UCOMA Unitedglobalcom (MM)

UGC Reports Fourth Quarter and Full Year Results All 2004 Guidance Targets Achieved or Exceeded DENVER, March 14 /PRNewswire-FirstCall/ -- UnitedGlobalCom, Inc. ("UGC")(1) (NASDAQ:UCOMA), today announces operating and financial results for the fourth quarter and year-ended December 31, 2004. Highlights for the fiscal year include: * Revenue growth of 34% to $2.53 billion * Operating Cash Flow growth of 40% to $879 million(2) * Net RGU additions of 552,800 on an organic basis(3) * Net loss of $(382) million compared to net income of $2.0 billion(4) * Free Cash Flow growth of 272% to $219 million(5) Mike Fries, President and Chief Executive Officer of UGC said, "Our 2004 results were excellent across the board, as we achieved or exceeded all of our public guidance targets. Organic subscriber growth was robust as we added 552,800 RGUs for the full year, excluding acquisitions, compared to guidance of 500,000. This solid performance was driven by record fourth quarter net additions of over 250,000 RGUs. At year-end 2004, we had over 11.6 million consolidated RGUs and growth remains strong in early 2005. During the first two months of the year, we've added over 100,000 RGUs." "On a reported basis, revenue and Operating Cash Flow (OCF) in fiscal 2004 increased 34% and 40%, respectively, in part due to favorable foreign currency (FX) movements. Adjusting for FX changes and excluding acquisitions, our full year organic revenue growth was 10.5%, modestly ahead of our 10% guidance target. Due to the strong RGU growth we generated toward the end of the year, our fourth quarter organic revenue growth accelerated significantly, increasing 4.0% on a sequential basis from the third quarter. Our full year OCF growth was 20% on an organic basis, consistent with our guidance on that metric and despite the additional costs associated with our better than expected subscriber additions. And, excluding approximately $22 million of fourth quarter costs associated with the termination and settlement of a Dutch programming contract (MovieCo), our organic cash flow growth rate for the full year would have been 24%." "We made significant progress on a number of our strategic initiatives during the fourth quarter, including the launch of our digital phone (VoIP) services in The Netherlands and Hungary, as well as successful trials of 30 Mbps broadband Internet speeds and "off-net" voice and data services outside of our cable footprint. We have added over 55,000 digital phone subscribers since October of last year, and this month we expect to begin the commercial launch of our digital phone products across France. In addition, we are planning upcoming launches of digital phone services in Austria, Norway, Sweden, Belgium, Poland and Czech Republic and, in total, we expect to have 5.5 million VoIP homes serviceable this Summer." "Consistent with our strategy of disciplined footprint expansion, we completed several acquisitions in the quarter, including Irish pay-TV provider Chorus, an indirect 14% interest in Belgian cable company Telenet, and in February 2005, we closed the acquisition of Telemach, the largest cable company in Slovenia. We applied the same disciplined approach to the purchase of ZoneVision, a global programming company with a significant presence in Eastern Europe." "We continue to have strong access to the senior secured and institutional debt markets, as evidenced by the latest partial refinancing of our European credit facility. Last week, we closed three new tranches totaling EUR 3.0 billion, primarily to refinance existing debt. The total facility size has increased from EUR 3.5 billion to EUR 3.8 billion, of which EUR 2.8 billion was outstanding at close. We have full access to our increased revolver capacity of EUR 1.0 billion, which can be used for financing potential acquisitions and general corporate purposes. The average maturity of the loan has been extended to approximately 6 years, with no amortization payments required until 2010. In addition, the average credit spread on the facility has been reduced to 262 basis points over Euribor." "Looking ahead to fiscal 2005, we announced today aggressive guidance targets that we believe position UGC as the fastest growing public cable company in terms of Operating Cash Flow. Including a full year of Noos' results in France and, together with other announced acquisitions, we expect to grow revenue and OCF by 20% on a consolidated basis in 2005. In addition, driven by data and digital phone launches, we expect to add at least 800,000 net new RGUs, an improvement of 34% compared to last year." Recent Events On March 10, 2005, the Chilean Supreme Court dismissed the appeal challenging the prior regulatory approval of the combination of UGC's wholly-owned Chilean subsidiary, VTR GlobalCom S.A. ("VTR"), with Metropolis Intercom S.A. ("Metropolis"). The combination of VTR and Metropolis had been previously approved, subject to certain conditions, by the Chilean anti-trust tribunal in October 2004. On January 18, 2005, Liberty Media International, Inc. (LMI) (NASDAQ:LBTYANASDAQ:LBTYB) and UGC announced that the two companies reached an agreement to combine the businesses under a single entity to be named Liberty Global, Inc. Liberty Global will be one of the largest owners and operators of broadband communications systems outside the United States with ownership interests in companies serving more than 14 million RGUs in 17 countries. Fiscal 2004 Results Our significant and consolidated operating subsidiaries in Europe include UPC Broadband -- our cable television and broadband division with operations in 13 countries, and chellomedia -- our media and programming division, which also includes our Competitive Local Exchange Carrier (CLEC), Priority Telecom. In Latin America, our primary operation is VTR, our cable television and broadband provider in Chile. Please refer to the end of this press release for additional segment financial information. Revenue Revenue for the year ended December 31, 2004 was $2.53 billion, an increase of 34% or $634 million compared to the same period in 2003. Excluding the impact of foreign exchange rates and the acquisitions of Noos and Chorus, organic year-over-year revenue growth was approximately 10.5% for fiscal 2004 as a result of higher average monthly revenue per subscriber (ARPU) and RGU growth. Please refer to the table on page 11 for additional information. Total European revenue increased 34% to $2.2 billion for the year ended December 31, 2004, primarily due to a 35% increase in our core triple play operation, UPC Broadband. Revenue in Western Europe increased 18%, or $215 million (excluding Noos and Chorus) compared to the same period in 2003, while revenue in Central and Eastern Europe increased 30% or $106 million. In Chile, revenue at VTR increased 31% or $70 million for the year ended December 31, 2004 compared to last year. Revenue for the three months ended December 31, 2004 was $775 million, an increase of 50% compared to the same period last year. On a sequential basis from September 30, 2004, revenue increased 18% or approximately 71% on an annualized basis. On an organic basis our sequential revenue growth in the fourth quarter was 4.0%. This represents a meaningful acceleration of our revenue growth compared to our previous results this year driven primarily by faster customer growth resulting from aggressive new product launches. Average monthly revenue (ARPU) per RGU, excluding acquisitions, for the three months ended December 31, 2004 was $20.67, an increase of 16.6% compared to the same period in 2003. Excluding foreign currency movements, the organic increase in ARPU per RGU was approximately 8% year-over-year. ARPU per customer relationship was $25.62 for the three months ended December 31, 2004, a sequential increase of 10% from $23.30 in third quarter 2004. Excluding foreign currency movements, the organic increase in ARPU per customer relationships was 4.3% on a sequential basis. Operating Cash Flow Operating Cash Flow (OCF) for the year ended December 31, 2004 was $879 million, an increase of 40% compared to the prior year. Excluding the impact of foreign exchange rate fluctuations and acquisitions, our organic OCF growth was approximately 20% for the period, in line with our guidance of 20% for the full year. Excluding approximately $22 million of fourth quarter charges associated with the termination and settlement of a Dutch programming contract, our organic cash flow growth rate for the full year would have been 24%. Please refer to the table on page 12 for additional information. Total European OCF increased 36% to $778 million for the year ended December 31, 2004, primarily due to a 35% increase at UPC Broadband. OCF in Western Europe increased 39% to $626 million (including Noos and Chorus), while OCF in Central and Eastern Europe increased 39% to $182 million. Excluding Noos and Chorus, OCF in Western Europe increased 27% to $573 million. In Chile, 2004 OCF increased 55% to $109 million as compared to 2003. For the year ended December 31, 2004, our consolidated OCF margin was 34.8% compared to 33.2% for the same period last year. However, our consolidated OCF margin decreased sequentially to 30.8% for fourth quarter 2004, compared to 36.7% in the third quarter. Excluding the results of Noos and Chorus and approximately $22 million of costs associated with the termination and settlement of a Dutch programming contract, our fourth quarter overall OCF margin was 35.8% compared to 36.1% for the same period last year. Net Income (Loss) Net loss was $382 million or $(0.50) per share for the year ended December 31, 2004, which compares with net income of $2.0 billion or $7.41 per share for the prior year. The 2003 result was due primarily to a $2.2 billion gain related to the extinguishment of debt. Free Cash Flow and Capital Expenditures Free Cash Flow (FCF) for the year ended December 31, 2004 was $219 million, a $160 million improvement compared to $59 million of FCF in 2003. The increase was driven by a 78% improvement in cash flow from operating activities, offset by a 44% increase in reported capital expenditures. For the three months ended December 31, 2004, FCF was $39 million, a 192% increase or $25 million improvement compared to the same period last year despite higher marketing costs associated with the 72% increase in subscriber growth between the periods. Capital expenditures for the year ended December 31, 2004 were $480 million (19.0% of revenues) compared to $333 million (17.6% of revenues) for fiscal year 2003. The primary reason for the increase was higher spending on customer premise equipment (CPE) due to the significant increase in RGU growth in fourth quarter 2004 compared to the same period last year, as well as foreign currency movements. Balance Sheet, Leverage, and Liquidity At December 31, 2004, total long-term debt was $4.8 billion and we had cash and cash equivalents (including short-term liquid investments) of $1.0 billion. Net debt to annualized Operating Cash Flow(6) or consolidated leverage ratio was 4.0x compared to 5.4x for the same period in the prior year. Excluding approximately $22 million of costs associated with the MovieCo programming contract, our year-end leverage was 3.8x. In addition to our cash balances, as a result of the partial refinancing of our European Credit Facility, we currently have EUR 1.0 billion available under the revolvers. Together with the market value of our interests in the publicly traded securities of SBS Broadcasting and Austar United, we have total liquidity of approximately $3.0 billion. Operating Statistics Total RGUs were over 11.6 million at December 31, 2004, including 1.9 million RGUs at Noos and Chorus. Excluding Noos and Chorus, total RGUs at December 31, 2004 were 9.7 million. Since December 31, 2003, we added 552,800 net new RGUs (excluding acquisitions), which exceeded our full year guidance target of 500,000 RGUs by 11%. In terms of net additions by product and excluding acquisitions, we added a total of 264,800 broadband Internet subscribers during 2004, including 216,800 in Europe. Together with the 211,200 broadband Internet subscribers we acquired from Noos and Chorus, our total broadband Internet subscriber base now exceeds 1.4 million. Digital video RGU additions were over 100,000 for the year driven primarily by the success of our digital HITs product in France. Including the acquisition of Noos' and Chorus' digital subscribers, we had a total of 725,100 digital subscribers at the end of the year. Telephony additions were 70,200 for the year including 42,000 during the fourth quarter following our commercial VoIP launches in The Netherlands and Hungary, and we had a total of 803,500 telephony subscribers at December 31, 2004. During the fourth quarter of 2004, we added 254,200 net new RGUs (excluding acquisitions) which represents the strongest single quarter in the Company's history and a 72% improvement compared to last year's fourth quarter. In Europe we added 218,500 RGUs during the fourth quarter and in Chile we added 35,600 RGUs. We ended 2004 with a backlog of over 60,000 RGUs awaiting installation which is approximately double our normal backlog due to the strong demand we are experiencing for our new broadband Internet and VoIP products. 2005 Guidance In 2005, we expect to generate a significant increase in customer growth compared to 2004 driven primarily by the continued aggressive rollout of digital phone services across Europe as well as continued broadband product innovation. As a result we expect to add 800,000 net new RGUs in 2005, a 34% increase compared to the 599,000 RGUs that we added in 2004 (which includes approximately 47,000 net gain at Noos, which we acquired in July of last year). We expect revenue to increase 20% for 2005 compared to 2004, including the impact of announced acquisitions (i.e. Noos, Chorus, Telemach, and ZoneVision) and assuming an average exchange rate of 1.24 dollars per euro for the full year. Operating Cash Flow is also expected to increase by 20% on the same basis. Capital expenditures for the year are expected to range between 20% and 22% of sales, an increase from 19% in 2004. The spending increase is primarily to support such new product launches as digital phone, and resultant higher RGU growth anticipated this year, as well as to support the upgrade of approximately 1.0 million new two way homes, primarily in Central and Eastern Europe. In addition, we expect to continue to be meaningfully Free Cash Flow positive in fiscal 2005. About UnitedGlobalCom UGC is a leading international provider of video, voice, and broadband Internet services with operations in 16 countries, including 13 countries in Europe. Based on the Company's operating statistics at December 31, 2004, UGC's networks reached approximately 16.0 million homes passed and served over 11.6 million RGUs, including approximately 9.5 million video subscribers, 1.4 million broadband Internet subscribers, and 803,500 telephone subscribers. Forward Looking Statements: Except for historical information contained herein, this press release contains forward-looking statements, including guidance given for 2005. The statements about the Company's proposed merger with Liberty Media International ("LMI") and the proposed VTR/Metropolis combination are also forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include our ability to complete the proposed merger with LMI by obtaining the approval of holders of a majority of the aggregate voting power of our shares not beneficially owned by LMI, Liberty Media Corporation ("Liberty") or any of their respective subsidiaries or any of the executive officers of directors of LMI, Liberty or the Company and satisfaction of other conditions necessary to close the merger, satisfaction of the conditions necessary to complete the proposed VTR/Metropolis combination, continued use by subscribers and potential subscribers of the Company's services, changes in the technology and competition, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and achieve assumed margins including, to the extent annualized figures imply forward- looking projections, continued performance comparable with the period annualized, as well as other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. These forward- looking statements speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any guidance and other forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Additional Information UnitedGlobalCom, Inc. ("UGC") and Liberty Media International, Inc. ("LMI") have filed a preliminary Joint Proxy Statement relating to their proposed merger as well as a related Schedule 13E-3. Liberty Global, Inc. ("Liberty Global") plans to shortly file a Registration Statement on Form S-4 which will contain a Prospectus/Joint Proxy Statement with respect to the proposed merger. UGC AND LMI STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ THESE DOCUMENTS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS WHEN AVAILABLE) BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Investors may obtain these documents free of charge at the SEC's website at http://www.sec.gov/. In addition, copies of the Prospectus/Joint Proxy Statement and other related documents filed by the parties to the merger may be obtained free of charge by directing a request to UnitedGlobalCom, Inc., 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237, Attention: Investor Relations Department, telephone: 303-770-4001. Participants in Solicitation UGC and its directors and executive officers may be deemed to be participants in the solicitation of proxies from UGC's stockholders in connection with the special meeting of stockholders to be held to approve the merger with LMI through the formation of a new holding company to be named Liberty Global. Information concerning UGC's directors and executive officers and their direct and indirect interests in UGC and LMI is set forth in UGC's and LMI's preliminary Joint Proxy Statement filed with the SEC on February 14, 2005. A definitive proxy statement will be mailed to UGC stockholders when available. Stockholders may obtain these documents (when available) free of charge at the SEC's website at http://www.sec.gov/. In addition, copies of the definitive Prospectus/Joint Proxy Statement (when available) may be obtained free of charge by directing a request to UnitedGlobalCom, Inc., 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237, Attention: Investor Relations Department, telephone: 303-770-4001. UGC STOCKHOLDERS SHOULD READ THE PROSPECTUS/JOINT PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS CAREFULLY BEFORE MAKING ANY VOTING DECISION BECAUSE IT CONTAINS IMPORTANT INFORMATION. Please visit http://www.unitedglobal.com/ for further information. New Basis of Accounting Effective January 1, 2004 On January 5, 2004, Liberty Media Corporation (together with its subsidiaries "LMC") acquired 8,198,016 shares of Class B common stock from our founding stockholders in exchange for securities of LMC and cash (the "Founders Transaction"). Upon completion of this transaction, the restriction on LMC's right to exercise its voting power over us was terminated. LMC then had the ability to elect our entire board of directors and control us. LMC acquired its cumulative interest in us over a period of several years in separate acquisitions. LMC's largest acquisition of us occurred in January 2002 whereby its economic and voting interest increased from approximately 11% and 37%, respectively, to approximately 73% and 94%, respectively. Because of certain voting and standstill agreements entered into between LMC and our founding stockholders in connection with this January 2002 transaction, LMC was unable to control us and therefore accounted for its investment in us under the equity method of accounting. Upon consummation of the Founders Transaction, our financial statements changed to reflect the push down of LMC's basis and, as a result, we have a new basis of accounting effective January 1, 2004. Accordingly, for periods prior to January 1, 2004 the assets and liabilities of UnitedGlobalCom, Inc. and the related consolidated financial statements are sometimes referred to herein as "UGC Pre-Founders Transaction," and for periods subsequent to January 1, 2004 the assets and liabilities of UnitedGlobalCom, Inc. and the related consolidated financial statements are sometimes referred to herein as "UGC Post-Founders Transaction." 1) Also referred to as the "Company," "we," "us," "our," and similar terms. 2) Please see page 14 for an explanation of Operating Cash Flow and a reconciliation of Operating Cash Flow to Net Income (Loss). 3) RGUs or Revenue Generating Units excluding the impact of acquisitions. Please see footnote (4) on page 17 for a definition. Organic growth, for RGU Net Gain and Revenue & OCF, excludes acquisitions and the impact of foreign exchange rate movements as applicable. 4) Net income in 2003 primarily due to $2.2 billion gain on the extinguishment of debt. 5) Please see page 14 for an explanation of Free Cash Flow and a reconciliation of Free Cash Flow to Net Cash Flows from operating activities. 6) Represents net debt / Operating Cash Flow annualized for the three months ended December 31, 2004. UnitedGlobalCom, Inc. Consolidated Balance Sheets (In thousands, except par value and number of shares) UGC UGC Post-Founders Pre-Founders Transaction Transaction December 31, December 31, Assets 2004 2003 Current assets: Cash and cash equivalents $1,028,993 $310,361 Restricted cash 43,640 25,052 Short-term liquid investments 48,965 2,134 Trade receivables, net 184,222 140,075 Other receivables 134,110 65,157 Other current assets, net 98,525 79,542 Total current assets 1,538,455 622,321 Long-term assets: Investments in affiliates, accounted for using the equity method 345,790 95,238 Other investments 262,091 206,325 Property and equipment, net 4,193,095 3,342,743 Goodwill 2,170,705 2,519,831 Intangible assets, net 445,172 252,236 Other assets, net 178,989 60,977 Total assets $9,134,297 $7,099,671 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $345,535 $225,540 Accrued liabilities 462,927 302,597 Subscriber advance payments and deposits 332,765 141,108 Accrued Interest 88,608 102,949 Notes payable, related party 108,414 102,728 Current portion of debt 34,325 310,804 Other current liabilities 49,675 82,149 Other current liabilities subject to compromise -- 336,916 Total current liabilities 1,422,249 1,604,791 Long-term liabilities: Long-term portion of debt 4,844,624 3,615,902 Other long-term liabilities 375,103 383,725 Total liabilities 6,641,976 5,604,418 Commitments and contingencies Minority interests in subsidiaries 96,378 22,761 Stockholders' equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized, nil shares issued and outstanding -- -- Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 413,206,357 and 287,350,970 shares issued, respectively 4,132 2,873 Class B common stock, $0.01 par value, 1,000,000,000 shares authorized, 11,165,777 and 8,870,332 shares issued, respectively 112 89 Class C common stock, $0.01 par value, 400,000,000 shares authorized, 379,603,223 and 303,123,542 share issued and outstanding, respectively 3,796 3,031 Additional paid-in capital 2,624,159 5,852,896 Deferred compensation (1,851) -- Treasury stock, at cost (75,844) (70,495) Accumulated deficit (382,355) (3,372,737) Accumulated other comprehensive income (loss) 223,794 (943,165) Total stockholders' equity 2,395,943 1,472,492 Total liabilities and stockholders' equity $9,134,297 $7,099,671 UnitedGlobalCom, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (In thousands, except per share data) UGC UGC Post-Founders Pre-Founders Transaction Transaction Year Ended Year Ended December 31, December 31, 2004 2003 2002 Statements of Operations Revenue $2,525,446 $1,891,530 $1,515,021 Operating costs and expenses: Operating (1,014,628) (785,132) (789,457) Selling, general and administrative ("SG&A") (631,585) (477,516) (429,190) Depreciation and amortization (operating) (935,185) (808,663) (730,001) Impairment of long-lived assets (operating) (38,915) (402,239) (436,153) Restructuring charges and other (operating) (29,019) (35,970) (1,274) Stock-based compensation (SG&A) (116,661) (38,024) (28,228) Operating loss (240,547) (656,014) (899,282) Interest income 23,823 13,054 38,315 Interest expense (283,280) (327,132) (680,101) Foreign currency transaction gains, net 26,753 153,808 485,938 Realized and unrealized (losses) gains on derivative instruments, net (60,237) (35,424) 138,398 Gains on extinguishment of debt 35,787 2,183,997 2,208,782 Gains on sale of investments and other, net 12,325 279,442 117,262 Other expense, net (13,455) (43,665) (80,617) Income (loss) before income taxes and other items (498,831) 1,568,066 1,328,695 Income tax benefit (expense), net 101,105 (50,344) (201,182) Minority interests in losses (earnings) of subsidiaries and other, net 3,062 183,182 (67,103) Share in results of affiliates, net 12,309 294,464 (72,142) Income (loss) before cumulative effect of change in accounting principle (382,355) 1,995,368 988,268 Cumulative effect of change in accounting principle, net of tax -- -- (1,344,722) Net income (loss) $(382,355) $1,995,368 $(356,454) Earnings per share: Basic earnings (loss) per share before cumulative effect of change in accounting principle $(0.50) $7.41 $2.29 Cumulative effect of change in accounting principle -- -- (3.13) Basic earnings (loss) per share $(0.50) $7.41 $(0.84) Diluted earnings (loss) per share before cumulative effect of change in accounting principle $(0.50) $7.41 $2.29 Cumulative effect of change in accounting principle -- -- (3.12) Diluted earnings (loss) per share $(0.50) $7.41 $(0.83) Statements of Comprehensive Income (Loss) Net income (loss) $(382,355) $1,995,368 $(356,454) Other comprehensive income (loss): Foreign currency translation adjustments 195,429 61,440 (864,104) Change in fair value of derivative contracts -- -- 13,443 Reclassification adjustment for expired derivative contracts included in net income -- 10,616 -- Net unrealized gains on available-for-sale securities 56,417 97,318 4,029 Reclassification adjustment for gains on available-for-sale securities included in net income (10,517) -- -- Other -- (194) (77) Other comprehensive income (loss) before income taxes 241,329 169,180 (846,709) Provision for income taxes related to net unrealized gains on available-for-sale securities (17,535) -- -- Other comprehensive income (loss) 223,794 169,180 (846,709) Comprehensive income (loss) $(158,561) $2,164,548 $(1,203,163) UnitedGlobalCom, Inc. Consolidated Statements of Cash Flows (In thousands) UGC UGC Post-Founders Pre-Founders Transaction Transaction Year Ended Year Ended December 31, December 31, 2004 2003 2002 Cash Flows from Operating Activities Net income (loss) $(382,355) $1,995,368 $(356,454) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 935,185 808,663 730,001 Impairment of long-lived assets, restructuring charges and other 67,934 438,209 437,427 Stock-based compensation 65,827 29,242 28,228 Accretion of interest on senior notes and amortization of deferred financing costs 21,588 50,733 234,247 Unrealized foreign currency transaction gains, net (5,526) (116,454) (491,313) Realized and unrealized losses (gains) on derivative instruments 60,237 35,424 (138,398) Gain on extinguishment of debt (35,787) (2,183,997) (2,208,782) Gains on sale of investments and other, net (12,325) (279,442) (117,262) Deferred income tax (benefit) expense, net (130,518) (23,420) 104,068 Minority interests in (losses) earnings of subsidiaries and other, net (3,062) (183,182) 67,103 Share in results of affiliates, net (12,309) (294,464) 72,142 Cumulative effect of change in accounting principle -- -- 1,344,722 Other non-cash items 14,755 32,009 102,326 Change in assets and liabilities: Change in receivables and other assets (72,169) 40,870 46,803 Change in accounts payable, accrued liabilities and other 188,127 42,533 (148,466) Net cash flows from operating activities 699,602 392,092 (293,608) Cash Flows from Investing Activities Cash paid for acquisitions, net of cash acquired (710,549) (2,150) (22,617) Cash paid for acquisition, to be refunded by seller (52,128) -- -- Capital expenditures (480,133) (333,124) (335,192) Purchases of short-term liquid investments (293,734) (1,000) (117,221) Proceeds from sale of short-term liquid investments 246,981 45,561 152,405 Restricted cash released (deposited), net (17,298) 24,825 40,357 Investments in and loans to affiliates (144,699) (20,931) (2,590) Proceeds from sale of investments in affiliates 696 45,447 -- Purchase of interest rate caps (21,442) (9,750) -- Cash paid to settle interest rate swaps (66,411) (58,038) -- Dividends received from affiliates 17,098 4,714 11,276 Proceeds received upon repayment of debt securities 115,592 -- -- Other 1,826 3,092 16,319 Net cash flows from investing activities (1,404,201) (301,354) (257,263) Cash Flows from Financing Activities Issuance of common stock 1,076,811 1,354 200,006 Proceeds from issuance of convertible senior notes 604,595 -- -- Proceeds from notes payable to shareholder 5,371 -- 102,728 Proceeds from issuance of debt 1,547,867 23,161 42,742 Repayments of debt (1,803,081) (233,506) (321,961) Financing costs (62,448) (2,233) (18,293) Purchase of treasury shares (5,349) -- -- Net cash flows from financing activities 1,363,766 (211,224) 5,222 Effects of Exchange Rates on Cash 59,465 20,662 35,694 Increase (Decrease) in Cash and Cash Equivalents 718,632 (99,824) (509,955) Cash and Cash Equivalents, Beginning of Year 310,361 410,185 920,140 Cash and Cash Equivalents, End of Year $1,028,993 $310,361 $410,185 Revenue The following table provides an analysis of our revenue by business segment for the years ended December 31, 2004 and 2003 (in thousands, except percentages). The first two columns present our consolidated revenue for each comparative period. The third and fourth columns present the U.S. dollar change and percent change, respectively, from period to period. The fifth and sixth columns present the U.S. dollar change and percent change, respectively, after removing foreign currency translation effects, or "F/X." These columns demonstrate what the revenue change would have been had exchange rates remained the same as the comparative period in the prior year. These amounts are based on the Euro for the Netherlands, Austria, France, Ireland, Belgium, chellomedia, UGC Europe corporate and other, Norwegian Krone for Norway, Swedish Krona for Sweden, Hungarian Forint for Hungary, Polish Zloty for Poland, Czech Koruna for Czech Republic, Slovak Koruna for Slovak Republic, Romanian Leu for Romania, Chilean Peso for Chile, and U.S. dollars for Brazil, Peru and other UGC corporate. Certain percentages are denoted as not meaningful ("n/m"). At the bottom of the table we subtract the consolidated revenue from our material acquisitions in 2004, Noos and Chorus (Ireland), to present our revenue growth without the results of these new businesses. Year Ended December 31, Increase (Decrease) Increase Excluding (Decrease) F/X Effects Europe (UGC Europe): 2004 2003 $ % $ % UPC Broadband The Netherlands $716,932 $592,223 $124,709 21.1% $60,999 10.3% Austria 299,874 260,162 39,712 15.3% 13,268 5.1% France (excluding Noos)128,862 113,946 14,916 13.1% 3,532 3.1% France (Noos) 183,930 -- 183,930 -- 183,930 -- Norway 112,378 95,284 17,094 17.9% 11,815 12.4% Sweden 88,080 75,057 13,023 17.4% 5,104 6.8% Belgium 37,472 31,586 5,886 18.6% 2,558 8.1% Ireland (Chorus) 48,953 -- 48,953 -- 48,953 -- Total Western Europe 1,616,481 1,168,258 448,223 38.4% 330,159 28.3% Hungary 217,507 165,450 52,057 31.5% 31,105 18.8% Poland 108,979 85,356 23,623 27.7% 16,388 19.2% Czech Republic 79,905 63,348 16,557 26.1% 10,262 16.2% Slovak Republic 32,671 25,467 7,204 28.3% 3,209 12.6% Romania 26,955 20,189 6,766 33.5% 5,532 27.4% Total Central and Eastern Europe 466,017 359,810 106,207 29.5% 66,496 18.5% Corporate and other 26,273 32,563 (6,290) (19.3%) (8,173) (25.1%) Total UPC Broadband 2,108,771 1,560,631 548,140 35.1% 388,482 24.9% Chellomedia Priority Telecom 118,956 121,330 (2,374) (2.0%) (12,982) (10.7%) Media 125,016 98,463 26,553 27.0% 15,459 15.7% Investments 840 528 312 59.1% 239 45.3% Total chellomedia 244,812 220,321 24,491 11.1% 2,716 1.2% Intercompany eliminations (138,983) (127,055) (11,928) (9.4%) 381 0.3% Total Europe 2,214,600 1,653,897 560,703 33.9% 391,579 23.7% Latin America: Broadband Chile (VTR) 299,951 229,835 70,116 30.5% 36,314 15.8% Brazil, Peru and other 7,883 7,789 94 1.2% 94 1.2% Total Latin America 307,834 237,624 70,210 29.5% 36,408 15.3% Corporate and other 3,012 9 3,003 n/m 3,003 n/m Total UGC $2,525,446 $1,891,530 $633,916 33.5% $430,990 22.8% Less Noos and Chorus $(232,883) -- $(232,883) -- Total UGC, excluding Noos and Chorus $ 401,033 21.2% $198,107 10.5% Operating Cash Flow The following table provides an analysis of our Operating Cash Flow by business segment for the years ended December 31, 2004 and 2003 (in thousands, except percentages). The first two columns present our consolidated Operating Cash Flow for each comparative period. The third and fourth columns present the U.S. dollar change and percent change, respectively, from period to period. The fifth and sixth columns present the U.S. dollar change and percent change, respectively, after removing foreign currency translation effects. These columns demonstrate what the Operating Cash Flow change would have been had exchange rates remained the same as the comparative period in the prior year. These amounts are based on the Euro for the Netherlands, Austria, France, Belgium, Ireland, chellomedia, UGC Europe corporate and other, Norwegian Krone for Norway, Swedish Krona for Sweden, Hungarian Forint for Hungary, Polish Zloty for Poland, Czech Koruna for Czech Republic, Slovak Koruna for Slovak Republic, Romanian Leu for Romania, Chilean Peso for Chile, and U.S. dollars for Brazil, Peru and other UGC corporate. At the bottom of the table we subtract the consolidated operating cash flow from our material acquisitions in 2004, Noos and Chorus (Ireland), to present our operating cash flow growth without the results of these new businesses. Year Ended December 31, Increase (Decrease) Increase Excluding (Decrease) F/X Effects Europe (UGC Europe): 2004 2003 $ % $ % UPC Broadband The Netherlands $361,265 $267,075 $94,190 35.3% $63,021 23.6% Austria 111,950 98,278 13,672 13.9% 4,238 4.3% France (other than Noos) 12,905 13,920 (1,015) (7.3%) (2,007)(14.4%) France (Noos) 40,785 -- 40,785 -- 40,785 -- Norway 37,066 27,913 9,153 32.8% 7,384 26.5% Sweden 33,421 31,827 1,594 5.0% (1,225) (3.8%) Belgium 16,751 12,306 4,445 36.1% 3,003 24.4% Ireland (Chorus) 11,795 -- 11,795 -- 11,795 -- Total Western Europe 625,938 451,319 174,619 38.7% 126,994 28.1% Hungary 86,418 63,357 23,061 36.4% 15,084 23.8% Poland 36,315 24,886 11,429 45.9% 9,338 37.5% Czech Republic 33,888 24,657 9,231 37.4% 6,699 27.2% Slovak Republic 13,766 10,618 3,148 29.6% 1,507 14.2% Romania 11,978 7,931 4,047 51.0% 3,941 49.7% Total Central and Eastern Europe 182,365 131,449 50,916 38.7% 36,569 27.8% Corporate and other (83,604) (46,091) (37,513) (81.4%) (30,594)(66.4%) Total UPC Broadband 724,699 536,677 188,022 35.0% 132,969 24.8% Chellomedia Priority Telecom 17,183 14,530 2,653 18.3% 1,090 7.5% Media 36,335 22,874 13,461 58.8% 10,166 44.4% Investments (502) (1,033) 531 51.4% 579 56.1% Total chellomedia 53,016 36,371 16,645 45.8% 11,835 32.5% Total Europe 777,715 573,048 204,667 35.7% 144,804 25.3% Latin America: Broadband Chile (VTR) 108,752 69,951 38,801 55.5% 26,721 38.2% Brazil, Peru and other 426 87 339 389.7% 339 389.7% Total Latin America 109,178 70,038 39,140 55.9% 27,060 38.6% Corporate and other (7,660) (14,204) 6,544 46.1% 6,544 46.1% Total UGC $879,233 $628,882 $250,351 39.8% $178,408 28.4% Less Noos and Chorus $(52,580) -- $(52,580) -- Total UGC, excluding Noos and Chorus $197,771 31.4% $ 125,828 20.0% Supplemental Financial Information: Revenue The table below highlights Revenue by segment: 12 months 12 months Year/Year (thousands) Dec-04 Dec-03 Change UPC Broadband - W Europe $1,383,598 $1,168,258 18% UPC Broadband - C&E Europe 466,017 359,810 30% Total UPC Broadband 1,849,615 1,528,068 21% Chellomedia 244,812 220,321 11% VTR 299,951 229,835 31% Other (1) (101,815) (86,694) 17% Subtotal $2,292,563 $1,891,530 21% Add: Noos & Chorus 232,883 0 n.a. UGC Consolidated $2,525,446 $1,891,530 34% Revenue The table below highlights Revenue by segment: 3 months 3 months Year/Year 3 months Sequential (thousands) Dec-04 Dec-03 Change Sep-04 Change UPC Broadband - W Europe $375,014 $315,407 19% $340,859 10% UPC Broadband - C&E Europe 132,614 96,460 37% 116,111 14% Total UPC Broadband 507,628 411,867 23% 456,970 11% Chellomedia 66,238 57,741 15% 61,713 7% VTR 83,414 68,168 22% 75,096 11% Other (1) (26,908) (21,912) 23% (24,002) 12% Subtotal $630,372 $515,864 22% $569,777 11% Add: Noos & Chorus 144,197 0 n.a. 88,686 n.a. UGC Consolidated $774,569 $515,864 50% $658,463 18% (1) Primarily inter-company eliminations, corporate and other, and other Latin America broadband. The following is provided for informational purposes to highlight revenues in the functional currency of VTR (Chilean Pesos) and the primary functional currency of UGC Europe (Euros), as follows: 12 months 12 months Year/Year (thousands, except for VTR) Dec-04 Dec-03 Change UPC Broadband - W Europe EUR 1,113,504 EUR 1,031,659 8% UPC Broadband - C&E Europe 374,850 317,740 18% Total UPC Broadband 1,488,354 1,349,399 10% Chellomedia 196,991 194,559 1% Other (1) (90,756) (83,444) 9% Subtotal 1,594,589 1,460,514 9% Add: Noos & Chorus 185,540 0 n.a. UGC Europe - Total EUR 1,780,129 EUR 1,460,514 22% VTR (millions) CP182,541 CP157,676 16% (thousands, 3 months 3 months Year/Year 3 months Sequential except for VTR) Dec-04 Dec-03 Change Sep-04 Change UPC Broadband - W Europe EUR 290,972 EUR 265,288 10% EUR 278,652 4% UPC Broadband - C&E Europe 102,894 81,035 27% 94,920 8% Total UPC Broadband 393,866 346,323 14% 373,572 5% Chellomedia 51,393 48,514 6% 50,450 2% Other (1) (22,708) (20,048) 13% (23,394) -3% Subtotal 422,551 374,789 13% 400,628 5% Add: Noos & Chorus 113,039 0 n.a. 72,501 n.m. UGC Europe - Total EUR 535,590 EUR 374,789 43% EUR 473,129 13% VTR (millions) CP49,377 CP42,547 16% CP47,177 5% (1) Primarily inter-company eliminations and corporate and other. Operating Cash Flow The table below highlights Operating Cash Flow ("OCF") by segment: 12 months 12 months Year/Year (thousands) Dec-04 Dec-03 Change UPC Broadband - W Europe $573,358 $451,319 27% UPC Broadband - C&E Europe 182,365 131,449 39% Total UPC Broadband 755,723 582,768 30% Chellomedia 53,016 36,371 46% VTR 108,752 69,951 55% Other (1) (90,838) (60,208) 51% Subtotal $826,653 $628,882 31% Add: Noos & Chorus 52,580 0 n.a. UGC Consolidated $879,233 $628,882 40% OCF Margin (% of revenues) 34.8% 33.2% 5% OCF Margin (without Noos & Chorus) 36.1% 33.2% 8% 3 months 3 months Year/Year 3 months Sequential (thousands) Dec-04 Dec-03 Change Sep-04 Change UPC Broadband - W Europe $143,522 $129,762 11% $149,600 -4% UPC Broadband - C&E Europe 45,620 33,894 35% 47,324 -4% Total UPC Broadband 189,142 163,656 16% 196,924 -4% Chellomedia 17,532 9,830 78% 13,988 25% VTR 33,810 22,067 53% 25,925 30% Other (1) (36,569) (9,539) 283% (12,911) 183% Subtotal $203,915 $186,014 10% $223,926 -9% Add: Noos & Chorus 34,803 0 n.a. 17,777 n.m. UGC Consolidated $238,718 $186,014 28% $241,703 -1% OCF Margin (% of revenues) 30.8% 36.1% -15% 36.7% -16% OCF Margin (without Noos & Chorus) 32.3% 36.1% -10% 39.3% -18% (1) Primarily corporate and other, and other Latin America broadband. The following is provided for informational purposes to highlight Operating Cash Flow in the functional currency of VTR (Chilean Pesos) and the primary functional currency of UGC Europe (Euros), as follows: 12 months 12 months Year/Year (thousands, except for VTR) Dec-04 Dec-03 Change UPC Broadband - W Europe EUR 461,837 EUR 397,428 16% UPC Broadband - C&E Europe 146,896 115,753 27% Total UPC Broadband 608,733 513,181 19% Chellomedia 42,535 32,028 33% Corporate and other (66,889) (40,587) 65% Subtotal 584,379 504,622 16% Add: Noos & Chorus 41,801 0 n.a. UGC Europe - Total EUR 626,180 EUR 504,622 24% OCF Margin (% of revenues) 35.2% 34.6% 2% OCF Margin (without Noos & Chorus) 36.6% 34.6% 6% VTR (in millions) CP66,082 CP47,801 38% OCF Margin (% of revenues) 36.2% 30.3% 19% (thousands, 3 months 3 months Year/Year 3 months Sequential except for VTR) Dec-04 Dec-03 Change Sep-04 Change UPC Broadband - W Europe EUR 111,358 EUR 109,014 2% EUR 122,331 -9% UPC Broadband - C&E Europe 35,396 28,253 25% 38,700 -9% Total UPC Broadband 146,754 137,267 7% 161,031 -9% Chellomedia 13,602 8,223 65% 11,432 19% Corporate and other (26,324) (5,063) 420% (12,235) 115% Subtotal 134,032 140,427 -5% EUR 160,228 -16% Add: Noos & Chorus 27,306 0 n.a. 14,495 n.m. UGC Europe - Total EUR 161,338 EUR 140,427 15% EUR 174,723 -8% OCF Margin (% of revenues) 30.1% 37.5% -20% 36.9% -18% OCF Margin (without Noos & Chorus) 31.7% 37.5% -15% 40.0% -21% VTR (in millions) CP20,015 CP13,815 45% CP16,299 23% OCF Margin (% of revenues) 40.5% 32.5% 25% 34.5% 17% Operating Cash Flow Definition and Reconciliation Operating Cash Flow is the primary measure used by our chief operating decision makers to evaluate segment operating performance and to decide how to allocate resources to segments. As we use the term, Operating Cash Flow is defined as revenue less operating, selling, general and administrative expenses (excluding depreciation and amortization, impairment of long-lived assets, restructuring charges and other and stock-based compensation). We believe Operating Cash Flow is meaningful because it provides investors a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that is used by our internal decision makers. Our internal decision makers believe Operating Cash Flow is a meaningful measure and is superior to other available GAAP measures because it represents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and benchmarking between segments in the different countries in which we operate and identify strategies to improve operating performance. For example, our internal decision makers believe that the inclusion of impairment and restructuring charges within Operating Cash Flow distorts the ability to efficiently assess and view the core operating trends in our segments. In addition, our internal decision makers believe our measure of Operating Cash Flow is important because analysts and investors use it to compare our performance to other companies in our industry. We reconcile the total of the reportable segments' Operating Cash Flow to our consolidated net income as presented in our consolidated statements of operations, because we believe consolidated net income is the most directly comparable financial measure to total segment operating performance. Investors should view Operating Cash Flow as a supplement to, and not a substitute for, operating income, net income, cash flow from operating activities and other GAAP measures of income as a measure of operating performance. We are unable to provide a reconciliation of forecasted Operating Cash Flow to the most directly comparable GAAP measure, net income (loss), because certain items are out of our control and/or cannot be reasonably predicted. For example, it is impractical to: (1) estimate future fluctuations in interest rates on our variable-rate debt facilities; (2) estimate the fluctuations in exchange rates relative to the U.S. dollar and its impact on our results of operations; (3) estimate the financial results of our non- consolidated affiliates; and (4) estimate changes in circumstances that lead to gains and/or losses such as sales of investments in affiliates and other assets. Any and/or all of these items could be significant to our financial results. The table below highlights the reconciliation of Operating Cash Flow to Net income (loss): 3 months 3 months 3 months 12 months 12 months (thousands) Dec-04 Sep-04 Dec-03 Dec-04 Dec-03 Total segment Operating Cash Flow $238,718 $241,703 $186,014 $879,233 $628,882 Depreciation and amortization (267,887) (235,186) (210,456) (935,185) (808,663) Impairment of long-lived assets (22,317) 25 (402,680) (38,915) (402,239) Restructuring charges and other (18,270) (1,824) (29,084) (29,019) (35,970) Stock-based compensation (52,767) (12,178) (9,377) (116,661) (38,024) Operating income (loss) (122,523) (7,460) (465,583) (240,547) (656,014) Interest expenses, net (71,651) (53,616) (60,868) (259,457) (314,078) Gains on extinguishment of debt 0 0 0 35,787 2,183,997 Gains (losses) on sale of investments and other, net 12,096 646 (1,879) 12,325 279,442 Realized and unrealized (losses) gains on foreign currency transactions and derivative instruments and other expenses, net (16,556) 2,005 (28,020) (46,939) 74,719 Income (loss) before income taxes and other items (198,634) (58,425) (556,350) (498,831) 1,568,066 Other, net 131,025 (11,785) 175,656 116,476 427,302 Net income (loss) ($67,609) ($70,210) ($380,694) ($382,355) $1,995,368 Free Cash Flow Definition and Reconciliation Free Cash Flow is not a GAAP measure of liquidity. We define Free Cash Flow as net cash flows from operating activities less capital expenditures. We believe our presentation of free cash flow provides useful information to our investors because it can be used to gauge our ability to service debt and fund new investment opportunities. Investors should view free cash flow as a supplement to, and not a substitute for, GAAP cash flows from operating, investing and financing activities as a measure of liquidity. The table below highlights the reconciliation of net cash flows from operating activities and Free Cash Flow: 12 months 12 months Year/Year (thousands) Dec-04 Dec-03 Change Net cash flows from operating activities $699,602 $392,092 78% Capital expenditures (480,133) (333,124) 44% Free cash flow $219,469 $58,968 272% 3 months 3 months Year/Year 3 months Sequential (thousands) Dec-04 Dec-03 Change Sep-04 Change Net cash flows from operating activities $226,255 $118,651 91% $175,064 29% Capital expenditures (187,576) (105,426) 78% (116,696) 61% Free cash flow $38,679 $13,225 192% $58,368 -34% The following table is provided for informational purposes only to highlight revenue and Operating Cash Flow of UPC Distribution, B.V. (UPCD). UPCD is the borrower of record on our European Credit Facility. Revenue 12 months 9 months 3 months (in thousands of Euros) Dec-04 Sept-04 Dec-04 Triple Play: The Netherlands 576,853 424,014 152,839 Austria 241,453 180,860 60,593 Belgium 30,156 22,219 7,937 Czech Republic 64,315 47,659 16,656 Norway 90,452 66,210 24,242 Hungary 174,952 126,970 47,982 France (excluding Noos) 103,713 76,791 26,922 France (Noos) 146,400 72,501 73,899 Poland 87,633 62,578 25,055 Sweden 70,877 52,438 18,439 Slovak 26,292 19,438 6,854 Romania 21,658 15,311 6,347 Total Triple Play UPC Broadband 1,634,754 1,166,989 467,765 chello Access 74,455 55,429 19,026 Corporate and Other 21,122 15,264 5,858 Eliminations (75,205) (55,869) (19,336) Total UPC Holding BV 1,655,126 1,181,813 473,313 Operating Cash Flow 12 months 9 months 3 months (in thousands of Euros) Dec-04 Sept-04 Dec-04 Triple Play: The Netherlands 290,849 217,785 73,064 Austria 90,276 70,521 19,755 Belgium 13,490 10,172 3,318 Czech Republic 27,333 21,465 5,868 Norway 29,839 22,291 7,548 Hungary 69,546 51,523 18,023 France (excluding Noos) 10,428 8,568 1,860 France (Noos) 32,347 14,495 17,852 Poland 29,259 22,340 6,919 Sweden 26,955 21,142 5,813 Slovak 11,101 8,668 2,433 Romania 9,657 7,504 2,153 Total Triple Play UPC Broadband 641,080 476,474 164,606 chello Access 48,031 34,896 13,135 Corporate and Other 25,630) (20,630) (5,000) Total UPC Holding BV 663,481 490,740 172,741 The Revenue and Operating Cash Flow of UPCD for the twelve-month period ended December 31, 2004 includes twelve months of UPC Poland and six months of Noos. UPC Poland and Noos were transferred into UPCD in July 2004. The Operating Cash Flow of UPCD for the twelve and three months ended December 31, 2004 excludes corporate costs, which primarily relates to costs on a programming agreement. Please note that for Q4 2004 chello access has been contributed into UPCD at December 31, 2004. We are currently reviewing intercompany arrangements with respect to interactive, arrivo, VOD and other services to be procured by UPCD from chellomedia. Currently these services are not settled in cash and as a result are not included in OCF. Total Q4 2004 amount with respect to these service totaled approximately Euro 1.9 million. The above selected historic financial data of UPCD (the "Unaudited Data") contained herein are unaudited, were not reviewed by the Company's certified public accountants and are subject to possible adjustments. The Unaudited Data represent management accounts prepared by the management of the Company. While presented with numerical specificity, the Unaudited Data were not prepared with a view to public disclosure. As such, the Unaudited Data should not be relied on, although management believes that the Unaudited Data is accurate. Consolidated Operating Statistics The table below shows operating statistics for UGC on a consolidated basis (excluding acquisitions):(1) As of As of As of As of As of Dec-04 Sep-04 Jun-04 Mar-04 Dec-03 Video Homes Passed 12,429,600 12,338,500 12,323,500 12,288,800 12,260,100 Basic Analog Subscribers 7,151,800 7,082,300 7,075,200 7,079,000 7,084,900 Basic Penetration 57.5% 57.4% 57.4% 57.6% 57.8% Quarterly Net Basic Subscriber Change 69,500 7,100 (3,800) (5,900) 42,400 Digital Subscribers 239,600 223,100 195,000 161,200 138,700 Digital Penetration 1.9% 1.8% 1.6% 1.3% 1.1% Quarterly Net Digital Subscriber Change 16,500 28,100 33,800 22,500 6,400 DTH Subscribers 249,600 213,800 213,800 204,100 196,900 MMDS Subscribers 61,400 63,500 63,100 63,000 64,100 Broadband Internet Broadband Internet Homes Serviceable 7,716,500 7,484,900 7,326,900 7,127,100 7,045,000 Broadband Internet Subscribers 1,187,500 1,095,000 1,031,000 983,300 922,700 Penetration 15.4% 14.6% 14.1% 13.8% 13.1% Quarterly Net Subscriber Change 92,500 64,000 47,700 60,600 56,200 Telephone Telephone Homes Serviceable 5,488,200 4,507,400 4,488,500 4,467,700 4,467,800 Telephone Subscribers 803,000 761,000 756,700 741,800 732,800 Penetration 14.6% 16.9% 16.9% 16.6% 16.4% Quarterly Net Subscriber Change 42,000 4,300 14,900 9,000 15,100 Total RGUs 9,692,900 9,438,700 9,334,800 9,232,400 9,140,100 Quarterly Net Subscriber Change 254,200 103,900 102,400 92,300 147,600 ARPU per RGU (2) $20.67 $18.96 $18.50 $18.69 $17.72 Constant ARPU per RGU (3) $20.67 $20.00 $19.77 $19.15 $19.13 Customer Relationships 7,787,900 7,645,300 7,633,200 7,625,000 7,624,300 ARPU per Customer Relationship (4) $25.62 $23.30 $22.51 $22.52 n.a. Constant ARPU per Customer Relationship (5) $25.62 $24.57 $24.05 $23.07 n.a. RGUs by region: Europe (UGC Europe) 8,651,600 8,433,100 8,358,400 8,286,200 8,214,900 Chile (VTR) 1,009,300 973,700 944,700 914,600 894,000 Other 32,000 31,900 31,700 31,600 31,200 Total RGUs 9,692,900 9,438,700 9,334,800 9,232,400 9,140,100 Growth Growth vs. 3Q04 vs. 4Q03 Video Homes Passed 91,100 169,500 Basic Analog Subscribers 69,500 66,900 Basic Penetration n.m. n.m. Quarterly Net Basic Subscriber Change n.m. n.m. Digital Subscribers 16,500 100,900 Digital Penetration n.m. n.m. Quarterly Net Digital Subscriber Change n.m. n.m. DTH Subscribers 35,800 52,700 MMDS Subscribers (2,100) (2,700) Broadband Internet Broadband Internet Homes Serviceable 231,600 671,500 Broadband Internet Subscribers 92,500 264,800 Penetration n.m. n.m. Quarterly Net Subscriber Change n.m. n.m. Telephone Telephone Homes Serviceable 980,800 1,020,400 Telephone Subscribers 42,000 70,200 Penetration n.m. n.m. Quarterly Net Subscriber Change 876.7% 178.1% Total RGUs 254,200 552,800 Quarterly Net Subscriber Change n.m. n.m. ARPU per RGU (2) 9.0% 16.6% Constant ARPU per RGU (3) 3.4% 8.1% Customer Relationships 142,600 163,600 ARPU per Customer Relationship (4) 10.0% n.a. Constant ARPU per Customer Relationship (5) 4.3% n.a. RGUs by region: Europe (UGC Europe) 218,500 436,700 Chile (VTR) 35,600 115,300 Other 100 800 Total RGUs 254,200 552,800 (1) The operating statistics exclude Noos, Chorus and two other minor acquisitions which closed in the fourth quarter. Please refer to page 17 for definitions regarding the Consolidated Operating Statistics. (2) ARPU per RGU is calculated as follows: average monthly broadband revenue for the period as indicated, divided by the average of the opening and closing RGUs for the period. (3) Constant ARPU per RGU is calculated as follows: average monthly broadband revenue converted at the same average exchange rates for the three months ended December 31, 2004 for each period as indicated, divided by the average of the opening and closing RGUs for the period. (4) ARPU per Customer Relationship is calculated as follows: average monthly broadband revenue for the period as indicated, divided by the average of the opening and closing Customer Relationships for the period. (5) Constant ARPU per Customer Relationship is calculated as follows: average monthly broadband revenue converted at the same average exchange rates for the three months ended December 31, 2004 for each period as indicated, divided by the average of the opening and closing Customer Relationships for the period. Capital Expenditures Update The table below highlights our capital expenditures per NCTA cable industry guidelines: 12 months 12 months Year/Year (thousands) Dec-04 Dec-03 Change Customer Premises Equipment $146,944 $94,739 55% Commercial -- -- -- Scaleable Infrastructure 73,633 42,755 72% Line Extensions 31,686 67,104 -53% Upgrade/Rebuild 48,755 28,430 71% Support Capital 92,087 70,670 30% Noos & Chorus 53,383 -- n.m. Intangibles & Other 33,645 29,426 14% Total Capital Expenditures $480,133 $333,124 44% Capital Expenditures (% of Revenue) 19.0% 17.6% 8% 3 months 3 months Year/Year 3 months Sequential (thousands) Dec-04 Dec-03 Change Sep-04 Change Customer Premises Equipment $45,271 $21,113 114% $35,193 29% Commercial -- -- -- -- -- Scaleable Infrastructure 27,744 18,634 49% 17,214 61% Line Extensions 12,096 15,638 -23% 10,317 17% Upgrade/Rebuild 17,920 12,923 39% 13,597 32% Support Capital 32,079 20,137 59% 19,642 63% Noos & Chorus 44,397 -- n.m. 8,986 394% Intangibles & Other 8,069 16,981 -52% 11,747 -31% Total Capital Expenditures $187,576 $105,426 78% $116,696 61% Capital Expenditures (% of Revenue) 24.2% 20.4% 18% 17.7% 37% Consolidated Operating Data 31-Dec-04 Two-way Homes Homes Customer Total Passed (1) Passed (2) Relationships(3) RGUs (4) Europe: The Netherlands 2,620,000 2,497,800 2,289,000 2,921,700 France 4,580,700 3,316,500 1,612,000 2,382,700 Austria 946,900 943,700 578,000 931,400 Norway 486,600 244,400 341,000 447,800 Sweden 421,600 281,200 292,300 406,000 Ireland 317,300 24,200 202,700 217,500 Belgium 155,500 155,500 148,100 164,800 Total Western Europe 9,528,600 7,463,300 5,463,100 7,471,900 Poland 1,884,800 569,100 1,000,700 1,047,600 Hungary 1,006,500 675,800 922,200 1,003,400 Czech Republic 729,000 322,200 401,200 428,200 Romania 518,700 3,900 357,100 357,300 Slovak Republic 413,200 168,800 298,400 306,300 Total Central and Eastern Europe 4,552,200 1,739,800 2,979,600 3,142,800 Total Europe 14,080,800 9,203,100 8,442,700 10,614,700 Latin America: Chile 1,793,900 1,070,700 636,000 1,009,300 Brazil 15,400 15,400 15,400 16,400 Peru 66,800 30,300 13,900 15,600 Total Latin America 1,876,100 1,116,400 665,300 1,041,300 Grand Total 15,956,900 10,319,500 9,108,000 11,656,000 Video Analog Cable Digital Cable DTH MMDS Subscribers(5) Subscribers(6) Subscribers(7) Subscribers(8) Europe: The Netherlands 2,285,500 56,700 -- -- France 1,523,200 545,800 -- -- Austria 501,400 35,000 -- -- Norway 341,000 35,400 -- -- Sweden 292,300 37,700 -- -- Ireland 112,900 14,500 -- 89,000 Belgium 134,900 -- -- -- Total Western Europe 5,191,200 725,100 -- 89,000 Poland 994,200 -- -- -- Hungary 720,900 -- 140,400 -- Czech Republic 295,700 -- 90,100 -- Romania 357,000 -- -- -- Slovak Republic 250,300 -- 14,600 32,200 Total Central and Eastern Europe 2,618,100 -- 245,100 32,200 Total Europe 7,809,300 725,100 245,100 121,200 Latin America: Chile 504,600 -- 4,500 13,900 Brazil -- -- -- 15,300 Peru 12,400 -- -- -- Total Latin America 517,000 -- 4,500 29,200 Grand Total 8,326,300 725,100 249,600 150,400 Internet Telephony Homes Homes Serviceable(9) Subscribers(10) Serviceable(11) Subscribers(12) Europe: The Netherlands 2,497,800 397,400 2,250,500 182,100 France 3,316,500 247,100 707,800 66,600 Austria 943,700 242,500 910,400 152,500 Norway 244,400 48,500 151,200 22,900 Sweden 281,200 76,000 -- -- Ireland 14,500 600 24,200 500 Belgium 155,500 29,900 -- -- Total Western Europe 7,453,600 1,042,000 4,044,100 424,600 Poland 569,100 53,400 -- -- Hungary 675,800 73,200 415,600 68,900 Czech Republic 322,200 42,400 -- -- Romania 3,900 300 -- -- Slovak Republic 162,100 9,200 -- -- Total Central and Eastern Europe 1,733,100 178,500 415,600 68,900 Total Europe 9,186,700 1,220,500 4,459,700 493,500 Latin America: Chile 1,070,700 176,300 1,052,700 310,000 Brazil 15,400 1,100 -- -- Peru 30,300 3,200 -- -- Total Latin America 1,116,400 180,600 1,052,700 310,000 Grand Total 10,303,100 1,401,100 5,512,400 803,500 (1) "Homes Passed" are homes that can be connected to our networks without further extending the distribution plant, except for DTH and MMDS homes. With respect to DTH, we do not count homes passed. With respect to MMDS, one home passed is equal to one MMDS subscriber. (2) "Two-way Homes Passed" are homes passed by our networks where customers can request and receive the installation of a two-way addressable set-top converter, cable modem, transceiver and/or voice port which, in most cases, allows for the provision of video and Internet services and, in some cases, telephony services. (3) "Customer Relationships" are the number of customers who receive at least one level of service without regard to which service(s) they subscribe. (4) "Revenue Generating Unit" is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephony Subscriber. A home may contain one or more RGUs. For example, if a residential customer in our Austrian system subscribed to our analog cable service, digital cable service, telephony service and high-speed broadband Internet access service, the customer would constitute four RGUs. "Total RGUs" is the sum of Analog, Digital Cable, DTH, MMDS, Internet and Telephony Subscribers. In some cases, non-paying subscribers are counted as subscribers during their free promotional service period. Some of these subscribers choose to disconnect after their free service period. (5) "Analog Cable Subscriber" is comprised of basic cable video customers that are counted on a per connection basis. We have approximately 1.34 million "lifeline" customers that are counted on a per connection basis, representing the least expensive regulated tier of basic cable service, with only a few channels. Commercial contracts such as hotels and hospitals are counted on an equivalent bulk unit (EBU) basis. EBU is calculated by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. (6) "Digital Cable Subscriber" is a customer with one or more digital converter boxes that receives our digital video service. A Digital Cable Subscriber is counted as one Analog Cable Subscriber in column 5 of the table above whether such customer receives only our digital video service or both analog and digital video services. (7) "DTH Subscriber" is a home or commercial unit that receives our video programming broadcast directly to the home via a geosynchronous satellite. (8) "MMDS Subscriber" is a home or commercial unit that receives our video programming via a multipoint microwave (wireless) distribution system. (9) "Internet Homes Serviceable" are homes that can be connected to our broadband networks, where customers can request and receive Internet access services. (10) "Internet Subscriber" is a home or commercial unit with one or more cable modems connected to our broadband networks, where a customer has requested and is receiving high-speed Internet access services. (11) "Telephony Homes Serviceable" are homes that can be connected to our networks, where customers can request and receive voice services. (12) "Telephony Subscriber" is a home or commercial unit connected to our networks, where a customer has requested and is receiving voice services. DATASOURCE: UnitedGlobalCom, Inc. CONTACT: Investors, UGC, Richard S.L. Abbott, +1-303-220-6682, or , or UGC Europe, Claire Appleby, +44-20-7-838-2004, or ; or Bert Holtkamp, Corporate Communications - UGC Europe, +31-20-778-9447, or Web site: http://www.unitedglobal.com/

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