue
Revenue for the three months ended March 31, 2004 was $547 million,
an increase of 26% or $111 million compared to the same period in
the prior year. Approximately 74% of the full year sales increase
was due to foreign exchange rate fluctuations (primarily the
appreciation of the Euro vs. the US$). Excluding the impact of
foreign exchange rates, organic year-over-year revenue growth was
6.7% for the first quarter of 2004 driven primarily by higher
average monthly revenue per subscriber (ARPU) and RGU growth. This
is below our long-term growth target of 10% organic revenue growth
due to several factors. First, and most important, UPC Broadband
revenue growth was reduced by 2.4% due to the negative impact of
foreign currency movements, particularly the depreciation of
Eastern European currencies against the euro. Other reasons for the
shortfall include the lack of RGU growth during the first 9 months
of 2003 and the corresponding impact of annualizing those customer
additions, the delayed analog video rate increase in The
Netherlands, a sequential decline in our Chilean broadband revenue
due to seasonality, and a 10% sales decline at our CLEC, Priority
Telecom. ARPU per RGU for the three months ended March 31, 2004 was
$18.66 an increase of 22% compared to the prior year. A significant
portion of the ARPU increase was due to foreign exchange rate
fluctuations (primarily the appreciation of the Euro vs. the US$).
Our overall European ARPU per RGU increased 4% to EUR 14.23 from
last year's first quarter, while ARPU per customer relationship was
EUR 16.78 at March 31, 2004. Excluding the impact of foreign
exchange rates, the ARPU increase was driven by higher rates for
analog video service, offset by declining ARPUs for our Internet
and telephone services. Operating Cash Flow Operating Cash Flow for
the three months ended March 31, 2004 was $204 million, an increase
of 67% compared to the same period in the prior year. Excluding the
impact of foreign exchange rate fluctuations, our organic Operating
Cash Flow growth was 42% for the period. In addition, we continue
to benefit from organizational, operating, and network
efficiencies, as our consolidated Operating Cash Flow margin
improved to 37% for first quarter 2004 compared to 28% for the same
period last year. On a functional currency basis, European
operating expenses decreased 6.7% for the three months ended March
31, 2004 compared to the same period in the prior year. The
decrease in operating expense resulted from continued improvement
in operational cost control, more effective procurement of support
services and lower customer care and billing and collection
charges, particularly in The Netherlands. In addition, European
selling, general and administrative (SG&A) expense decreased
10% for the three months ended March 31, 2004 compared to the same
period in the prior year. The decrease SG&A expense reflects
continued improvement in cost control, reduced infrastructure cost,
a reduction in outsourced support and translation effects, offset
by an increase in marketing expenditures. Net Income (Loss) Net
loss was $(150) million for the three months ended March 31, 2004,
which compares with net income of $17 million for the same period
in 2003. The larger loss in first quarter 2004 is primarily due to
a $(22) million foreign currency exchange loss in the period
compared to a gain of $151 million in last year's first quarter as
a result of less favorable foreign currency exchange movements on
few U.S. dollar denominated securities. Free Cash Flow and Capital
Expenditures We remain focused on improving the underlying cash
flow generation of our business. Free Cash Flow for the three
months ended March 31, 2004 was $36 million, a 111% improvement
compared to the same period last year. The increase was driven by a
56% improvement in cash flow from operating activities, offset by a
39% increase in capital expenditures. Capital expenditures
increased to $80 million for the three months ended March 31, 2004,
compared to $58 million for same period last year. The primary
reason for the increase was higher spending on customer premise
equipment (CPE) due to the significant increase in RGU growth in
the first quarter 2004 compared to the same period last year.
Operating Statistics As of March 31, 2004, total RGUs were
9,274,100, an increase of 4.0%, or 359,800 compared to the prior
year. Since December 31, 2003, we added 92,300 net new RGUs, of
which 60,600 were Internet subscribers. Our net gain in the first
quarter 2004 represents an increase of 90% from our net gain in the
same period last year. Due to the seasonality of our business, we
believe that our first quarter net gain in RGUs puts us on track to
meet our guidance of 500,000 net new RGUs in 2004. In Europe we
added 50,800 new Internet subscribers during the quarter, a 22%
sequential improvement from the 41,700 additions in the seasonally
strong fourth quarter as a result of our tiering strategy. We now
offer tiered services across all of our European markets where we
offer the Internet product. Offsetting the higher than expected
customer additions, most of our new Internet customers are taking
lower-priced, lower-speed tiers of service which, in turn, is
causing ARPUs to decline. Currently, our blended average ARPU for
Internet across all countries in Europe is approximately EUR 36.50
($43.00). About UnitedGlobalCom UGC is the leading international
broadband communications provider of video, voice, and Internet
services with operations in 14 countries. Based on UGC's operating
statistics at March 31, 2004, the Company's networks reached
approximately 12.8 million homes and had over 9.2 million RGUs,
including approximately 7.5 million video subscribers, 742,000
telephone subscribers and 984,300 Internet access subscribers.
Forward-Looking Statements: Except for historical information
contained herein, this press release contains forward-looking
statements, including guidance given for 2004. The Company's plans
with respect to refinancing the senior bank facility and the
intended effects of such refinancing, if any, such as a reduction
of interest rates, elimination or loosening of covenants and
potential acquisitions are 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, obtaining regulatory approval for the
previously announced Noos Transaction, our ability to successfully
integrate the French systems, 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, as well as
other factors detailed from time to time in the Company's filings
with the Securities and Exchange Commission. These forward-looking
statements speak only as of the date of this release. The Company
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any guidance and other forward-looking
statement contained herein to reflect any change in the Company's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
Please visit http://www.unitedglobal.com/ for further information.
(1) Including the "Company", "we, "us", "our", and similar terms.
(2) Previously disclosed as Adjusted EBITDA. Please see pages 4 and
5 of this press release for a full explanation of Operating Cash
Flow, more detail on Operating Cash Flow by company, and a
reconciliation of Operating Cash Flow to Net Income (Loss). (3)
Please see page 5 of this press release for an explanation of Free
Cash Flow. Financial Highlights: Revenue The table below highlights
Revenue by segment: 3 months 3 months Year/Year 3 months Sequential
(thousands) Q1 2004 Q1 2003 Change Q4 2003 Change UPC Broadband
$441,447 $356,102 24% $411,867 7% Chellomedia 59,707 50,840 17%
57,741 3% VTR 71,683 49,087 46% 68,168 5% Other (1) (25,495)
(19,987) 28% (21,912) 16% UGC Consolidated $547,342 $436,042 26%
$515,864 6% (1) Includes primarily intercompany eliminations and
other Latin America Broadband. The following is provided for
informational purposes to highlight revenues in the functional
currency of UGC Europe (Euros) and VTR (Chilean Pesos), as follows:
(thousands, except 3 months 3 months Year/Year 3 months Sequential
for VTR) Q1 2004 Q1 2003 Change Q4 2003 Change UPC Broadband euro
352,733 euro 331,994 6% euro 346,323 2% Chellomedia 47,708 47,398
1% 48,514 -2% Other (1) (21,997) (20,292) 8% (20,048) 10% UGC
Europe - Total euro 378,444 euro 359,100 5% euro 374,789 1% VTR
(millions) CP42,103 CP36,168 16% CP42,547 -1% (1) Includes
primarily intercompany eliminations. Operating Cash Flow The table
below highlights Operating Cash Flow ("OCF") by segment: 3 months 3
months Year/Year 3 months Sequential (thousands) Q1 2004 Q1 2003
Change Q4 2003 Change UPC Broadband $186,108 $122,620 52% $163,656
14% Chellomedia 11,532 5,252 120% 9,830 17% VTR 25,030 12,459 101%
22,067 13% Other (1) (18,386) (18,260) 1% (9,539) 93% UGC
Consolidated OCF $204,284 $122,071 67% $186,014 10% OCF Margin (%
of revenues) 37% 28% 33% 36% 4% (1) Includes primarily intercompany
eliminations and other Latin America Broadband. The following is
provided for informational purposes to highlight Operating Cash
Flow in the functional currency of UGC Europe (Euros) and VTR
(Chilean Pesos), as follows: (thousands, except for 3 months 3
months Year/Year 3 months Sequential VTR) Q1 2004 Q1 2003 Change Q4
2003 Change UPC Broadband euro 148,687 euro 114,314 30% euro
137,268 8% Chellomedia 9,212 4,896 88% 8,223 12% Other (1) (11,699)
(12,722) -8% (5,065) 131% UGC Europe - Total OCF euro 146,200 euro
106,488 37% euro 140,426 4% OCF Margin (% of revenues) 38.6% 29.7%
37.5% VTR (in millions) CP14,683 CP9,182 60% CP13,815 6% OCF Margin
(% of revenues) 34.9% 25.4% 32.5% (1) Includes primarily
intercompany eliminations. Use of Operating Cash Flow 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. We previously
referred to this measure as Adjusted EBITDA. As we use the term,
Operating Cash Flow is defined as revenue less operating, selling,
general and administrative expense (excluding depreciation and
amortization, impairment of long-lived assets, restructuring
charges and other and stock-based compensation). We believe
Operating Cash Flow is meaningful because it provides investors a
means to evaluate the operating performance of our segments and our
company on an ongoing basis using criteria that is used by our
internal decision makers. Our internal decision makers believe
Operating Cash Flow is a meaningful measure and is superior to
other available GAAP measures because it represents a transparent
view of our recurring operating performance and allows management
to readily view operating trends, perform analytical comparisons
and benchmarking between segments in the different countries in
which we operate and identify strategies to improve operating
performance. For example, our internal decision makers believe that
the inclusion of impairment and restructuring charges within
Operating Cash Flow distorts their ability to efficiently assess
and view the core operating trends in our segments. In addition,
our internal decision makers believe our measure of Operating Cash
Flow is important because analysts and investors use it to compare
our performance to other companies in our industry. We reconcile
the total of the reportable segments' Operating Cash Flow to our
consolidated net income as presented in the accompanying condensed
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. Operating Cash Flow Reconciliation The table
below highlights the reconciliation of Operating Cash Flow to Net
income (loss): 3 months 3 months 3 months (thousands) Q1 2004 Q1
2003 Q4 2003 Total Segment Operating Cash Flow $204,284 $122,071
$186,014 Depreciation and amortization (217,694) (194,718)
(210,456) Impairment of long-lived assets (512) -- (403,667)
Restructuring charges and other (3,902) -- (28,097) Stock-based
compensation (61,852) (6,111) (9,377) Operating income (loss)
(79,676) (78,758) (465,583) Interest expense, net (68,405) (89,586)
(60,868) Foreign currency exchange gain (loss), net (21,852)
150,960 (16,270) Gain on extinguishment of debt 31,916 74,401 0
Other expense, net (4,304) (2,894) (1,616) Income (loss) before
income taxes and other items (142,321) 54,123 (544,337) Other, net
(7,344) (37,184) 163,643 Net income (loss) ($149,665) $16,939
($380,694) 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: 3 months 3 months
Year/Year 3 months Sequential (thousands) Q1 2004 Q1 2003 Change Q4
2003 Change Net cash flows from operating activities $115,771
$74,427 56% $118,651 -2% Capital expenditures (80,210) (57,598) 39%
(105,426) -24% Free cash flow $35,561 $16,829 111% $13,225 169%
Capital Expenditures Update The table below highlights our capital
expenditures per NCTA cable industry guidelines: 3 months 3 months
Year/Year 3 months Sequential (thousands) Q1 2004 Q1 2003 Change Q4
2003 Change Customer Premises Equipment $28,182 $20,349 38% $21,112
33% Commercial -- -- -- -- -- Scaleable Infrastructure 11,989
10,329 16% 18,634 -36% Line Extensions 11,797 10,578 12% 15,638
-25% Upgrade/Rebuild 5,386 3,122 73% 12,923 -58% Support Capital
17,221 12,578 37% 20,137 -14% Intangibles & Other 5,635 641
779% 16,982 -67% Total Capital Expenditures $80,210 $57,597 39%
$105,426 -24% Consolidated Operating Statistics The table below
shows operating statistics for UGC on a consolidated basis: As of
As of Year/Year As of Sequential Mar-04 Mar-03 Change Dec-03 Change
Homes Passed 12,750,500 12,519,900 230,600 12,693,500 57,000
Two-Way Homes Passed 7,639,400 6,992,000 647,400 7,536,000 103,400
Customer Relationships 7,633,900 n.a. n.a. 7,633,200 n.a. RGUs by
product: Internet 984,300 790,700 193,600 923,700 60,600 Telephone
742,000 695,600 46,400 733,000 9,000 DTH 204,500 157,500 47,000
197,300 7,200 Digital 168,100 137,000 31,100 145,700 22,400 Analog
Cable 7,148,200 7,106,500 41,700 7,155,100 (6,900) Total RGUs
9,247,100 8,887,300 359,800 9,154,800 92,300 RGUs by company: UGC
Europe 8,300,900 8,068,500 232,400 8,229,600 71,300 VTR 914,600
787,200 127,400 894,000 20,600 Other 31,600 31,600 -- 31,200 400
Total RGUs 9,247,100 8,887,300 359,800 9,154,800 92,300 The table
below highlights UGC's average revenue per RGU and Customer
Relationship per month ("ARPU"): 3 months 3 months Year/Year 3
months Sequential Q1 2004 Q1 2003 Change Q4 2003 Change ARPU per
RGU (1) UGC Consolidated $18.66 $15.31 22% $17.69 5% UGC Europe:
Western Europe euro 16.84 euro 16.26 4% euro 16.85 0% Eastern
Europe euro 9.59 euro 9.21 4% euro 9.27 3% Total euro 14.23 euro
13.74 4% euro 14.13 1% VTR GlobalCom (Pesos) CP15,520 CP15,505 0%
CP16,174 -4% VTR GlobalCom (US$'s) $26.42 $21.04 26% $25.91 2% ARPU
per Customer Relationship (2) UGC Consolidated $22.50 n.a. n.a.
n.a. n.a. UGC Europe: Western Europe euro 21.46 n.a. n.a. n.a. n.a.
Eastern Europe euro 10.00 n.a. n.a. n.a. n.a. Total euro 16.78 n.a.
n.a. n.a. n.a. VTR GlobalCom (Pesos) CP23,499 n.a. n.a. n.a. n.a.
VTR GlobalCom (US$'s) $39.92 n.a. n.a. n.a. n.a. (1) ARPU per RGU
calculations are 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. (2) ARPU per Customer
Relationship calculations are 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. New Basis of Accounting Effective January 1, 2004 On
January 5, 2004, Liberty Media Corporation (together with its
subsidiaries "Liberty") acquired approximately 8.2 million shares
of Class B common stock from our founding stockholders in exchange
for securities of Liberty and cash (the "Founders Transaction").
Upon completion of this transaction, the restriction on Liberty's
right to exercise its voting power over us was terminated. Liberty
now has the ability to elect our entire board of directors and
otherwise to control us. Liberty acquired its cumulative interest
in us over a period of several years in separate transactions.
Liberty's largest acquisition of us occurred in January 2002
whereby its economic and voting interests increased from
approximately 11% and 37%, respectively, to approximately 73% and
94%, respectively. Because of certain voting and standstill
agreements entered into between Liberty and our founding
stockholders in connection with this January 2002 transaction,
Liberty was unable to control us and therefore accounted for its
investment in us under the equity method of accounting. Upon
completion of the Founders Transaction, our financial statements
changed to reflect the push down of Liberty'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."
UnitedGlobalCom, Inc. Condensed Consolidated Balance Sheets (In
thousands, except par value and number of shares) (Unaudited) UGC
UGC Post-Founders Pre-Founders Transaction Transaction March 31,
December 31, 2004 2003 Assets Current assets Cash and cash
equivalents $1,275,785 $310,361 Restricted cash 18,169 25,052
Short-term liquid investments 19,621 2,134 Trade and other
receivables, net 204,733 203,502 Related party receivables 1,379
1,730 Other current assets, net 89,797 79,542 Total current assets
1,609,484 622,321 Long-term assets Property, plant and equipment,
net 3,143,864 3,342,743 Goodwill 1,917,855 2,519,831 Intangible
assets, net 413,808 252,236 Other assets, net 411,205 362,540 Total
assets $7,496,216 $7,099,671 Liabilities and Stockholders' Equity
Current liabilities Not subject to compromise: Accounts payable
$219,342 $224,092 Accounts payable, related party 209 1,448 Accrued
liabilities 319,959 405,546 Subscriber prepayments and deposits
201,916 141,108 Notes payable, related party -- 102,728 Current
portion of long-term debt 258,105 310,804 Other current liabilities
15,193 82,149 Total current liabilities not subject to compromise
1,014,724 1,267,875 Subject to compromise: Current portion of
long-term debt 24,627 317,372 Other liabilities 4,691 19,544 Total
current liabilities subject to compromise 29,318 336,916 Long-term
liabilities Long-term debt 3,595,264 3,615,902 Deferred taxes
139,199 124,232 Other long-term liabilities 315,138 259,493 Total
long-term liabilities 4,049,601 3,999,627 Minority interests in
subsidiaries 22,124 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, 400,354,385 and 287,350,970 shares
issued, respectively 4,004 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, 385,828,203 and 303,123,542
shares issued and outstanding, respectively 3,858 3,031 Additional
paid-in capital 2,621,288 5,852,896 Treasury stock, at cost
(70,495) (70,495) Accumulated deficit (149,665) (3,372,737)
Accumulated other comprehensive income (loss) (28,653) (943,165)
Total stockholders' equity 2,380,449 1,472,492 Total liabilities
and stockholders' equity $7,496,216 $7,099,671 UnitedGlobalCom,
Inc. Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss) (In thousands, except per share data)
(Unaudited) UGC UGC Post-Founders Pre-Founders Transaction
Transaction Three Months Three Months Ended Ended March 31, March
31, 2004 2003 Statements of Operations Revenue $547,342 $436,042
Operating expense (209,173) (190,269) Selling, general and
administrative expense (133,885) (123,702) Depreciation and
amortization (217,694) (194,718) Impairment of long-lived assets
(512) -- Restructuring charges and other (3,902) -- Stock-based
compensation (61,852) (6,111) Operating income (loss) (79,676)
(78,758) Interest income 3,328 5,403 Interest expense (71,733)
(94,989) Foreign currency exchange (loss) gain, net (21,852)
150,960 Gain on extinguishment of debt 31,916 74,401 Other expense,
net (4,304) (2,894) Income (loss) before income taxes and other
items (142,321) 54,123 Reorganization expense, net (6,894) (8,196)
Income tax benefit (expense), net 1,293 (26,752) Minority interests
in subsidiaries, net 470 463 Share in results of affiliates, net
(2,213) (2,699) Net income (loss) $(149,665) $16,939 Earnings per
share: Basic and diluted net income (loss) per share $(0.21) $1.37
Statements of Comprehensive Income Net income (loss) $(149,665)
$16,939 Other comprehensive income, net of tax: Foreign currency
translation adjustments (48,091) (222,970) Change in fair value of
derivative assets 6,558 Change in unrealized gain on
available-for-sale securities 19,438 33 Comprehensive income (loss)
$(178,318) $(199,440) UnitedGlobalCom, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands) (Unaudited) UGC UGC
Post-Founders Pre-Founders Transaction Transaction Three Months
Three Months Ended Ended March 31, March 31, 2004 2003 Cash Flows
from Operating Activities Net income (loss) $(149,665) $16,939
Adjustments to reconcile net income (loss) to net cash flows from
operating activities: Stock-based compensation 61,852 6,111
Depreciation and amortization 217,694 194,718 Impairment of
long-lived assets, restructuring charges and other 4,414 --
Accretion of interest on senior notes and amortization of deferred
financing costs 3,186 17,985 Unrealized foreign exchange (gains)
losses, net 13,100 (145,402) Loss on derivative securities 4,025
4,701 Gain on extinguishment of debt (31,916) (74,401)
Reorganization expenses, net 6,894 8,196 Deferred tax provision
(5,247) 26,752 Minority interests in subsidiaries, net (470) (463)
Share in results of affiliates, net 2,213 2,699 Change in assets
and liabilities: Change in receivables and other assets (17,679)
(7,499) Change in accounts payable, accrued liabilities and other
7,370 24,091 Net cash flows from operating activities 115,771
74,427 Cash Flows from Investing Activities Purchase of short-term
liquid investments (17,487) (957) Proceeds from sale of short-term
liquid investments -- 44,555 Restricted cash (deposited) released,
net 6,105 (130,169) Capital expenditures (80,210) (57,598) Purchase
of interest rate caps (14,198) (9,750) Dividends received and other
4,775 736 Net cash flows from investing activities (101,015)
(153,183) Cash Flows from Financing Activities Issuance of common
stock 1,076,264 -- Proceeds from short-term and long-term
borrowings 18,773 1,481 Repayments of short-term and long-term
borrowings (113,557) (10,354) Financing costs (21,071) -- Net cash
flows from financing activities 960,409 (8,873) Effect of Exchange
Rates on Cash (9,741) 4,817 Decrease in Cash and Cash Equivalents
965,424 (82,812) Cash and Cash Equivalents, Beginning of Period
310,361 410,185 Cash and Cash Equivalents, End of Period $1,275,785
$327,373 Supplemental Cash Flow Disclosures: Cash paid for
reorganization expenses $6,894 $3,076 Cash paid for interest
$106,809 $71,895 Cash paid for income taxes $1,756 $327 Non-cash
Investing and Financing Activities: Issuance of common stock for
financial assets, settlement of liabilities and other $36,574
$612,836 Summary of Operating Data as of March 31, 2004 Homes in
Two-way Customer Service Homes Homes Relation- Total Area(1)
Passed(2) Passed(3) ships(4)(13) RGUs(5) Europe: The Netherlands
2,634,600 2,606,100 2,405,500 2,311,200 2,866,700 Austria 1,081,400
925,300 922,000 566,800 896,300 France 2,656,600 1,393,100 701,400
500,100 576,500 Norway 529,000 485,100 226,700 339,000 436,200
Sweden 770,000 421,600 272,300 282,600 379,800 Belgium 530,000
154,600 154,600 145,000 160,300 Total Western Europe 8,201,600
5,985,800 4,682,500 4,144,700 5,315,800 Poland 1,876,000 1,876,000
407,200 989,500 1,021,100 Hungary 1,170,400 991,200 613,500 856,100
930,400 Czech Republic 913,000 722,800 289,600 382,600 400,700
Romania 659,600 458,400 2,600 337,700 337,700 Slovak Republic
517,800 400,900 86,300 292,700 295,200 Total Central and Eastern
Europe 5,136,800 4,449,300 1,399,200 2,858,600 2,985,100 Total
Europe 13,338,400 10,435,100 6,081,700 7,003,300 8,300,900 Latin
America: Chile 2,350,000 1,757,300 1,036,100 600,900 914,600 Brazil
746,300 491,300 491,300 15,800 16,400 Peru 202,800 66,800 30,300
13,900 15,200 Total Latin America 3,299,100 2,315,400 1,557,700
630,600 946,200 Grand Total 16,637,500 12,750,500 7,639,400
7,633,900 9,247,100 Video Internet Analog Digital Cable DTH Cable
Homes Subscri- Subscri- Subscri- Service- Subscri- bers(6) bers(7)
bers(8) able(9) bers(10) Europe The Netherlands 2,307,600 -- 53,500
2,405,500 345,500 Austria 496,500 -- 26,600 922,000 218,900 France
467,500 -- 22,200 701,400 28,000 Norway 339,000 -- 33,100 226,700
40,400 Sweden 282,600 -- 26,300 272,300 70,900 Belgium 132,400 --
-- 154,600 27,900 Total Western Europe 4,025,600 -- 161,700
4,682,500 731,600 Poland 987,400 -- -- 407,200 33,700 Hungary
710,100 108,900 -- 583,100 46,700 Czech Republic 296,200 77,800 --
289,600 26,700 Romania 337,700 -- -- -- -- Slovak Republic 279,400
12,600 -- 82,000 3,200 Total Central and Eastern Europe 2,610,800
199,300 -- 1,361,900 110,300 Total Europe 6,636,400 199,300 161,700
6,044,400 841,900 Latin America: Chile 490,200 5,200 -- 1,036,100
138,800 Brazil 9,200 -- 6,400 491,300 800 Peru 12,400 -- -- 30,300
2,800 Total Latin America 511,800 5,200 6,400 1,557,700 142,400
Grand Total 7,148,200 204,500 168,100 7,602,100 984,300 Telephone
Homes Serviceable(11) Subscribers(12) Europe The Netherlands
1,607,800 160,100 Austria 901,500 154,300 France 701,400 58,800
Norway 143,600 23,700 Sweden -- -- Belgium -- -- Total Western
Europe 3,354,300 396,900 Poland -- -- Hungary 87,200 64,700 Czech
Republic -- -- Romania -- -- Slovak Republic -- -- Total Central
and Eastern Europe 87,200 64,700 Total Europe 3,441,500 461,600
Latin America: Chile 1,026,200 280,400 Brazil -- -- Peru -- --
Total Latin America 1,026,200 280,400 Grand Total 4,467,700 742,000
(1) "Homes in Service Area" are homes in our franchise areas that
can potentially be served, based on census data and other market
information. (2) "Homes Passed" are homes that can be connected to
our broadband network without further extending the distribution
plant. (3) "Two-way Homes Passed" are homes passed by our network
where customers can request and receive the installation of a
two-way addressable set-top computer, cable modem, transceiver
and/or voice port which, in most cases, allows for the provision of
video, telephone and Internet services. (4) "Customer
Relationships" are the number of customers who receive at least one
level of service (video/telephone/Internet) without regard to which
service(s) they subscribe. (5) "Revenue Generating Unit" is
separately an Analog Cable Subscriber, DTH Subscriber, Digital
Cable Subscriber, Internet Subscriber or Telephone 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, telephone service and high-speed
Internet access service, the customer would constitute four RGUs.
"Total RGUs" is the sum of Analog, DTH, Digital Cable, Internet and
Telephone Subscribers. (6) "Analog Cable Subscriber" is comprised
of basic analog customers and lifeline customers that are counted
on a per connection basis. 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.
Non-paying subscribers are counted as subscribers during their free
promotional or service period. Some of these customers may choose
to disconnect after their free service period. (7) "DTH Subscriber"
is a home or commercial unit that receives our video programming
broadcast directly to the home via geosynchronous satellites. (8)
"Digital Cable Subscriber" is a home or commercial unit connected
to our distribution network with one or more digital converter
boxes that receives our digital video service. A Digital Cable
Subscriber is also counted as an Analog Cable Subscriber. (9)
"Internet Homes Serviceable" are homes that can be connected to our
broadband network 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
network, where a customer has requested and is receiving high-speed
Internet access services. (11) "Telephone Homes Serviceable" are
homes that can be connected to our broadband network (or twisted
pair network in Hungary), where customers can request and receive
voice services. (12) "Telephone Subscriber" is a home or commercial
unit connected to our broadband network (or twisted pair network in
Hungary), where a customer has requested and is receiving voice
services. (13) As of December 31, 2003, certain analog cable
customers in The Netherlands that also received our Internet
services were counted as two separate customer relationships, due
to the nature of our billing arrangement (cable through the local
utility company and Internet directly by UGC Europe). As of March
31, 2004, we count customers in this situation as one customer
relationship. Had this methodology been applied to the December 31,
2003 data, the previously reported 2,403,000 customer relationships
in The Netherlands would have been 2,316,900. DATASOURCE:
UnitedGlobalCom, Inc. CONTACT: Richard S.L. Abbott, Investor
Relations - Denver, +1-303-220-6682, , or Bert Holtkamp, Corporate
Communications - Europe, + 31 (0) 20 778 9447, , both of
UnitedGlobalCom, Inc.
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