UCOMA Unitedglobalcom (MM)

UGC Reports Third Quarter 2004 Results Record Third Quarter Customer Growth DENVER, Nov. 9 /PRNewswire-FirstCall/ -- UnitedGlobalCom, Inc. ("UGC") (1) (NASDAQ:UCOMA), today announces operating and financial results for the third quarter ended September 30, 2004. Highlights for the third quarter compared to the same period in the prior year (unless noted) include: * Revenue growth of 39% to $658 million * Operating Cash Flow (2) growth of 41% to $242 million * Net RGU (3) additions (excluding Noos) of 103,900 * Net loss of $(70) million compared to net income of $1.7 billion * Free Cash Flow (4) of $58 million for Q3 and $181 million year-to-date Mike Fries, President and Chief Executive Officer of UGC said, "We delivered another strong quarterly performance with record customer growth and Operating Cash Flow. During what is typically our seasonally softest quarter and excluding the recent acquisition of Noos, we added 103,900 RGUs, including 64,000 broadband Internet subscribers. Together with the 1.7 million RGUs we acquired with the completion of the Noos transaction on July 1, 2004, our total RGU count exceeds 11.1 million. Given the increase in RGU growth we expect to deliver in the fourth quarter, which is our seasonally strongest period, we are on track to meet our full year guidance target of 500,000 net new RGUs. Driven by continued customer and ARPU growth, as well as prudent cost controls, we also delivered strong financial results. Revenue for the three months ended September 30, 2004 was $658 million, an increase of 39% compared to the prior year, while Operating Cash Flow (OCF) increased 41% to $242 million over the same period. On an organic basis (5) and excluding Noos, for the nine months ended September 30, 2004, our currency adjusted revenue and Operating Cash Flow growth rates were 10% and 28%, respectively. We are on track to achieve our full year revenue growth guidance of 10% and we're significantly ahead of our 20% guidance on OCF. In the third quarter we generated record Operating Cash Flow of $242 million as well as a record OCF margin (excluding Noos) exceeding 39%. We also generated $58 million of Free Cash Flow (FCF) in the quarter despite the semi-annual interest payment we made on our European credit facility in July, bringing our year-to-date FCF to $181 million. We made significant progress on a number of our strategic initiatives during the quarter. We launched commercial VoIP telephony services in both The Netherlands and Hungary and have aggressive expansion plans over the next 6-9 months throughout Europe. By the middle of 2005, we expect that we'll be selling VoIP telephony services across 5.5 million homes in 9 of our 11 European markets. We are implementing significant speed upgrades to our broadband Internet products across Europe and, in The Netherlands, we have initiated a 30Mbps downstream trial in Almere to be followed by a 50Mbps trial in Amsterdam in early 2005. And finally we announced today our first "off-net" deployment of our broadband Internet and VoIP telephony products in The Netherlands using the phone company's DSL network. This "off-net" trial is only the beginning of what we believe will be a rapid and profitable expansion of our business outside of our HFC footprint in our core markets. Lastly, we continue to have strong access to the senior secured debt market. We have been advised by our bookrunners that the new institutional tranche of Euro 400 million (or equivalent) due December 2011 has successfully syndicated and was oversubscribed. Proceeds of this new tranche (Tranche F) will be used to re-finance a portion of the existing (earlier maturing and/or higher interest margin) tranches of the facility. A decision on the final size of the facility has not yet been taken but in any event we expect final documentation to be agreed and executed, and the deal to be funded, in the near term." Third Quarter 2004 and YTD 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 Competitive Local Exchange Carrier (CLEC), Priority Telecom. In Latin America, our primary operation is VTR, our cable television and broadband provider in Chile. Please refer to the end of this press release for additional financial information. Revenue Revenue for the three months ended September 30, 2004 was $658 million, an increase of 39% or $184 million compared to the same period in the prior year. Excluding the impact of foreign exchange rates and the acquisition of Noos, organic year-over-year revenue growth was approximately 10% for the third quarter of 2004 driven by higher average monthly revenue per subscriber (ARPU) and RGU growth. For the nine months ended September 30, 2004, organic revenue growth was approximately 10%, consistent with our guidance target for the full year. Please refer to the tables on pages 9 and 10 for additional information. Total European revenue increased 40% to $579 million for the three months ended September 30, 2004, primarily due to a 41% increase in our core triple play operation, UPC Broadband. Revenue in Western Europe increased 46% to $430 million (including Noos) compared to third quarter 2003, while revenue in Central and Eastern Europe increased 32% to $116 million. Excluding Noos, revenue in Western Europe increased 16% to $341 million. In Chile, revenue at VTR increased 28% to $75 million for the three months ended September 30, 2004. Average monthly revenue (ARPU) per RGU for the three months ended September 30, 2004 was $18.96, an increase of 15% compared to the same period in 2003. Excluding foreign currency movements, the organic increase in ARPU per RGU was approximately 6% year-over-year. ARPU per customer relationship was $23.30 for the three months ended September 30, 2004, a sequential increase from $22.51 in second quarter 2004. Operating Cash Flow Operating Cash Flow (OCF) for the three months ended September 30, 2004 was $242 million, an increase of 41% compared to the same period in the prior year. Excluding the impact of foreign exchange rate fluctuations and the acquisition of Noos, our organic OCF growth was approximately 20% for the period. For the nine months ended September 30, 2004, organic OCF growth was approximately 28%, above our guidance of 20% for the full year. As such, we believe that full year OCF growth will exceed our guidance target. Please refer to the tables on pages 11 and 12 for additional information. Total European OCF increased 38% to $214 million for the three months ended September 30, 2004, primarily due to a 40% increase at UPC Broadband. OCF in Western Europe increased 30% to $167 million (including Noos), while OCF in Central and Eastern Europe increased 51% to $47 million. Excluding Noos, OCF in Western Europe increased 16% to $150 million. In Chile, OCF increased 37% to $26 million for the three months ended September 30, 2004. Our consolidated Operating Cash Flow margin improved to 36.7% for third quarter 2004. Excluding the results of Noos (which include an allocation for corporate overhead), our European OCF margin was 40.0% in the third quarter compared to 37.5% for the same period last year -- an increase of 250 basis points. In Chile, our OCF margin was 34.5% and UGC's overall OCF Margin (excluding Noos) was 39.3% for the three months ended September 30, 2004. Net Income (Loss) Net loss was $70 million or $(0.09) per share for the three months ended September 30, 2004, which compares with net income of $1.7 billion or $3.80 per share for the same period in 2003. Last years' third quarter result included a $2.1 billion gain on the extinguishment of debt associated with the completion of our European restructuring. Free Cash Flow and Capital Expenditures Free Cash Flow (FCF) for the three months ended September 30, 2004 was $58 million, a $54 million improvement compared to $4 million of FCF in the same period last year. The increase was driven by a 77% improvement in cash flow from operating activities, offset by a 23% increase in reported capital expenditures. For the nine months ended September 30, 2004, FCF was $181 million, a 295% increase or $135 million improvement compared to the same period last year. Capital expenditures increased to $117 million (18% of revenues) for the three months ended September 30, 2004, compared to $95 million (20% of revenues) for the 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 third quarter 2004 compared to the same period last year, as well as foreign currency movements. For the nine months ended September 30, 2004, capital expenditures were $293 million (17% of revenues) compared to $228 million (17% of revenues) for the same period last year. Based on our YTD result and expectation regarding our fourth quarter capital spend, we now expect our full year capital expenditures will be below our full year guidance target of 20% of revenues. Balance Sheet, Leverage Position and Liquidity At September 30, 2004, total long-term debt was $4.2 billion and we had cash and cash equivalents (including short-term liquid investments) of $1.1 billion. Net debt to annualized Operating Cash Flow (6) was 3.3x compared to 5.6x for the same period in the prior year. In addition to our cash balances, we had approximately $636 million of availability under Facility A of our European Credit Facility at September 30, 2004. Together with the market value of our interests in publicly traded securities of SBS Broadcasting and Austar United, we had total liquidity exceeding $2.2 billion as of September 30, 2004. Operating Statistics Total RGUs were 11.1 million at September 30, 2004, including 1.7 million RGUs at Noos. Excluding Noos, total RGUs at September 30, 2004 exceeded 9.4 million, a 5.0% increase compared to last year's third quarter. During the third quarter of 2004, we added 103,900 net new RGUs (excluding Noos) a 32% increase compared to the 78,700 net new RGUs we added during third quarter 2003. In Europe we added 74,700 RGUs during the quarter, which represents our strongest third quarter net gain ever, and in Chile we added 29,000 RGUs. The third quarter is typically our seasonally softest quarter for customer growth heading into the fall selling season. In terms of net additions by product, we added a total of 64,000 broadband Internet subscribers during the third quarter, including 49,800 in Europe. Together with the 204,800 broadband Internet subscribers we acquired from Noos, our total broadband Internet subscriber base is now 1.3 million RGUs. Digital video additions were 28,200 in the quarter with solid gains in France and Sweden. Including the acquisition of Noos' 456,300 digital subscribers, we now have a total of 685,800 digital RGUs. Since December 31, 2003, we have added 298,600 net new RGUs (excluding Noos). Based on our YTD results, together with the acceleration of subscriber growth as we enter the fall selling season (typically the strongest time of year for customer additions), we are confirming our full year guidance of 500,000 net new RGUs (excluding Noos). About UnitedGlobalCom UGC is a leading international provider of video, voice, and broadband Internet services with operations in 14 countries, including 11 countries in Europe. Based on the Company's operating statistics at September 30, 2004, UGC's networks reached approximately 15.5 million homes passed and served over 11.1 million RGUs, including approximately 9.1 million video subscribers, 761,000 telephone subscribers and 1.3 million broadband Internet 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 seeking a new term loan facility are also forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include, our ability to successfully integrate the Noos 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, how we choose to act with respect to conditions imposed by the antitrust authorities with respect to the proposed VTR merger, our ability to generate expected revenue and achieve assumed margins including, to the extent annualized figures imply forward-looking projections, continued performance comparable with the period annualized, as well as other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any guidance and other forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please visit http://www.unitedglobal.com/ for further information or contact: Richard Abbott Bert Holtkamp Investor Relations - Denver Corporate Communications - Europe (303) 220-6682 + 31 (0) 20 778 9447 Email: New Basis of Accounting Effective January 1, 2004 On January 5, 2004, Liberty Media Corporation (together with its subsidiaries "LMC") acquired approximately 8.2 million shares of Class B common stock from our founding stockholders in exchange for securities of LMC and cash (the "Founders Transaction"). Upon completion of this transaction, the restriction on LMC's right to exercise its voting power over us was terminated. LMC then had the ability to elect our entire board of directors and otherwise to control us. LMC acquired its cumulative interest in us over a period of several years in separate acquisitions. LMC's largest acquisition of us occurred in January 2002 whereby its economic and voting interest increased from approximately 11% and 37%, respectively, to approximately 73% and 94%, respectively. Because of certain voting and standstill agreements entered into between LMC and our founding stockholders in connection with this January 2002 transaction, LMC was unable to control us and therefore accounted for its investment in us under the equity method of accounting. Upon consummation of the Founders Transaction, our financial statements changed to reflect the push down of LMC's basis and, as a result, we have a new basis of accounting effective January 1, 2004. Accordingly, for periods prior to January 1, 2004 the assets and liabilities of UnitedGlobalCom, Inc. and the related consolidated financial statements are sometimes referred to herein as "UGC Pre-Founders Transaction", and for periods subsequent to January 1, 2004 the assets and liabilities of UnitedGlobalCom, Inc. and the related consolidated financial statements are sometimes referred to herein as "UGC Post-Founders Transaction." (1) Also referred to as the "Company," "we," "us," "our," and similar terms. (2) Please see page 14 for an explanation of Operating Cash Flow and a reconciliation of Operating Cash Flow to Net Income (Loss). Operating Cash Flow is also referred to as "OCF." (3) RGUs or Revenue Generating Units. Please see footnote 5 on page 17 for a definition. (4) Please see page 14 for an explanation of Free Cash Flow and a reconciliation of Free Cash Flow to Net Cash Flows from operating activities. (5) Please refer to the tables on pages 9 to 12 which summarize revenue and OCF growth based on actual results and what the growth would have been had exchange rates remained the same in 2004 as the comparative periods in the prior year; organic growth refers to the latter. (6) Represents net debt / Operating Cash Flow annualized for the three months ended September 30, 2004. UnitedGlobalCom, Inc. Condensed Consolidated Balance Sheets (In thousands, except par value and number of shares) (Unaudited) UGC UGC Post-Founders Pre-Founders Transaction Transaction September 30, December 31, 2004 2003 Assets Current assets Cash and cash equivalents $981,638 $310,361 Restricted cash 23,367 25,052 Short-term liquid investments 111,536 2,134 Trade and other receivables, net 205,143 205,232 Other current assets, net 94,127 79,542 Total current assets 1,415,811 622,321 Long-term assets Property and equipment, net 3,787,933 3,342,743 Goodwill 2,064,973 2,519,831 Intangible assets, net 414,418 252,236 Other assets, net 440,150 362,540 Total assets $8,123,285 $7,099,671 Liabilities and Stockholders' Equity Current liabilities Not subject to compromise: Accounts payable $236,842 $225,540 Accrued liabilities 408,885 405,546 Subscriber advance payments and deposits 292,151 141,108 Notes payable, related party -- 102,728 Current portion of debt 53,034 310,804 Deferred Income Taxes 110,583 -- Other current liabilities 65,123 82,149 Total current liabilities not subject to compromise 1,166,618 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 portion of debt 4,208,810 3,615,902 Deferred income taxes 63,749 124,232 Other long-term liabilities 319,403 259,493 Total long-term liabilities 4,591,962 3,999,627 Commitments and contingencies Minority interests in subsidiaries 101,077 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, 400,423,083 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 2,599,766 5,852,896 Treasury stock, at cost (75,844) (70,495) Accumulated deficit (314,746) (3,372,737) Accumulated other comprehensive income (loss) 17,160 (943,165) Total stockholders' equity 2,234,310 1,472,492 Total liabilities and stockholders' equity $8,123,285 $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 Transaction Pre-Founders Transaction Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2004 2004 2003 2003 Statements of Operations Revenue $658,463 $1,750,877 $474,515 $1,375,666 Operating expense (262,737) (682,518) (186,406) (574,394) Selling, general and administrative expense (154,023) (427,844) (116,743) (358,404) Depreciation and amortization (Operating Expense) (235,186) (667,298) (192,002) (598,207) Impairment of long-lived assets (Operating Expense) 25 (16,598) 441 441 Restructuring charges (Operating Expense) (1,824) (10,749) 18 (6,886) Stock-based compensation (SG&A Expense) (12,178) (63,894) (14,261) (28,647) Operating income (loss) (7,460) (118,024) (34,438) (190,431) Interest income 5,380 16,903 2,698 10,603 Interest expense (58,996) (204,709) (73,945) (263,813) Foreign currency exchange gain (loss), net 21,771 (7,061) (269,598) 175,890 Loss on derivative instruments (16,838) (14,512) (103) (11,497) Gain (loss) on sale of investments in affiliates and other assets, net (1,174) (1,574) (283) 281,321 Gain on extinguishment of debt -- 35,787 2,109,596 2,183,997 Other income (expense), net 302 830 (7,935) (41,658) Income (loss) before income taxes and other items (57,015) (292,360) 1,725,992 2,144,412 Reorganization expense, net (1,410) (7,837) (6,276) (19,996) Income tax expense, net (19,174) (23,708) (13,986) (71,505) Minority interests in subsidiaries, net 2,116 2,616 42,582 43,319 Share in results of affiliates, net 5,273 6,543 (11,203) 279,832 Net income (loss) $(70,210) $(314,746) $1,737,109 $2,376,062 Earnings per share: Basic earnings (loss) per share $(0.09) $(0.41) $3.80 $8.31 Diluted earnings (loss) per share $(0.09) $(0.41) $3.79 $8.31 Statements of Comprehensive Income Net income (loss) $(70,210) $(314,746) $1,737,109 $2,376,062 Other comprehensive income, net of tax: Foreign currency translation adjustments 75,157 14,674 335,024 (37,852) Change in fair value of derivative assets -- -- -- 10,616 Change in unrealized (loss) gain on available- for-sale securities 13,045 2,486 (18,465) (12,408) Comprehensive income (loss) $17,992 $(297,586) $2,053,668 $2,336,418 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 Nine Months Nine Months Ended Ended Sept. 30, 2004 Sept. 30, 2003 Cash Flows from Operating Activities Net income (loss) $(314,746) $2,376,062 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Stock-based compensation 39,973 28,647 Depreciation and amortization 667,298 598,207 Impairment of long-lived assets and restructuring charges 27,347 6,445 Accretion of interest on senior notes and amortization of deferred financing costs 13,561 47,607 Unrealized foreign exchange (gains) losses, net 6,184 (114,016) Gain on sale of investments in affiliates and other assets, net 1,574 (281,321) Loss on derivative instruments 14,512 11,450 Gain on extinguishment of debt (35,787) (2,183,997) Deferred income tax provision 6,467 70,407 Minority interests in subsidiaries, net (2,616) (43,319) Share in results of affiliates, net (6,543) (279,832) Change in assets and liabilities: Change in receivables and other assets (14,830) 69,461 Change in accounts payable, accrued liabilities and other 70,953 (32,360) Net cash flows from operating activities 473,347 273,441 Cash Flows from Investing Activities Acquisition of business, net of cash acquired (625,970) (784) Capital expenditures (292,557) (227,698) Purchase of short-term liquid investments (244,859) (1,489) Proceeds from sale of short-term liquid investments 135,371 45,560 Investments in affiliates and other investments (50) (20,931) Proceeds from sale of investments in affiliated companies 697 44,558 Purchase of interest rate caps (21,442) (9,750) Settlement of interest rate swaps -- (58,038) Dividends received from affiliates 15,565 4,684 Other 1,605 14,559 Net cash flows from investing activities (1,031,640) (209,329) Cash Flows from Financing Activities Issuance of common stock 1,076,284 1,081 Proceeds from issuance of convertible senior notes 604,595 -- Proceeds from short-term and long-term borrowings 212,307 11,269 Repayments of short-term and long-term borrowings (597,481) (187,152) Financing costs (49,640) (2,233) Purchase of treasury shares (5,349) -- Net cash flows from financing activities 1,240,716 (177,035) Effect of Exchange Rates on Cash (11146) 15,515 Increase (Decrease) in Cash and Cash Equivalents 671,277 (97,408) Cash and Cash Equivalents, Beginning of Period 310,361 410,185 Cash and Cash Equivalents, End of Period $981,638 $312,777 Supplemental Cash Flow Disclosures: Cash paid for reorganization expenses $7,837 $25,518 Cash paid for interest $227,640 $170,997 Cash (paid) received for income taxes $(4,327) $3,398 Non-cash Investing and Financing Activities: Issuance of common stock for financial assets, settlement of liabilities and other $36,574 $966,362 Revenue The following tables provide an analysis of our revenue by business segment for the three and nine months ended September 30, 2004 compared to the same periods in the prior year (in thousands, except percentages). The first two columns present our consolidated revenue for each comparative period. The third and fourth columns present the U.S. dollar change and percent change, respectively, from period to period. The fifth and sixth columns present the U.S. dollar change and percent change, respectively, after removing foreign currency translation effects, or "F/X." These columns demonstrate what the revenue change would have been had exchange rates remained the same in 2004 as the comparative period in the prior year. These amounts are based on the Euro for the Netherlands, Austria, France, Belgium, chellomedia, UGCE corporate and other, Norwegian Krone for Norway, Swedish Krona for Sweden, Hungarian Forint for Hungary, Polish Zloty for Poland, Czech Koruna for Czech Republic, Slovak Koruna for Slovak Republic, Romanian Leu for Romania, Chilean Peso for Chile, and U.S. dollars for Brazil, Peru and other UGC Corporate. Revenue for the Three Months Ended September 30, Increase (Decrease) Increase Excluding (Decrease) F/X Effects 2004 2003 $ % $ % Europe (UGC Europe): UPC Broadband The Nether- lands $178,996 $150,838 $28,158 18.7% $14,028 9.3% Austria 72,482 65,085 7,397 11.4% 1,692 2.6% France (other than Noos) 31,905 29,744 2,161 7.3% (357) (1.2%) France (Noos) 88,686 -- 88,686 -- 88,686 -- Norway 27,140 22,912 4,228 18.5% 2,520 11.0% Sweden 21,141 18,710 2,431 13.0% 692 3.7% Belgium 9,195 7,785 1,410 18.1% 685 8.8% Total Western Europe 429,545 295,074 134,471 45.6% 107,946 36.6% Hungary 53,194 40,358 12,836 31.8% 6,699 16.6% Poland 28,464 21,391 7,073 33.1% 4,770 22.3% Czech Republic 19,644 15,422 4,222 27.4% 2,375 15.4% Slovak Republic 7,967 6,164 1,803 29.3% 869 14.1% Romania 6,842 4,543 2,299 50.6% 2,431 53.5% Total Central and Eastern Europe 116,111 87,878 28,233 32.1% 17,144 19.5% Corporate and other 6,668 8,607 (1,939) 22.5% (2,462) (28.6%) Total UPC Broad- band 552,324 391,559 160,765 41.1% 122,628 31.3% Chellomedia Priority Telecom 29,308 29,972 (664) (2.2%) (2,967) (9.9%) Media 32,218 25,508 6,710 26.3% 4,183 16.4% Investments 187 60 127 211.7% 113 188.3% Total chello- media 61,713 55,540 6,173 11.1% 1,329 2.4% Intercompany eliminations (35,286) (33,261) (2,025) (6.1%) 765 2.3% Total Europe 578,751 413,838 164,913 39.8% 124,722 30.1% Latin America: Broadband Chile (VTR) 75,096 58,608 16,488 28.1% 9,436 16.1% Brazil, Peru and other 1,909 2,069 (160) (7.7%) (160) (7.7%) Total Latin America 77,005 60,677 16,328 26.9% 9,276 15.3% Corporate and other 2,707 -- 2,707 -- 2,707 -- Total UGC $658,463 $474,515 $183,948 38.8% $136,705 28.8% Less Noos $(88,686) -- $(88,686) -- Total UGC, excluding Noos $95,262 20.1% $48,019 10.1% Revenue for the Nine Months Ended September 30, Increase (Decrease) Increase Excluding (Decrease) F/X Effects 2004 2003 $ % $ % Europe (UGC Europe): UPC Broadband The Nether- lands $519,948 $430,620 $89,328 20.7% $41,340 9.6% Austria 221,780 189,880 31,900 16.8% 11,393 6.0% France (other than Noos) 94,164 84,435 9,729 11.5% 1,013 1.2% France (Noos) 88,686 -- 88,686 -- 88,686 -- Norway 81,134 69,978 11,156 15.9% 8,397 12.0% Sweden 64,315 54,867 9,448 17.2% 3,402 6.2% Belgium 27,243 23,071 4,172 18.1% 1,661 7.2% Total Western Europe 1,097,270 852,851 244,419 28.7% 155,892 18.3% Hungary 155,666 121,300 34,366 28.3% 21,349 17.6% Poland 76,687 63,200 13,487 21.3% 11,250 17.8% Czech Republic 58,438 45,775 12,663 27.7% 8,331 18.2% Slovak Republic 23,837 18,634 5,203 27.9% 2,217 11.9% Romania 18,775 14,441 4,334 30.0% 4,462 30.9% Total Central and Eastern Europe 333,403 263,350 70,053 26.6% 47,609 18.1% Corporate and other 18,722 23,043 (4,321) (18.8%) (6,037) (26.2%) Total UPC Broad- band 1,449,395 1,139,244 310,151 27.2% 197,464 17.3% Chellomedia Priority Telecom 86,794 89,998 (3,204) (3.6%) (11,250) (12.5%) Media 91,140 72,251 18,889 26.1% 10,549 14.6% Investments 640 331 309 93.4% 248 74.9% Total chello- media 178,574 162,580 15,994 9.8% (453) (0.3%) Intercompany elimin- ations (102,166) (93,627) (8,539) (9.1%) 843 0.9% Total Europe 1,525,803 1,208,197 317,606 26.3% 197,854 16.4% Latin America: Broadband Chile (VTR) 216,537 161,667 54,870 33.9% 25,382 15.7% Brazil, Peru and other 5,830 5,794 36 0.6% 36 0.6% Total Latin America 222,367 167,461 54,906 32.8% 25,418 15.2% Corporate and other 2,707 8 2,699 -- 2,699 -- Total UGC $1,750,877 $1,375,666 $375,211 27.3% $225,971 16.4% Less Noos $(88,686) -- $(88,686) -- Total UGC, excluding Noos $286,525 20.8% $137,285 10.0% Operating Cash Flow The following tables provide an analysis of our Operating Cash Flow by business segment for the three and nine months ended September 30, 2004 compared to the same periods in the prior year (in thousands, except percentages). The first two columns present our consolidated Operating Cash Flow for each comparative period. The third and fourth columns present the U.S. dollar change and percent change, respectively, from period to period. The fifth and sixth columns present the U.S. dollar change and percent change, respectively, after removing foreign currency translation effects. These columns demonstrate what the Operating Cash Flow change would have been had exchange rates remained the same in 2004 as the comparative period in the prior year. These amounts are based on the Euro for the Netherlands, Austria, France, Belgium, chellomedia, UGCE corporate and other, Norwegian Krone for Norway, Swedish Krona for Sweden, Hungarian Forint for Hungary, Polish Zloty for Poland, Czech Koruna for Czech Republic, Slovak Koruna for Slovak Republic, Romanian Leu for Romania, Chilean Peso for Chile, and U.S. dollars for Brazil, Peru and other UGC Corporate. Operating Cash Flow for the Three Months Ended September 30, Increase (Decrease) Increase Excluding (Decrease) F/X Effects 2004 2003 $ % $ % Europe (UGC Europe): UPC Broadband The Nether- lands $93,596 $78,608 $14,988 19.1% $7,546 9.6% Austria 28,221 25,830 2,391 9.3% 232 0.9% France (other than Noos) 4,945 5,651 (706) (12.5%) (1,130) (20.0%) France (Noos) 17,777 -- 17,777 -- 17,777 -- Norway 9,680 7,402 2,278 30.8% 1,665 22.5% Sweden 8,762 8,249 513 6.2% (198) (2.4%) Belgium 4,396 2,811 1,585 56.4% 1,254 44.6% Total Western Europe 167,377 128,551 38,826 30.2% 27,146 21.1% Hungary 20,810 14,574 6,236 42.8% 3,906 26.8% Poland 9,987 5,645 4,342 76.9% 3,534 62.6% Czech Republic 9,969 6,910 3,059 44.3% 2,128 30.8% Slovak Republic 3,507 2,175 1,332 61.2% 948 43.6% Romania 3,051 1,992 1,059 53.2% 1,121 56.3% Total Central and Eastern Europe 47,324 31,296 16,028 51.2% 11,637 37.2% Corporate and other (14,950) (16,756) 1,806 10.8% 2,765 16.5% Total UPC Broad- band 199,751 143,091 56,660 39.6% 41,548 29.0% Chellomedia Priority Telecom 4,011 3,780 231 6.1% (83) (2.2%) Media 10,129 8,264 1,865 22.6% 1,033 12.5% Investments (152) 22 (174) (790.9%) 10 45.5% Total chello- media 13,988 12,066 1,922 15.9% 960 8.0% Total Europe 213,739 155,157 58,582 37.8% 42,508 27.4% Latin America: Broadband Chile (VTR) 25,925 18,929 6,996 37.0% 4,600 24.3% Brazil, Peru and other 41 44 (3) (6.8%) (3) (6.8%) Total Latin America 25,966 18,973 6,993 36.9% 4,597 24.2% Corporate and other 1,998 (2,764) 4,762 172.3% 4,762 172.3% Total UGC $241,703 $171,366 $70,337 41.0% $51,867 30.3% Less Noos $(17,777) -- $(17,777) -- Total UGC, excluding Noos $52,560 30.7% $34,090 19.9% Operating Cash Flow for the Nine Months Ended September 30, Increase (Decrease) Increase Excluding (Decrease) F/X Effects 2004 2003 $ % $ % Europe (UGC Europe): UPC Broadband The Nether- lands $267,097 $188,528 $78,569 41.7% $54,296 28.8% Austria 86,489 73,288 13,201 18.0% 5,350 7.3% France (other than Noos) 10,508 8,709 1,799 20.7% 845 9.7% France (Noos) 17,777 -- 17,777 -- 17,777 -- Norway 27,338 19,345 7,993 41.3% 7,100 36.7% Sweden 25,929 23,091 2,838 12.3% 439 1.9% Belgium 12,475 8,596 3,879 45.1% 2,742 31.9% Total Western Europe 447,613 321,557 126,056 39.2% 88,549 27.5% Hungary 63,189 46,401 16,788 36.2% 11,600 25.0% Poland 27,398 19,032 8,366 44.0% 7,556 39.7% Czech Republic 26,325 18,473 7,852 42.5% 5,930 32.1% Slovak Republic 10,629 8,207 2,422 29.5% 1,116 13.6% Romania 9,204 5,442 3,762 69.1% 3,842 70.6% Total Central and Eastern Europe 136,745 97,555 39,190 40.2% 30,044 30.8% Corporate and other (49,748) (39,607) (10,141) (25.6%) (5,624) (14.2%) Total UPC Broad- band 534,610 379,505 155,105 40.9% 112,969 29.8% Chellomedia Priority Telecom 11,305 10,128 1,177 11.6% 152 1.5% Media 24,412 17,151 7,261 42.3% 5,042 29.4% Investments (233) (738) 505 68.4% 526 71.3% Total chello- media 35,484 26,541 8,943 33.7% 5,720 21.6% Total Europe 570,094 406,046 164,048 40.4% 118,689 29.2% Latin America: Broadband Chile (VTR) 74,942 47,884 27,058 56.5% 16,999 35.5% Brazil, Peru and other 236 (44) 280 100.0% 280 100.0% Total Latin America 75,178 47,840 27,338 57.1% 17,279 36.1% Corporate and other (4,757) (11,018) 6,261 56.8% 6,261 56.8% Total UGC $640,515 $442,868 $197,647 44.6% $142,229 32.1% Less Noos $(17,777) -- $(17,777) -- Total UGC, excluding Noos $179,870 40.6% $124,452 28.1% Supplemental Financial Information: Revenue The table below highlights Revenue by segment: 3 months 3 months Year/Year (thousands) Sep-04 Sep-03 Change UPC Broadband -- W Europe (1) $340,859 $295,074 16% UPC Broadband -- CEE Europe 116,111 87,878 32% Total UPC Broadband 456,970 382,952 19% Chellomedia 61,713 55,540 11% VTR 75,096 58,608 28% Other (1) (24,002) (22,585) 6% Subtotal $569,777 $474,515 20% Add: Noos 88,686 0 n.a. UGC Consolidated $658,463 $474,515 39% 9 months 9 months Year/Year (thousands) Sep-04 Sep-03 Change UPC Broadband -- W Europe (1) $1,008,584 $852,851 18% UPC Broadband -- CEE Europe 333,403 263,350 27% Total UPC Broadband 1,341,987 1,116,201 20% Chellomedia 178,574 162,580 10% VTR 216,537 161,667 34% Other (1) (74,907) (64,782) 16% Subtotal $1,662,191 $1,375,666 21% Add: Noos 88,686 0 n.a. UGC Consolidated $1,750,877 $1,375,666 27% (1) Primarily inter-company eliminations, corporate and other and other Latin America broadband. The following is provided for informational purposes to highlight revenues in the functional currency of VTR (Chilean Pesos) and the primary functional currency of UGC Europe (Euros), as follows: 3 months 3 months Year/Year (thousands, except for VTR) Sep-04 Sep-03 Change UPC Broadband -- W Europe Euro 278,652 Euro 261,850 6% UPC Broadband -- CEE Europe 94,920 77,984 22% Total UPC Broadband 373,572 339,834 10% Chellomedia 50,450 49,286 2% Other (1) (23,394) (21,880) 7% Subtotal 400,628 367,240 9% Add: Noos 72,501 0 n.a. UGC Europe -- Total Euro 473,129 Euro 367,240 29% VTR (millions) CP47,177 CP40,629 16% 9 months 9 months Year/Year (thousands, except for VTR) Sep-04 Sep-03 Change UPC Broadband -- W Europe Euro 822,534 Euro 766,371 7% UPC Broadband -- CEE Europe 271,954 236,705 15% Total UPC Broadband 1,094,488 1,003,076 9% Chellomedia 145,598 146,045 0% Other (1) (68,048) (63,396) 7% Subtotal 1,172,038 1,085,725 8% Add: Noos 72,501 0 n.a. UGC Europe -- Total Euro 1,244,539 Euro 1,085,725 15% VTR (millions) CP133,165 CP115,129 16% (1) Primarily inter-company eliminations. Operating Cash Flow The table below highlights Operating Cash Flow by segment: 3 months 3 months Year/Year (thousands) Sep-04 Sep-03 Change UPC Broadband -- W Europe $149,600 $128,551 16% UPC Broadband -- CEE Europe 47,324 31,296 51% Total UPC Broadband 196,924 159,847 23% Chellomedia 13,988 12,066 16% VTR Broadband 25,925 18,929 37% Other (1) (12,911) (19,476) -34% Subtotal $223,926 $171,366 31% Add: Noos 17,777 0 n.a. UGC Consolidated -- as reported $241,703 $171,366 41% EBITDA Margin (% of revenues) 36.7% 36.1% 2% EBITDA Margin (without Noos) 39.3% 36.1% 9% 9 months 9 months Year/Year (thousands) Sep-04 Sep-03 Change UPC Broadband -- W Europe $429,836 $321,557 34% UPC Broadband -- CEE Europe 136,745 97,555 40% Total UPC Broadband 566,581 419,112 35% Chellomedia 35,484 26,541 34% VTR Broadband 74,942 47,884 57% Other (1) (54,269) (50,669) 7% Subtotal $622,738 $442,868 41% Add: Noos 17,777 0 n.a. UGC Consolidated -- as reported $640,515 $442,868 45% EBITDA Margin (% of revenues) 36.6% 32.2% 14% EBITDA Margin (without Noos) 37.5% 32.2% 16% (1) Primarily inter-company eliminations, corporate and other and other Latin America broadband. The following is provided for informational purposes to highlight Operating Cash Flow in the functional currency of VTR (Chilean Pesos) and the primary functional currency of UGC Europe (Euros), as follows: 3 months 3 months Year/Year (thousands, except for VTR) Sep-04 Sep-03 Change UPC Broadband -- W Europe Euro 122,331 Euro 114,159 7% UPC Broadband -- CEE Europe 38,700 27,678 40% Total UPC Broadband 161,031 141,837 14% Chellomedia 11,432 10,491 9% Other (1) (12,235) (14,646) -16% Subtotal Euro 160,228 Euro 137,682 16% Add: Noos 14,495 0 n.a. UGCE Total Euro 174,723 Euro 137,682 27% -- EBITDA Margin (% of revenues) 36.9% 37.5% -1% EBITDA Margin (without Noos) 40.0% 37.5% 7% VTR (in millions) CP16,299 CP13,110 24% EBITDA Margin (% of revenues) 34.5% 32.3% 7% 9 months 9 months Year/Year (thousands, except for VTR) Sep-04 Sep-03 Change UPC Broadband -- W Europe Euro 350,479 Euro 288,414 22% UPC Broadband -- CEE Europe 111,500 87,500 27% Total UPC Broadband 461,979 375,914 23% Chellomedia 28,933 23,805 22% Other (1) (40,565) (35,523) 14% Subtotal Euro 450,347 Euro 364,196 24% Add: Noos 14,495 0 n.a. UGCE Total Euro 464,842 Euro 364,196 28% -- EBITDA Margin (% of revenues) 37.4% 33.5% 11% EBITDA Margin (without Noos) 38.4% 33.5% 15% VTR (in millions) CP46,067 CP33,986 36% EBITDA Margin (% of revenues) 34.6% 29.5% 17% Operating Cash Flow Definition and Reconciliation Operating Cash Flow is the primary measure used by our chief operating decision makers to evaluate segment-operating performance and to decide how to allocate resources to segments. As we use the term, Operating Cash Flow is defined as revenue less operating, selling, general and administrative expenses (excluding depreciation and amortization, impairment of long-lived assets, restructuring charges and other and stock-based compensation). We believe Operating Cash Flow is meaningful because it provides investors a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that is used by our internal decision makers. Our internal decision makers believe Operating Cash Flow is a meaningful measure and is superior to other available GAAP measures because it represents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and benchmarking between segments in the different countries in which we operate and identify strategies to improve operating performance. For example, our internal decision makers believe that the inclusion of impairment and restructuring charges within Operating Cash Flow distorts 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. We are unable to provide a reconciliation of forecasted Operating Cash Flow to the most directly comparable GAAP measure, net income, because certain items are out of our control and/or cannot be reasonably predicted. For example, it is impractical to: (1) estimate future fluctuations in interest rates on our variable-rate debt facilities; (2) estimate the fluctuations in exchange rates relative to the U.S. dollar and its impact on our results of operations; (3) estimate the financial results of our non-consolidated affiliates; and (4) estimate changes in circumstances that lead to gains and/or losses such as sales of investments in affiliates and other assets. Any and/or all of these items could be significant to our financial results. The table below highlights the reconciliation of Operating Cash Flow to Net income (loss): 3 months 3 months 9 months 9 months (thousands) Sep-04 Sep-03 Sep-04 Sep-03 Total segment Operating Cash Flow $241,703 $171,366 $640,515 $442,868 Depreciation and amortization (235,186) (192,002) (667,298) (598,207) Impairment of long-lived assets 25 441 (16,598) 441 Restructuring charges (1,824) 18 (10,749) (6,886) Stock-based compensation (12,178) (14,261) (63,894) (28,647) Operating income (loss) (7,460) (34,438) (118,024) (190,431) Interest expense, net (53,616) (71,247) (187,806) (253,210) Foreign currency exchange gain (loss), net 21,771 (269,598) (7,061) 175,890 Loss on derivative instruments (16,838) (103) (14,512) (11,497) Gain (loss) on sale of investments in affiliates and other assets, net (1,174) (283) (1,574) 281,321 Gain on extinguishment of debt -- 2,109,596 35,787 2,183,997 Other income (expense), net 302 (7,935) 830 (41,658) Income (loss) before income taxes and other items (57,015) 1,725,992 (292,360) 2,144,412 Other, net (13,195) 11,117 (22,386) 231,650 Net income (loss) ($70,210) $1,737,109 ($314,746) $2,376,062 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: Year/ Year/ 3 months 3 months Year 9 months 9 months Year (thousands) Sep-04 Sep-03 Change Sep-04 Sep-03 Change Net cash flows from operating activities $175,064 $98,701 77% $473,347 $273,441 73% Capital expenditures (116,696) (94,755) 23% (292,557) (227,698) 28% Free cash flow $58,368 $3,946 1379% $180,790 $45,743 295% The following table is provided for informational purposes only to highlight revenue and Operating Cash Flow of UPC Distribution, B.V. (UPCD). UPCD is the borrower of record on our European Credit Facility. UPCD Segment Tables Nine Months Ended September 30, 2004 Revenue Three Months Ended Nine Months Ended September 30, 2004 September 30, 2004 (in thousands of Euros) Triple Play: The Netherlands 146,320 424,005 Austria 59,283 180,889 Belgium 7,517 22,219 Czech Republic 16,059 47,659 Norway 22,180 66,204 Hungary 43,487 126,971 France 26,076 76,785 Noos 72,475 72,475 Poland 23,295 62,604 Sweden 17,277 52,433 Slovak 6,514 19,438 Romania 5,488 15,762 Eliminations / Other 101 (455) Total Triple Play UPC Broadband 446,072 1,166,989 Other 5,452 15,264 Total UPC Broadband 451,524 1,182,253 Other -- -- Total UPCD 451,524 1,182,253 Operating Cash Flow Three Months Ended Nine Months Ended September 30, 2004 September 30 2004 (in thousands of Euros) Triple Play: The Netherlands 76,578 217,830 Austria 22,946 70,384 Belgium 3,595 10,172 Czech Republic 8,149 21,465 Norway 7,948 22,324 Hungary 17,020 51,522 France 4,071 8,600 Noos 14,621 14,621 Poland 8,041 22,216 Sweden 7,193 21,169 Slovak 2,869 8,667 Romania 2,401 7,318 Eliminations / Other 94 186 Total Triple Play UPC Broadband 175,526 476,474 Corporate (19,746) (54,861) Other 7,510 14,296 Total UPC Broadband 163,290 435,909 Corporate and Other 6,539 19,980 Total UPCD 169,829 455,889 The revenue and Operating Cash Flow of UPCD for the nine months period ended September 30, 2004 include nine months of UPC Poland and three months of Noos. UPC Poland and Noos were transferred into UPCD in July 2004. The Operating Cash Flow of UPCD for the nine and three months ended September 30, 2004 excludes corporate costs, which primarily relates to costs on a programming agreement. The above selected historic financial data of UPCD (the "Unaudited Data") contained herein are unaudited, were not reviewed by the Company's certified public accountants and are subject to possible adjustments. The Unaudited Data represent management accounts prepared by the management of the Company. While presented with numerical specificity, the Unaudited Data were not prepared with a view to public disclosure. As such, the Unaudited Data should not be relied on, although management believes that the Unaudited Data is accurate. Consolidated Operating Statistics The table below shows operating statistics for UGC on a consolidated basis (excluding Noos):(1) As of As of As of As of As of Sep-04 Jun-04 Mar-04 Dec-03 Sep-03 Video Homes Passed 12,338,500 12,323,500 12,288,800 12,260,100 12,166,600 Basic Analog Subscrib- ers 7,139,400 7,132,000 7,135,600 7,142,500 7,103,000 Basic Penetration 57.9% 57.9% 58.1% 58.3% 58.4% Quarterly Net Basic Subscriber Change 7,400 (3,600) (6,900) 39,500 13,400 Digital Subscribers 229,500 201,300 167,600 145,200 139,200 Digital Penetration 1.9% 1.6% 1.4% 1.2% 1.1% Quarterly Net Digital Subscriber Change 28,200 33,700 22,400 6,000 3,200 DTH Subscribers 213,800 213,800 204,100 196,900 166,100 Broadband Internet Broadband Internet Homes Service- able 7,484,900 7,326,900 7,127,100 7,045,000 6,789,200 Broadband Internet Subscrib- ers 1,095,000 1,031,000 983,300 922,700 866,500 Penetration 14.6% 14.1% 13.8% 13.1% 12.8% Quarterly Net Subscriber Change 64,000 47,700 60,600 56,200 42,400 Telephone Telephone Homes Service- able 4,507,400 4,488,500 4,467,700 4,467,800 4,437,600 Telephone Subscribers 761,000 756,700 741,800 732,800 717,700 Penetration 16.9% 16.9% 16.6% 16.4% 16.2% Quarterly Net Subscriber Change 4,300 14,900 9,000 15,100 13,700 Total RGUs 9,438,700 9,334,800 9,232,400 9,140,100 8,992,500 Quarterly Net Subscriber Change 103,900 102,400 92,300 147,600 78,700 ARPU per RGU (2) $18.96 $18.50 $18.69 $17.72 $16.52 Constant ARPU per RGU (3) $18.96 $18.75 $18.16 $18.14 $17.96 Customer Relation- ships 7,645,300 7,633,200 7,625,000 7,624,300 n.a. ARPU per Customer Relation- ship (4) $23.30 $22.51 $22.52 n.a. n.a. Constant ARPU per Customer Relation- ship (5) $23.30 $22.81 $21.88 n.a. n.a. RGUs by region: Europe (UGC Europe) 8,433,100 8,358,400 8,286,200 8,214,900 8,101,300 Chile (VTR) 973,700 944,700 914,600 894,000 859,700 Other 31,900 31,700 31,600 31,200 31,500 Total RGUs 9,438,700 9,334,800 9,232,400 9,140,100 8,992,500 The table below shows operating statistics for UGC on a consolidated basis (excluding Noos):(1) Growth Growth Growth vs. 2Q04 vs. 4Q03 vs. 3Q03 Video Homes Passed 15,000 78,400 171,900 Basic Analog Subscribers 7,400 (3,100) 36,400 Basic Penetration Quarterly Net Basic Subscriber Change Digital Subscribers 28,200 84,300 90,300 Digital Penetration Quarterly Net Digital Subscriber Change DTH Subscribers -- 16,900 47,700 Broadband Internet Broadband Internet Homes Serviceable 158,000 439,900 695,700 Broadband Internet Subscribers 64,000 172,300 228,500 Penetration Quarterly Net Subscriber Change Telephone Telephone Homes Serviceable 18,900 39,600 69,800 Telephone Subscribers 4,300 28,200 43,300 Penetration Quarterly Net Subscriber Change Total RGUs 103,900 298,600 446,200 Quarterly Net Subscriber Change ARPU per RGU (2) 2.5% 7.0% 14.8% Constant ARPU per RGU (3) 1.1% 4.5% 5.6% Customer Relationships 12,100 21,000 n.a. ARPU per Customer Relationship (4) 3.5% n.a. n.a. Constant ARPU per Customer Relationship (5) 2.1% n.a. n.a. RGUs by region: Europe (UGC Europe) 74,700 218,200 331,800 Chile (VTR) 29,000 79,700 114,000 Other 200 700 400 Total RGUs 103,900 298,600 446,200 (1) Please refer to page 17 for definitions regarding the Consolidated Operating Statistics. (2) ARPU per RGU is calculated as follows: average monthly broadband revenue for the period as indicated, divided by the average of the opening and closing RGUs for the period. (3) Constant ARPU per RGU is calculated as follows: average monthly broadband revenue converted at the same average exchange rates for the three months ended September 30, 2004 for each period as indicated, divided by the average of the opening and closing RGUs for the period. (4) ARPU per Customer Relationship is calculated as follows: average monthly broadband revenue for the period as indicated, divided by the average of the opening and closing Customer Relationships for the period. (5) Constant ARPU per Customer Relationship is calculated as follows: average monthly broadband revenue converted at the same average exchange rates for the three months ended September 30, 2004 for each period as indicated, divided by the average of the opening and closing Customer Relationships for the period. Capital Expenditures Update The table below highlights our capital expenditures per NCTA cable industry guidelines: (thousands) 3 months 3 months 9 months 9 months Sep-04 Sep-03 Sep-04 Sep-03 Customer Premises Equipment $35,193 $28,009 $101,673 $73,626 Commercial -- -- -- -- Scaleable Infrastructure 17,214 12,767 45,889 24,121 Line Extensions 10,317 19,622 19,590 51,466 Upgrade/Rebuild 13,597 6,780 30,835 15,506 Support Capital 19,642 23,755 60,008 50,533 Noos 8,986 -- 8,986 -- Intangibles & Other 11,747 3,822 25,576 12,446 Total Capital Expenditures $116,696 $94,755 $292,557 $227,698 Capital Expenditures (% of Revenue) 17.7% 20.0% 16.7% 16.6% Consolidated Operating Data September 30, 2004 Two-way Homes in Homes Homes Customer Total Service Area Passed Passed Relationships RGUs (1) (2)(14) (3)(14) (4)(13)(15) (5)(15)(16) Europe: The Netherlands 2,643,400 2,614,800 2,413,700 2,288,600 2,885,100 Austria 1,081,400 930,400 927,100 562,100 901,700 France (other than Noos) 2,656,600 1,395,800 706,900 502,400 624,000 France (Noos) 3,662,400 3,171,600 2,547,300 1,093,900 1,698,300 Norway 529,000 485,600 239,300 340,600 443,200 Sweden 770,000 421,600 275,900 287,300 404,900 Belgium 530,000 155,100 155,100 147,900 163,500 Total Western Europe 11,872,800 9,174,900 7,265,300 5,222,800 7,120,700 Poland 1,879,800 1,879,800 534,400 985,400 1,024,000 Hungary 1,170,400 1,000,000 658,800 873,500 958,600 Czech Republic 913,000 726,700 311,300 375,600 394,400 Romania 659,600 458,400 3,900 339,600 339,700 Slovak Republic 517,800 405,200 162,600 289,700 294,000 Total Central and Eastern Europe 5,140,600 4,470,100 1,671,000 2,863,800 3,010,700 Total Europe 17,013,400 13,645,000 8,936,300 8,086,600 10,131,400 Latin America: Chile 2,350,000 1,782,900 1,059,500 623,400 973,700 Brazil 746,300 15,400 15,400 15,400 16,400 Peru 203,800 66,800 30,300 13,800 15,500 Total Latin America 3,300,100 1,865,100 1,105,200 652,600 1,005,600 Grand Total 20,313,500 15,510,100 10,041,500 8,739,200 11,137,000 Consolidated Operating Data September 30, 2004 Video Analog Cable DTH Digital Cable Analog Cable Subscribers Subscribers Subscribers Penetration (6)(15)(16) (7)(16) (8)(16) Europe: The Netherlands 2,285,000 -- 56,800 87.4% Austria 490,600 -- 31,300 52.7% France (other than Noos) 470,800 -- 59,800 33.7% France (Noos) 1,037,200 -- 456,300 32.7% Norway 340,600 -- 34,400 70.1% Sweden 287,300 -- 40,800 68.1% Belgium 134,300 -- -- 86.6% Total Western Europe 5,045,800 -- 679,400 55.0% Poland 983,100 -- -- 52.3% Hungary 712,500 120,900 -- 71.3% Czech Republic 289,600 76,100 -- 39.9% Romania 339,600 -- -- 74.1% Slovak Republic 277,100 12,000 -- 68.4% Total Central and Eastern Europe 2,601,900 209,000 -- 58.2% Total Europe 7,647,700 209,000 679,400 56.0% Latin America: Chile 507,500 4,800 -- 28.5% Brazil 9,000 -- 6,400 58.4% Peru 12,400 -- -- 18.6% Total Latin America 528,900 4,800 6,400 28.4% Grand Total 8,176,600 213,800 685,800 52.7% Consolidated Operating Data September 30, 2004 Internet Homes Serviceable Subscribers Penetration (9)(14) (10)(16) Europe: The Netherlands 2,413,700 379,600 15.7% Austria 927,100 228,200 24.6% France (other than Noos) 706,900 31,000 4.4% France (Noos) 2,547,300 204,800 8.0% Norway 239,300 45,300 18.9% Sweden 275,900 76,800 27.8% Belgium 155,100 29,200 18.8% Total Western Europe 7,265,300 994,900 13.7% Poland 534,400 40,900 7.7% Hungary 658,800 61,100 9.3% Czech Republic 311,300 28,700 9.2% Romania 1,300 100 7.7% Slovak Republic 155,900 4,900 3.1% Total Central and Eastern Europe 1,661,700 135,700 8.2% Total Europe 8,927,000 1,130,600 12.7% Latin America: Chile 1,059,500 165,100 15.6% Brazil 15,400 1,000 6.5% Peru 30,300 3,100 10.2% Total Latin America 1,105,200 169,200 15.3% Grand Total 10,032,200 1,299,800 13.0% Consolidated Operating Data September 30, 2004 Telephone Homes Serviceable Subscribers Penetration (11) (12)(16) Europe: The Netherlands 1,614,800 163,700 10.1% Austria 906,600 151,600 16.7% France (other than Noos) 706,900 62,400 8.8% France (Noos) -- -- 0.0% Norway 147,600 22,900 15.5% Sweden -- -- 0.0% Belgium -- -- 0.0% Total Western Europe 3,375,900 400,600 11.9% Poland -- -- 0.0% Hungary 87,200 64,100 73.5% Czech Republic -- -- 0.0% Romania -- -- 0.0% Slovak Republic -- -- 0.0% Total Central and Eastern Europe 87,200 64,100 73.5% Total Europe 3,463,100 464,700 13.4% Latin America: Chile 1,044,300 296,300 28.4% Brazil -- -- 0.0% Peru -- -- 0.0% Total Latin America 1,044,300 296,300 28.4% Grand Total 4,507,400 761,000 16.9% (1) "Homes in Service Area" are homes that can potentially be served in the areas we operate, 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/broadband Internet) without regard to which service(s) they subscribe. (5) "Revenue Generating Unit" is separately an Analog Cable Subscriber, DTH Subscriber, Digital Cable Subscriber, Broadband 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 broadband Internet access service, the customer would constitute four RGUs. "Total RGUs" is the sum of Analog, DTH, Digital Cable, Broadband 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. The lifeline tier is the least expensive regulated tier of our video services, containing only a few channels. Commercial contracts such as hotels and hospitals are counted on an equivalent bulk unit ("EBU") basis. EBU is calculated by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. 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) "Broadband Internet Homes Serviceable" are homes that can be connected to our broadband network where customers can request and receive broadband Internet access services. (10) "Broadband 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 broadband Internet services were counted as two separate customer relationships, due to the nature of our billing arrangement (cable through the local utility company and broadband Internet directly by UGC Europe). As of June 30, 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. (14) Included in analog cable subscribers are multi-channel multi-point distribution system ("MMDS") subscribers that receive our video service through microwave transmissions and are not part of our wireline network. Total MMDS subscribers represent less than 1% of our total analog video subscriber base. Previously we counted nil homes passed for MMDS subscribers in Chile and one home passed for every line-of-sight home in Brazil. As of June 30, 2004, we count one home passed for every MMDS customer. The impact of this change was a net reduction of 461,700 homes passed from the figures previously reported. (15) Prior to June 30, 2004, we inadvertently counted certain commercial contracts in the Netherlands on a per connection basis rather than an EBU basis. The impact of this change on the figures previously reported was a net reduction in the number of customer relationships and analog cable subscribers of 8,900 and 9,400, respectively. (16) Prior to September 30, 2004, we counted certain customers in Europe receiving our analog, DTH, digital, Internet and telephone service for free as subscribers. The impact of this change on the analog, DTH, digital, Internet and telephone subscribers from the figures previously reported was 3,200, 400, 500, 1,000 and 200, respectively. DATASOURCE: UnitedGlobalCom, Inc. CONTACT: Richard Abbott, Investor Relations - Denver, +1-303-220-6682, , or Bert Holtkamp, Corporate Communications - Europe, + 31 (0) 20 778 9447, , both of UnitedGlobalCom, Inc. Web site: http://www.unitedglobal.com/

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