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Liberty Media International, Inc. First Quarter Supplemental
Financial Information & 2005 Guidance
ENGLEWOOD, Colo., May 13 /PRNewswire-FirstCall/ -- Important Notice: Liberty
Media International, Inc. (LMI) (NASDAQ:LBTYANASDAQ:LBTYB) Chairman, President
and CEO, John Malone, will discuss LMI's first quarter results in a conference
call which will begin at 11:30 a.m. (ET) May 13, 2005. The call can be
accessed by dialing (719) 457-2662 or (800) 946-0786 at least 10 minutes prior
to the start time. Replays of the conference call can be accessed from 3:00
p.m. (ET) on May 13, 2005 through 5:00 p.m. (ET) May 20, 2005, by dialing (719)
457-0820 or (800) 203-1112 plus the pass code 3508463#. The call will also be
broadcast live across the internet. To access the web cast go to
http://www.libertymediainternational.com/ir/default.htm. Links to this press
release will also be available on the LMI web site.
On May 13, 2005, Liberty Media International, Inc. (NASDAQ:LBTYANASDAQ:LBTYB)
(LMI) filed its Form 10-Q with the Securities and Exchange Commission for the
quarter ended March 31, 2005. This press release is being provided to
supplement the information provided to investors in LMI's Form 10-Q as filed
with the SEC. The information in this release is not meant to serve as a
release of financial results for LMI. For information regarding LMI's
financial results, investors should refer to LMI's financial statements
included in its Form 10-Q.
LMI owns interests in broadband distribution and content companies operating
outside the U.S., principally in Europe, Asia, and Latin America. Our
businesses include UnitedGlobalCom, Inc. (UGC), Jupiter Telecommunications Co.,
Ltd. (J:COM), Jupiter Programming Co., Ltd. (JPC), Liberty Cablevision of
Puerto Rico Ltd. and Pramer S.C.A.
Following is summary financial information and a discussion of the results of
our two largest subsidiaries and our largest equity affiliate. To enable
investors to better understand the results of these companies, this information
presents 100% of the revenue and operating cash flow for UGC, J:COM and JPC
even though we own less than 100% of these businesses. Unless otherwise noted,
the following discussion compares financial information for the three months
ended March 31, 2005 to the same period in 2004. Please see page 8 of this
press release for how we define operating cash flow and a discussion of
management's use of this performance measure as well as a reconciliation of
operating cash flow to operating income calculated in accordance with Generally
Accepted Accounting Principles in the United States (GAAP) for the quarters
ended March 31, 2005 and 2004 for the aforementioned businesses.
The selected financial information presented for LMI's equity affiliates (which
included J:COM for 2004 and JPC for 2004 and 2005) was obtained directly from
these entities. LMI does not control the decision-making processes or business
management practices of its affiliates. Accordingly, LMI relies on the
management of these affiliates and their independent auditors to provide
accurate financial information prepared in accordance with generally accepted
accounting principles. As a result, LMI makes no representations as to whether
such information presented on a stand-alone basis has been prepared in
accordance with GAAP. LMI is not aware, however, of any errors in or possible
misstatements of the financial information provided to it by its affiliates
that would have a material effect on LMI's consolidated financial statements.
Further, LMI could not, among other things, cause any noncontrolled affiliate
to distribute to LMI its proportionate share of the revenue or operating cash
flow of such affiliate.
OPERATING RESULTS
UnitedGlobalCom, Inc. (UGC) (54% / 91%)
LMI owned 54% of UGC as of March 31, 2005 and controlled 91% of the vote. UGC
is a leading international broadband communications provider of video, voice,
and Internet services with operations in 16 countries, 13 of which are in
Europe. As a separate publicly traded company (NASDAQ:UCOMA), UGC reported its
first quarter results on May 10, 2005.
UGC
Summary Financial Information
1Q05 1Q04
(amounts in million US$)
Revenue
UPC Broadband $667 448
VTR 85 72
chellomedia 61 37
Eliminations & Other (15) (10)
Total Revenue $798 547
Operating Cash Flow
UPC Broadband $257 185
VTR 31 25
chellomedia 4 (2)
Other (13) (4)
Total Operating Cash Flow $279 204
Operating Income (Loss) $39 (80)
Outstanding Debt (1) $4,902 3,878
Operating Statistics (2) (figures in thousands)
Homes Passed 16,130 12,289
Total Video Subscribers (3) 8,796 7,340
Internet Subscribers 1,514 983
Telephone Subscribers 848 742
(1) Includes $104 million of intercompany debt with LMI at March 31,
2005 that eliminates in consolidation.
(2) See definitions in Supplemental Operating Information section on
page 7.
(3) Represents the sum of basic analog subscribers, digital cable
subscribers, DTH subscribers, and MMDS subscribers as applicable.
Revenue for the three months ended March 31, 2005 was up 46% compared to the
corresponding period of the prior year. Excluding the impact of exchange rate
fluctuations and acquisitions, organic year-over-year revenue growth was
approximately 13%. The increase was driven primarily by higher average monthly
revenue per subscriber and subscriber growth across all of UGC's Broadband
operations.
Operating cash flow for the first quarter was $279 million, an increase of 37%
compared to the corresponding period of the prior year. Excluding the impact
of exchange rate fluctuations, acquisitions and costs related to the potential
combination with LMI, organic operating cash flow growth was approximately 15%
for the period. UGC's operating cash flow margin declined from 37.3% during
the first quarter of 2004 to 35.0% for the most recent quarter. This decline
is primarily due to costs related to the potential combination with LMI as well
as the inclusion of results from acquired businesses in France and Ireland that
have lower margins.
Capital expenditures increased to $167 million for the quarter compared to $80
million in the same prior year period. The primary reason for the increase was
higher spending on customer premise equipment due to subscriber growth and
exchange rate fluctuations.
As compared to March 31, 2004, including acquisitions, UGC increased total
video subscribers by approximately 1,456,000, Internet subscribers by 531,000
and telephone subscribers by 106,000.
Jupiter Telecommunications Co., Ltd. (J:COM) (36.8%)
LMI indirectly owned 37.5% of J:COM at March 31, 2005. J:COM is Japan's
largest multiple system operator, based on the number of customers served,
providing cable television, Internet access and telephone services in Japan. As
a result of a change in governance for LMI/Sumisho Super Media LLC (Super
Media) the entity through which LMI holds its J:COM interest, LMI began
accounting for Super Media and J:COM as consolidated subsidiaries effective
January 1, 2005. On March 23, 2005, J:COM completed an initial public offering
of its common shares on Tokyo's Jasdaq stock market. On April 15, 2005, the
underwriters of the IPO exercised their over-allotment option taking LMI's
indirect ownership in J:COM to 36.8%. As a separate public company, J:COM
reported its results in Japan on April 26, 2005.
J:COM
Summary Financial Information
(in US$) (in yen)
1Q05 1Q04 1Q05 1Q04
(amounts in millions)
Revenue $406 359 yen 42,462 38,316
Operating Expenses 238 218 24,854 23,226
Operating Cash Flow $168 141 yen 17,608 15,090
Operating Income $64 57 yen 6,678 6,028
Third-Party Debt $1,706 1,000 yen 182,751 104,342
Shareholder Debt --- 1,481 --- 154,601
Outstanding Debt $1,706 2,481 yen 182,751 258,943
Consolidated Operating Statistics (1) (figures in thousands)
Homes Passed (2) 6,529 5,503
Total Video Subscribers (3) 1,520 1,422
Internet Subscribers 734 621
Telephone Subscribers 762 576
(1) See definitions in Supplemental Operating Information section on
page 7.
(2) As a result of mapping audits J:COM increased its cable homes passed
during 2004.
(3) Represents the sum of basic analog subscribers, digital cable
subscribers, DTH subscribers, and MMDS subscribers, as applicable.
Revenue increased 13% in the first quarter of 2005 compared to the
corresponding quarter of 2004. Excluding the effect of exchange rates, revenue
increased 11%. Revenue increases were due to increased distribution across all
J:COM services, with substantial growth in Internet and telephone services.
Total video subscribers increased 7%, Internet subscribers increased 18% and
telephone subscribers increased 32%.
Operating cash flow increased 19% for the first quarter of 2005 compared to the
first quarter of last year. Excluding the effect of exchange rates, operating
cash flow increased 17% year over year. Operating cash flow margins increased
to 41% from 39%. Operating cash flow increases are due to the revenue
increases combined with continued margin improvements associated with increased
scale.
J:COM served approximately 1.8 million households at March 31, 2005, an
increase of 9% from March 2004, and services per household (total revenue
generating units divided by total households served) rose from 1.59 to 1.68.
Penetration of homes taking at least one service was 27% at March 31, 2005.
Approximately 48% of J:COM's customers subscribed to more than one service at
March 31, 2005, which translated into approximately 862,000 homes with multiple
services. The triple play service option (taking all three services available)
has steadily increased to 20% of J:COM's homes at March 31, 2005 compared to
16% at March 31, 2004. J:COM's network operates at 750 or 770 MHz capacity.
At March 31, 2005, J:COM's weighted average ownership of its total consolidated
subscribers was 81.9%.
Jupiter Programming Co., Ltd. (JPC) (50.0%)
LMI owned 50% of JPC at March 31, 2005. JPC is the largest multi-channel pay
television programming and content provider in Japan based upon the number of
subscribers receiving the channels. JPC currently owns or has investments in
15 channels.
JPC
Summary Financial Information
(in US$) (in yen)
1Q05 1Q04 1Q05 1Q04
(amount in millions)
Revenue $183 124 yen 19,089 13,177
Operating Expenses 147 106 15,313 11,223
Operating Cash Flow $36 18 yen 3,776 1,954
Operating Income $32 16 yen 3,353 1,657
Outstanding Debt (1) $57 62 yen 6,148 6,464
Cumulative Subscribers (2)
(in thousands) 47,461 43,165
(1) Includes shareholder debt of $9 million and $10 million at March 31,
2005 and 2004, respectively.
(2) Includes subscribers at all consolidated and equity owned JPC
channels. Shop Channel subscribers are stated on a full-time
equivalent basis. Shop Channel prior year full-time equivalent
subscriber numbers have been restated for comparability with current
year presentation.
JPC's revenue increased 48% in the first quarter of 2005 compared to the same
quarter last year largely due to the increase in retail sales at Shop Channel
and in subscription and advertising revenues at the other channels. Excluding
the effect of exchange rates, revenue increased by 45%. Shop Channel, which is
70%-owned by JPC, was the largest contributor generating approximately 93% of
the increase during the quarter versus the corresponding period in 2004. This
increase was driven by a 10% increase in full-time equivalent ("FTE") homes and
an increase of 20% in sales per FTE and a 34% increase in active customers
(customers who have purchased at least once in the last twelve months). In
addition to the growth at Shop Channel, subscribers grew by 10% at Movie Plus,
11% at Golf Network, 8% at J-Sports, 12% at Discovery, 22% at Animal Planet and
15% at AXN.
JPC's operating cash flow increased 100% for the quarter ended March 31, 2005
compared to the same quarter last year. Excluding the effect of exchange
rates, operating cash flow increased 93% for the first quarter of 2005 compared
to the same quarter last year. Operating cash flow increased due primarily to
revenue increases, partially offset by higher cost of goods sold, fulfillment,
telemarketing, programming, marketing, distribution and general and
administrative expenses.
Free Cash Flow
For the three months ended
March 31, 2005
UGC J:COM JPC
(amounts in millions)
Net cash provided by operations $132 120 23
Capital expenditures (1) (167) (92) (7)
Free cash flow $(35) 28 16
(1) Capital expenditures for J:COM and JPC include equipment purchased
under capital leases.
CORPORATE & OTHER
Cash, Carrying Value of Non Strategic Holdings and Debt
March 31, 2005 December 31, 2004
(amounts in millions)
Consolidated Cash & Cash Equivalents $3,076 2,531
LMI Non-Strategic Investments
News Corporation (1) $93 103
ABC Family Preferred $379 387
UGC Non-Strategic Investments
SBS Broadcasting S.A. $268 242
Consolidated Debt
Parent Debt $-- --
UGC Debt 4,798 4,853
J:COM Debt 1,706 --
Other Subsidiary Debt 138 140
Consolidated Debt $6,642 4,993
(1) LMI has entered into a variable forward transaction with respect
to this investment. The variable forward transaction was terminated
on April 7, 2005.
At March 31, 2005 consolidated cash includes $1,066 million and $1,385 million
of cash at UGC and J:COM, respectively. At December 31, 2004, consolidated
cash included $1,029 million of cash at UGC.
Outstanding Shares
At March 31, 2005, there were approximately 173 million outstanding shares of
LBTYA and LBTYB and 5 million shares of LBTYA and LBTYB reserved for issuance
pursuant to stock options.
Other Items
On April 14, 2005, VTR GlobalCom S.A., a wholly-owned subsidiary of UGC
completed its acquisition of LMI's 50%-owned equity affiliate, Metropolis
Intercom S.A. The combined entity is the largest MSO in Chile, based on the
number of customers served, with a total of approximately 1,280,000 revenue
generating units, including 744,000 video customers, 215,000 broadband Internet
customers and 321,000 telephony customers at December 31, 2004.
Forward Looking Information
Certain statements in this press release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual results,
performance or achievements of the assets of Liberty Media International, Inc.
included herein or industry results, to differ materially from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors
include, among others: the risks and factors described in the publicly filed
documents of LMI, including the most recently filed Form 10-Q of LMI; economic
and business conditions and industry trends in the countries in which we
operate; currency exchange risks; consumer disposable income and spending
levels, including the availability and amount of individual consumer debt;
changes in television viewing preferences and habits by our subscribers and
potential subscribers; consumer acceptance of existing service offerings,
including our newer digital video, voice and Internet access services; consumer
acceptance of new technology, programming alternatives and broadband services
that we may offer; our ability to manage rapid technological changes, and grow
our digital video, voice and Internet access services; the regulatory and
competitive environment in the broadband communications and programming
industries in the countries in which we, and the entities in which we have
interests, operate; continued consolidation of the foreign broadband
distribution industry; uncertainties inherent in the development and
integration of new business lines and business strategies; the expanded
deployment of personal video recorders and the impact on television advertising
revenue; capital spending for the acquisition and/or development of
telecommunications networks and services; uncertainties associated with product
and service development and market acceptance, including the development and
provision of programming for new television and telecommunications
technologies; future financial performance, including availability, terms and
deployment of capital; the ability of suppliers and vendors to timely deliver
products, equipment, software and services; the outcome of any pending or
threatened litigation; availability of qualified personnel; changes in, or
failure or inability to comply with, government regulations in the countries in
which we operate and adverse outcomes from regulatory proceedings; government
intervention which opens our broadband distribution networks to competitors;
our ability to successfully negotiate rate increases with local authorities;
changes in the nature of key strategic relationships with partners and joint
venturers; uncertainties associated with our ability to satisfy conditions
imposed by competition and other regulatory authorities in connection with
acquisitions; uncertainties associated with our ability to comply with the
internal control requirements of the Sarbanes Oxley Act of 2002; competitor
responses to our products and services, and the products and services of the
entities in which we have interests; spending on television advertising; and
threatened terrorist attacks and ongoing military action in the Middle East and
other parts of the world. These forward-looking statements speak only as of
the date of this Release. LMI expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in LMI's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.
Additional Information
Liberty Global, Inc. (Liberty Global) has filed a Registration Statement on
Form S-4 containing a definitive joint proxy statement/prospectus related to
the proposed business combination between LMI and UGC. LMI STOCKHOLDERS AND
OTHER INVESTORS ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE
BUSINESS COMBINATION. Investors may obtain a copy of the definitive joint
proxy statement/prospectus and other documents related to the transaction free
of charge at the SEC's website (http://www.sec.gov/). Copies of the definitive
joint proxy statement/prospectus and the filings with the SEC that are
incorporated by reference in the definitive joint proxy statement/prospectus
can also be obtained, without charge, by directing a request to Liberty Media
International, Inc., 12300 Liberty Boulevard, Englewood, Colorado 80112,
Attention: Investor Relations Telephone: (877) 783-7676.
Participants in Solicitation
The proposed directors and executive officers of Liberty Global and the
directors and executive officers of LMI and other persons may be deemed to be
participants in the solicitation of proxies in respect of the proposed business
combination. Information regarding Liberty Global's proposed directors and
executive officers and LMI's directors and executive officers and other
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, is available in the
definitive joint proxy statement/prospectus contained in the above-referenced
Registration Statement.
SUPPLEMENTAL OPERATING INFORMATION
As a supplement to LMI's condensed consolidated statements of operations, the
following is a presentation of operating metrics on a stand-alone basis for
LMI's two largest broadband distribution businesses (UGC and J:COM).
March 31,
2005 2004
UGC (54% / 91%) (1) (amounts in thousands)
Homes Passed (2) 16,130 12,289
Basic Analog Subscribers (3) 7,677 6,920
Digital Cable Subscribers (4) 719 158
DTH Subscribers (5) 250 199
MMDS Subscribers (6) 150 63
Internet Homes Serviceable (7) 10,537 7,127
Internet Subscribers (8) 1,514 983
Telephone Homes Serviceable (9) 5,675 4,468
Telephone Subscribers(10) 848 742
J:COM (36.8%)
Homes Passed (2) 6,529 5,503
Basic Analog Subscribers (3) 1,221 1,398
Digital Cable Subscribers (4) 299 24
Internet Homes Serviceable (7) 6,517 5,489
Internet Subscribers (8) 734 621
Telephone Homes Serviceable (9) 5,835 4,464
Telephone Subscribers (10) 762 576
(1) In some cases, non-paying subscribers are counted by UGC as
subscribers during their free promotional service period. Some of
these subscribers choose to disconnect after their free service
period. The number of non-paying subscribers at March 31, 2005 was
immaterial.
(2) 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.
(3) Basic Analog Subscriber is comprised of basic cable video customers
who receive only our analog video service and are generally counted
on a per connection basis. Except in the case of UGC, residential
multiple dwelling units with a discounted pricing structure are
counted on an equivalent bulk unit (EBU) basis. Commercial
contracts such as hotels and hospitals are counted by all our
subsidiaries on an EBU basis. EBU is calculated by dividing the
bulk price charged to accounts in an area by the prevalent price
charged to non-bulk residential customers in that market for the
comparable tier of service. UGC also has "lifeline" customers
(approximately 1.34 million at March 31, 2005) that are counted on
a per connection basis, representing the least expensive regulated
tier of basic cable service, with only a few channels.
(4) Digital Cable Subscriber is a customer with one or more digital
converter boxes that receives our digital video service. A customer
is counted as one Digital Cable Subscriber whether such customer
receives only our digital video service or both analog and digital
video services. The EBU method of counting certain subscribers
described in note 3 applies to Digital Cable Subscribers as well as
Basic Analog Subscribers.
(5) DTH Subscriber is a home or commercial unit that receives our video
programming broadcast directly to the home via a geosynchronous
satellite. For March 31, 2004 excludes 5,200 DTH subscribers since
VTR GlobalCom S.A. sold its DTH business during the first quarter
of 2005.
(6) MMDS Subscriber is a home or commercial unit that receives our video
programming via a multipoint microwave (wireless) distribution
system.
(7) Internet Homes Serviceable are homes that can be connected to our
networks, where customers can request and receive Internet access
services.
(8) Internet Subscriber is a home or commercial unit with one or more
cable modems connected to our networks, where a customer has
requested and is receiving high-speed Internet access services.
(9) Telephony Homes Serviceable are homes that can be connected to our
networks, where customers can request and receive voice services.
(10) Telephony Subscriber is a home or commercial unit connected to our
networks, where a customer has requested and is receiving voice
services.
NON-GAAP FINANCIAL MEASURES
This press release includes a presentation of operating cash flow, which is a
non-GAAP financial measure, for UGC, J:COM and JPC. Set forth in the table
below is a reconciliation of that non-GAAP measure to each such business'
operating income, determined under GAAP. LMI defines operating cash flow as
revenue less operating and SG&A expenses (excluding stock-based compensation,
depreciation and amortization, impairment of long-lived assets, and
restructuring and other charges). LMI believes this is an important indicator
of the operational strength and performance of its businesses, including the
ability to service debt and fund capital expenditures. In addition, this
measure allows management to view operating results and perform analytical
comparisons and benchmarking between businesses and identify strategies to
improve performance. In this regard, LMI believes that operating cash flow is
meaningful because it provides investors a means to evaluate the operating
performance of the Company and its reportable segments on an ongoing basis
using criteria that is used by LMI's internal decision makers. This measure of
performance excludes depreciation and amortization, stock-based compensation
and restructuring and impairment charges that are included in the measurement
of operating income pursuant to GAAP. Accordingly, operating cash flow should
be considered in addition to, but not as a substitute for, operating income,
net income, cash flow provided by operating activities and other measures of
financial performance prepared in accordance with GAAP. LMI generally accounts
for intersegment sales and transfers as if the sales or transfers were to third
parties, that is, at current prices.
Please see the schedule below for a reconciliation of operating cash flow to
operating income calculated in accordance with GAAP for the quarters ended
March 31, 2005 and 2004 for UGC, J:COM and JPC.
UGC J:COM JPC
Three months ended March 31, 2005 (amounts in millions)
Operating Cash Flow $279 168 36
Depreciation and Amortization (227) (95) (4)
Stock Compensation Expense (9) (9) --
Other Non Cash Charges (4) -- --
Operating Income $39 64 32
Three months ended March 31, 2004
Operating Cash Flow $204 141 18
Depreciation and Amortization (218) (84) (2)
Stock Compensation Expense (62) -- --
Other Non Cash Charges (4) -- --
Operating (Loss) Income $(80) 57 16
DATASOURCE: Liberty Media International, Inc.
CONTACT: Mike Erickson of Liberty Media International, Inc.,
+1-877-772-1518
Web site: http://www.libertymediainternational.com/ir/default.htm
Web site: http://www.libertymediainternational.com/