Liberty Media International, Inc. Supplemental Financial
Information & 2004 Guidance ENGLEWOOD, Colo., Aug. 16
/PRNewswire-FirstCall/ -- Important Notice: Liberty Media
International, Inc. (LMI) (Nasdaq: LBTYA; LBTYB) Chairman,
President and CEO, John Malone, will discuss LMI's second quarter
results in a conference call which will begin at 11:30 a.m. (ET)
August 16, 2004. The call can be accessed by dialing (719) 457-2638
at least 10 minutes prior to the start time. Replays of the
conference call can be accessed from 2:30 p.m. (ET) on August 16,
2004 through 12:00 a.m. (ET) August 23, 2004, by dialing (719)
457-0280 plus the pass code 303197#. The call will also be
broadcast live across the internet. To access the web cast go to
http://www.libertymediainternational.com/ir/default.htm. Links to
this press release will also be available on the LMI web site. On
August 16, 2004, Liberty Media International, Inc. (Nasdaq: LBTYA;
LBTYB) (LMI) filed its Form 10-Q with the Securities and Exchange
Commission for the quarter ended June 30, 2004. This press release
is being provided to supplement the information provided to
investors in LMI's Form 10-Q as filed with the SEC. The information
in this release is not meant to serve as a release of financial
results for LMI. For information regarding LMI's financial results,
investors should refer to LMI's financial statements included in
its Form 10-Q. LMI owns interests in broadband distribution and
content companies operating outside the U.S., principally in
Europe, Asia, and Latin America. Through our subsidiaries and
affiliates, we are the largest cable television operator outside
the United States in terms of video subscribers. Our businesses
include UnitedGlobalCom, Inc. (UGC), Jupiter Telecommunications
Co., Ltd. (J-COM), Jupiter Programming Co., Ltd. (JPC), Liberty
Cablevision of Puerto Rico, Inc. and Pramer S.C.A. Following is
summary financial information and a discussion of the results of
our largest subsidiary and our two largest equity affiliates. To
enable investors to better understand the results of these
companies, this information presents 100% of the revenue and
operating cash flow for UGC, J-COM and JPC even though we own less
than 100% of these businesses. Unless otherwise noted, the
following discussion compares financial information for the three
months ended June 30, 2004 to the same period in 2003. Please see
page 9 of this press release for how we define of operating cash
flow and a discussion of management's use of this performance
measure as well as a reconciliation of operating cash flow to
operating income calculated in accordance with GAAP for the
quarters ended June 30, 2004 and 2003 for the aforementioned
businesses. The selected financial information presented for J-COM
and JPC was obtained directly from those equity affiliates. LMI
does not control the decision-making processes or business
management practices of its equity affiliates. Accordingly, LMI
relies on the management of these affiliates and their independent
auditors to provide accurate financial information prepared in
accordance with generally accepted accounting principles that LMI
uses in the application of the equity method. As a result, LMI
makes no representations as to whether such information presented
on a stand-alone basis has been prepared in accordance with GAAP.
LMI is not aware, however, of any errors in or possible
misstatements of the financial information provided to it by its
equity affiliates that would have a material effect on LMI's
consolidated financial statements. Further, LMI could not, among
other things, cause any noncontrolled affiliate to distribute to
LMI its proportionate share of the revenue or operating cash flow
of such affiliate. OPERATING RESULTS UnitedGlobalCom, Inc. (UGC)
(53% / 90%) LMI owned 53% of UGC at June 30, 2004 and controlled
90% of the vote. UGC is a leading international broadband
communications provider of video, voice, and Internet services with
operations in 14 countries, principally operating in Europe. As a
separate publicly traded company (Nasdaq: UCOMA; UCOMB), UGC
reported its second quarter results on August 9, 2004. UGC Summary
Financial Information (in US$) (in primary functional currency)
2Q04 2Q03 2Q04 2Q03 (amounts in millions) Revenue UPC Broadband
$444 377 euro 368 331 VTR 70 54 CP 43,884 38,331 Chellomedia &
Other 31 34 Total Revenue $545 465 Operating Cash Flow UPC
Broadband $184 137 euro 152 120 VTR 24 16 CP 15,085 11,694
Chellomedia & Other (13) (4) Total Operating Cash Flow $195 149
Operating Loss $(31) (77) Outstanding Debt $4,106 7,019 Operating
Statistics (1) (figures in thousands) Homes Passed 12,324 12,124
Total Video Subscribers 7,551 7,391 Internet Subscribers 1,032 825
Telephone Subscribers 757 704 Total RGUs 9,340 8,920 Homes
Receiving Service 7,633 N/A (1) See definitions in Supplemental
Operating Information section on page 8. Revenue for the three
months ended June 30, 2004 was up 17% compared to the prior year.
Excluding the impact of exchange rates, organic year-over- year
revenue growth was approximately 11%. The increase was driven by
higher average monthly revenue per unit (ARPU) and RGU growth.
Operating cash flow for the second quarter was $195 million, an
increase of 31% compared to the prior year. Excluding the impact of
exchange rates, organic operating cash flow growth was
approximately 23% for the period. UGC continues to benefit from
organizational, operating, and network efficiencies, as the
operating cash flow margin improved 380 basis points to 35.8% for
the three months ended June 30, 2004. Capital expenditures
increased to $96 million for the quarter compared to $75 million in
the same prior year period. The primary reason for the increase was
higher spending on customer premise equipment due to the
significant increase in RGU growth. UGC expects full year capital
expenditures to approximate 20% of sales. As of June 30, 2004,
total RGUs were 9.3 million, an increase of 5% compared to June 30,
2003. For the three months ended June 30, 2004, UGC added 102,400
net new RGUs compared to 41,200 during the same period last year.
Jupiter Telecommunications Co., Ltd. (J-COM) (45.3%) LMI owned 45%
of J-COM at June 30, 2004. J-COM is Japan's largest multiple system
operator (MSO) based on the number of customers served. J-COM and
its subsidiaries provide cable television, Internet access and
telephony services in Japan. J-COM Summary Financial Information
(in US$) (in yen) 2Q04 2Q03 2Q04 2Q03 (amounts in millions) Revenue
$367 294 yen 39,726 34,958 Operating Expenses 221 194 23,890 23,088
Operating Cash Flow $146 100 yen 15,836 11,870 Operating Income $57
28 yen 6,205 3,287 Third-Party Debt $963 935 yen 104,816 111,935
Shareholder Debt 1,421 1,251 154,601 149,784 Outstanding Debt
$2,384 2,186 yen 259,417 261,719 Consolidated Operating Statistics
(1) (figures in thousands) Total Video Subscribers 1,442 1,351
Internet Subscribers 652 530 Telephone Subscribers 622 429 Total
RGUs 2,716 2,310 Managed Operating Statistics (1), (2) Homes Passed
(3) 6,704 5,892 Total Video Subscribers 1,551 1,454 Internet
Subscribers 692 561 Telephone Subscribers 659 446 Total RGUs 2,902
2,461 Homes Receiving Service 1,808 1,654 (1) See definitions in
Supplemental Operating Information section on page 8. (2) In
addition to consolidated systems, includes systems managed by J-COM
that are owned by entities that are not consolidated with J-COM for
financial reporting purposes. Excludes operating information from
Chofu Cable, Inc. J-COM manages Chofu's systems, but has no
ownership interest in Chofu. (3) As a result of a mapping audit in
June 2004, J-COM increased its June 30, 2004 cable homes passed by
approximately 700,000. Revenue increased 25% in the second quarter
of 2004 compared to the corresponding quarter of 2003 due to
increased distribution in all three services and substantial growth
in HSD and telephony revenue. Excluding the effect of exchange
rates, revenue increased 14%. Operating cash flow increased 46%
compared to the second quarter of last year due to the revenue
increases combined with margin improvements associated with
increased scale. Operating cash flow margins increased to 40% from
34%. Excluding the effect of exchange rates, operating cash flow
increased 33%. For managed systems, video subscribers increased 7%,
Internet subscribers increased 23% and telephone subscribers
increased 48%. Average monthly revenue per household receiving at
least one service increased 4% to $65 (yen 6,974). J-COM's managed
systems served approximately 1.8 million homes at June 30, 2004, an
increase of 9% from June 2003, and services per household (total
revenue generating units divided by total households served) rose
from 1.49 to 1.60. Penetration of homes taking at least one service
was 27% at June 30, 2004. Excluding the cable homes added in June
2004 as a result of the mapping audit, penetration of homes taking
at least one service increased by 200 basis points. Approximately
44% of J-COM's customers subscribed to more than one service at
June 30, 2004, which translated into approximately 799,000 homes
with multiple services. The triple play service option (taking all
three services available) has steadily increased to 16% of J-COM's
managed homes at June 30, 2004 compared to 11% at June 30, 2003.
Nearly 100% of J-COM's network operates at 750 MHz capacity. At
June 30, 2004, J-COM's weighted average ownership of its managed
RGUs was 79.3% compared to 78.4% at the same time last year.
Jupiter Programming Co., Ltd. (JPC) (50.0%) LMI owned 50% of JPC at
June 30, 2004. JPC is the largest multi-channel pay television
programming and content provider in Japan based upon the number of
subscribers receiving the channels. JPC currently owns or has
investments in 15 channels. JPC Summary Financial Information (in
US$) (in yen) 2Q04 2Q03 2Q04 2Q03 (amount in millions) Revenue $138
100 yen 14,944 11,862 Operating Expenses 114 87 12,369 10,341
Operating Cash Flow $24 13 yen 2,575 1,521 Operating Income $21 10
yen 2,267 1,225 Outstanding Debt (1) $51 56 yen 5,572 6,668
Cumulative Subscribers (2) (in thousands) 43,385 37,230 (1)
Includes shareholder debt of $11 million and $17 million at June
30, 2004 and 2003, respectively. (2) Includes subscribers at all
consolidated and equity owned JPC channels. Shop Channel
subscribers are stated on a full-time equivalent basis. JPC's
revenue increased 38% in the second quarter of 2004 compared to the
same quarter last year largely due to the increase in retail sales
at Shop Channel and in subscription and advertising revenues at the
other channels. Excluding the effect of exchange rates, revenue
increased by 26%. Shop Channel, which is 70% owned by JPC, was the
largest contributor generating approximately 87% of the increase
during the quarter versus the corresponding period in 2003. This
increase was driven by an 11% increase in full-time equivalent
("FTE") homes and an increase of 14% in sales per FTE. Other than
Shop Channel, subscribers grew by 9% at Movie Plus (formerly
branded CSN), 9% at Golf Network, 9% at J-Sky Sports, 12% at
Discovery and 16% at Animal Planet. JPC's operating cash flow
increased 85% for the quarter ended June 30, 2004 compared to the
same quarter last year due to the revenue increase, partially
offset by increased cost of goods sold, fulfillment, telemarketing,
programming, marketing and general and administrative expenses.
Excluding the effect of exchange rates, operating cash flow
increased 69%. Free Cash Flow For the six months ended June 30,
2004 UGC J-COM JPC (amounts in millions) Net cash provided by
operations $298 226 15 Capital expenditures (1) (176) (184) (18)
Free cash flow $122 42 (3) (1) Capital expenditures for J-COM and
JPC include equipment purchased under capital leases. 2004 OUTLOOK
UGC - 2004 Guidance Increased Revenue estimates exclude the impact
of foreign exchange rates and assume continued organic
year-over-year growth and positive contribution from recent analog
video rate increases in The Netherlands. Operating cash flow
estimates assume continued organic year-over-year growth and
foreign currency exchange rates of US$1.20 / euro 1 and 650CP /
US$1. For the full year 2004 versus 2003, UGC expects revenue to
increase by 10% and operating cash flow to increase at least 20%.
Including the consolidation of Noos beginning July 1, 2004, UGC
expects to report full year operating cash flow of at least $850
million. J-COM -- 2004 Guidance Increased The following estimates
assume continued subscriber growth, foreign currency exchange rates
remain constant for the remainder of the year and continued cost
control efforts, including programming costs. For full year 2004
versus 2003, J-COM expects revenue to increase by mid- teens % and
operating cash flow to increase by mid-20s%. JPC - 2004 Guidance
Unchanged The following estimates assume continued subscriber
growth across all programming services, foreign currency exchange
rates remain constant for the remainder of the year, increases in
sales per home at Shop Channel and gross margins that are
consistent with historical margins. For full year 2004 versus 2003,
JPC expects revenue to increase by mid-20s% and operating cash flow
to increase by between 45% and 60%. CORPORATE & OTHER Cash,
Carrying Value of Non Strategic Holdings and Debt June 30, 2004
March 31, 2004 (amounts in millions) Consolidated Cash & Cash
Equivalents $1,397 1,287 News Corp. ADSs (1), (2) $164 159 ABC
Family Preferred (2) $390 413 Telewest plc (3) $253 273 SBS
Broadcasting $184 215 Austar $23 18 Parent Debt $117 -- UGC Debt
4,106 3,878 Other Subsidiary Debt 56 54 Consolidated Debt $4,279
3,932 (1) LMI has entered into an equity collar with respect to
this investment. (2) These investments were contributed to LMI as
part of the June 2004 spin-off from Liberty Media Corporation. (3)
Represents Senior and Senior Discount Notes, which were converted
subsequent to June 30, 2004 into shares of common stock of Telewest
Global, Inc. Included in consolidated cash is $1,369 million and
$1,276 million of cash at UGC at June 30, 2004 and March 31, 2004,
respectively. LMI launched a rights offering on July 26, 2004
which, if fully subscribed, would yield gross proceeds of
approximately $733 million, before deducting any offering expenses.
Outstanding Shares At June 30, 2004, there were approximately 146
million outstanding shares (175 million assuming full subscription
of the rights offering) of LBTYA and LBTYB and 14 million shares of
LBTYA and LBTYB reserved for issuance pursuant to stock options.
Other Items On July 1, 2004, UGC completed its previously announced
acquisition of Noos, the largest cable television operator in
France. On July 15, 2004, LMI invested an additional $18 million in
Mediatti Communications, Inc. As a result of this transaction,
LMI's ownership interest in Mediatti increased from 24% to 33%. On
July 26, 2004, LMI launched a rights offering which, if fully
subscribed, will yield gross proceeds of approximately $733
million. On August 6, 2004, the shareholders of J-COM converted
$276 million (yen 30,000 million) of shareholder debt to equity.
LMI's portion of the converted debt was $129 million (yen 14,065
million). LMI converted a slightly disproportionate share of its
shareholder loans and as a result, LMI's ownership interest in
J-COM increased from 45.3% to 45.5%. Certain statements in this
press release may constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause
the actual results, performance or achievements of the assets of
Liberty Media International, Inc. included herein or industry
results, to differ materially from any future results, performance
or achievements expressed or implied by such forward- looking
statements. Such risks, uncertainties and other factors include,
among others: the risks and factors described in the publicly filed
documents of LMI, including the most recently filed Form 10-Q of
LMI; general economic and business conditions and industry trends
in the countries in which LMI's subsidiaries and affiliates
operate; currency exchange risks; consumer disposable income and
spending levels; spending on foreign advertising; the regulatory
and competitive environment in the broadband communications and
programming industries; continued consolidation of the foreign
broadband distribution industry; uncertainties inherent in proposed
business strategies and development plans; the expanded deployment
of personal video recorders and the impact of television
advertising revenue; rapid technological changes; future financial
performance, including availability, terms and deployment of
capital; the ability of suppliers and vendors to timely deliver
products, equipment, software and services; availability of
qualified personnel; government intervention which opens broadband
communications networks to competitors; adverse outcomes in pending
litigation or from regulatory proceedings; changes in the nature of
key strategic relationships with partners and joint ventures;
competitor responses to products and services, and the overall
market acceptance of such products and services, including
acceptance of the pricing of such products and services; and
threatened terrorist attacks and ongoing military action, including
armed conflict in the Middle East and other parts of the world.
These forward-looking statements speak only as of the date of this
Release. LMI expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in LMI's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
SUPPLEMENTAL OPERATING INFORMATION As a supplement to LMI's
consolidated statements of operations, the following is a
presentation of quarterly operating metrics on a stand-alone basis
for LMI's two largest broadband distribution businesses (UCG and
J-COM). 2Q04 1Q04 4Q03 3Q03 2Q03 UGC (53% / 90%) (amounts in
thousands, except per unit information) Homes Passed 12,324 12,289
12,260 12,167 12,124 Basic Cable Subscribers 7,135 7,139 7,146
7,106 7,093 Digital Cable Subscribers 202 168 146 140 137 DTH
Subscribers 214 205 197 167 161 Total Video Subscribers 7,551 7,512
7,489 7,413 7,391 Internet Homes Serviceable 7,327 7,127 7,045
6,789 6,580 Internet Subscribers 1,032 984 924 868 825 Telephone
Homes Serviceable 4,489 4,468 4,468 4,438 4,408 Telephone
Subscribers 757 742 733 718 704 Revenue Generating Units (RGUs) (1)
9,340 9,238 9,146 8,999 8,920 Homes Receiving Service (2) 7,633
7,625 7,624 N/A N/A Average Monthly Revenue Per RGU $18.49 18.68
17.71 16.49 16.22 J-COM Managed (45.3%) (3) Homes Passed 6,704
5,974 5,959 5,935 5,892 Basic Cable Subscribers 1,464 1,505 1,501
1,458 1,430 Digital Cable Subscribers 87 25 26 25 24 Total Video
Subscribers 1,551 1,530 1,527 1,483 1,454 Internet Homes
Serviceable 6,673 5,960 5,947 5,918 5,851 Internet Subscribers 692
659 633 591 561 Telephone Homes Serviceable 5,965 4,830 4,216 3,963
3,619 Telephone Subscribers 659 610 555 496 446 Revenue Generating
Units (RGUs) (1) 2,902 2,799 2,715 2,570 2,461 Homes Receiving
Service (2) 1,808 1,771 1,755 1,698 1,654 Services Per Household
1.60 1.58 1.55 1.51 1.49 Avg. Monthly Rev. Per Managed Household
(in US$) $65 65 58 58 56 Avg. Monthly Rev. Per Managed Household
(in Yen) yen 6,974 6,908 6,779 6,745 6,684 (1) Revenue Generating
Units represent separately a basic cable subscriber, digital cable
subscriber, DTH subscriber, Internet subscriber, and telephone
subscriber. A home may contain more than one RGU. (2) Homes
Receiving Service represent households subscribing to at least one
service. (3) Includes managed systems owned by entities that are
not consolidated with J-COM for financial reporting purposes.
Excludes operating information from Chofu Cable, Inc. J-COM manages
Chofu's systems, but has no ownership interest in Chofu. NON-GAAP
FINANCIAL MEASURES This press release includes a presentation of
operating cash flow, which is a non-GAAP financial measure, for
UGC, J-COM and JPC. Set forth in the table below is a
reconciliation of that non-GAAP measure to each of the business'
operating income, determined under GAAP. LMI defines operating cash
flow as revenue less operating expenses, and selling, general and
administrative expenses (excluding stock compensation) and certain
other non- cash charges. Operating cash flow, as defined by LMI,
excludes depreciation and amortization, stock compensation and
restructuring and impairment charges that are included in the
measurement of operating income pursuant to GAAP. LMI believes
operating cash flow is an important indicator of the operational
strength and performance of its businesses, including the ability
to service debt and fund capital expenditures. In addition, this
measure allows management to view operating results and perform
analytical comparisons and benchmarking between businesses and
identify strategies to improve performance. Because operating cash
flow is used as a measure of operating performance, LMI views
operating income as the most directly comparable GAAP measure.
Operating cash flow is not meant to replace or supercede operating
income or any other GAAP measure, but rather to supplement the
information to present investors with the same information as LMI's
management considers in assessing the results of operations and
performance of its assets. Please see the schedule below for a
reconciliation of operating cash flow to operating income
calculated in accordance with GAAP for the quarters ended June 30,
2004 and 2003 for UGC, J-COM and JPC. UGC J-COM JPC Three months
ended June 30, 2004 (amounts in millions) Operating Cash Flow $195
146 24 Depreciation and Amortization (214) (89) (3) Stock
Compensation Expense 10 -- -- Other Non Cash Charges (22) -- --
Operating (Loss) Income $(31) 57 21 Three months ended June 30,
2003 Operating Cash Flow $149 100 13 Depreciation and Amortization
(211) (72) (3) Stock Compensation Expense (8) -- -- Other Non Cash
Charges (7) -- -- Operating (Loss) Income $(77) 28 10 DATASOURCE:
Liberty Media International, Inc. CONTACT: Mike Erickson of Liberty
Media International, Inc., +1-877-772-1518 Web site:
http://www.libertymediainternational.com/ir/default.htm
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