Second Quarter Investor Call August 11, 2005
Safe Harbor Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Forward-Looking Statements: Except for historical information contained herein, this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including guidance given for 2005. 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 the continued use by subscribers and potential subscribers of the Company's services, changes in technology and competition, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and Operating Cash Flow 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 refer to the Appendix at the end of this presentation, as well as the Company s Press Release dated August 11, 2005 and SEC filings, for definitions of the following terms which are used herein including: Operating Cash Flow (OCF), Free Cash Flow, Revenue Generating Units (RGUs), and Average Revenue per Unit (ARPU), as well as GAAP reconciliations. Page 2
Agenda LGI Overview Q2 Highlights Summary of Results Q&A Page 3
The Distribution Platform Largest MSO outside U.S. - 3 rd largest in world (1) (In 000 s) Homes Passed 14,351 6,616 2,102 23,480 2-Way Homes Passed 9,654 6,608 1,363 17,999 Total Customers 8,619 1,826 881 11,477 RGUs per Customer 1.2 1.7 1.5 1.3 RGUs: Analog (2) 7,295 1,140 747 9,275 Digital (2) 990 406 0 1,449 Voice 594 807 338 1,753 Data 1,402 764 255 2,452 Total 10,281 3,117 1,340 14,929 (1) In terms of subscribers. (2) Analog includes MMDS subscribers and digital includes DTH subscribers. Page 4
Key Value Drivers Organic Growth 1.1+ million net adds in 05 Greenfield expansion New products launches (In Thousands) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Voice & Data Subs (1) 4,205 3,669 2,788 2,256 2002 2003 2004 Q2 '05 Voice Data Attractive Economics High gross margins Favorable capex profile OCF margin expansion 40% 35% 30% 25% 20% 15% 10% 5% Operating Cash Flow Margins 36% 36% 32% 22% 23% 23% (1) Includes consolidation of UGC and J:COM for all periods. Other acquisitions included at date of acquisition. 0% 2002 Q2 '05 UPC VTR J:COM Page 5
Key Value Drivers Strategic Opportunities Content development New technologies Footprint expansion RGUs Deal Country (000's) Rationale Noos France 1,230 Consolidation Telemach Slovenia 116 New Market Chorus Ireland 203 New Market NTL Ireland 360 Consolidation Astral Romania 890 Consolidation Page 6
Agenda LGI Overview Q2 Highlights Summary of Results Q&A Page 7
Q2 Highlights Operating Performance Record subscriber growth Strong revenue performance Operating cash flow impacted by volume Products Digital products & initiatives on track Voice (digital phone) driving new growth Data speeds increasing; prices stabilizing Page 8
Q2 Highlights Strategic Initiatives Acquisitions & integrations on schedule Content assets & opportunities flourishing Advanced network & technology roadmap Balance Sheet Modest leverage and ample liquidity Market is open for opportunistic financings Stock dividend announced Page 9
Agenda LGI Overview Q2 Highlights Summary of Results Q&A Page 10
Consolidated RGU Results RGUs at PF / Organic Net Additions (4) Q2 '05 (3) Q2 '05 Q2 '04 % Var RGUs by Product (1) Internet 2,452,000 137,000 81,500 68% Telephone 1,753,400 112,400 62,200 81% Digital / DTH 1,448,500 132,800 102,800 29% Analog Cable (2) 9,275,100 (119,700) (83,200) 44% Total RGUs 14,929,000 262,500 163,300 61% RGUs by Region UPC (Europe) 10,280,700 122,800 38,300 221% J:COM (Japan) 3,117,400 101,200 93,700 8% VTR (Chile) 1,339,500 36,900 30,100 23% Other 191,400 1,600 1,200 33% Total RGUs 14,929,000 262,500 163,300 61% (1) A Digital RGU is not double counted as an Analog RGU. (2) Analog cable includes MMDS subscribers. (3) Excludes NTL Ireland. (4) Organic net gain only (i.e., excludes impact of acquisitions at closing). Q2 04 includes J:COM net gain for comparison purposes. Page 11
Summary Financial Results (In US$ Millions) Q2 Q2 Yr/Yr 2005 2004 % Revenue $1,276 $580 120% Operating Expenses 848 384 121% Operating Cash Flow $428 $197 118% % Margin 33.6% 33.9% -30Bps Capital Expenditures (1) $343 $106 222% Capex (% of Rev.) 26.9% 18.3% +860Bps Free Cash Flow (Deficit) ($62) $62-199% (1) Includes capital lease additions. Operating Cash Flow - Please see Appendix for a definition and reconciliation to earnings (loss) before income taxes and minority interests. Free Cash Flow Please see Appendix for a definition and additional information. Page 12
Revenue Breakdown (In US$ Millions) Q2 PF Q2 Yr/Yr FX Adjusted 2005 2004 % Growth (1) Western Europe $520 $345 51% 46% C & E Europe 156 111 40% 27% UPC Broadband 676 456 48% 41% Japan (J:COM) (2) 413 364 13% 12% Chile (VTR) 109 70 57% 45% Other 79 54 46% 41% Total LGI $1,276 $944 35% 30% (1) The FX Adjusted growth figures presented are based on what the growth would have been had exchange rates remained the same in Q2 05 as Q2 04. (2) J:COM was not consolidated in 2004. For comparative purposes, we have shown J:COM as if it was consolidated. Please refer to Appendix. Page 13
OCF Breakdown (In US$ Millions) Q2 PF Q2 Yr/Yr FX Adjusted 2005 2004 % Growth (1) Western Europe $183 $141 30% 25% C & E Europe 62 43 43% 31% UPC Broadband 245 185 33% 26% Japan (J:COM) (2) 147 145 1% 0% Chile (VTR) 35 24 47% 36% Other 1 (12) 107% 105% Total LGI $428 $342 25% 20% (1) The FX Adjusted growth figures presented are based on what the growth would have been had exchange rates remained the same in Q2 05 as Q2 04. (2) J:COM was not consolidated in 2004. For comparative purposes, we have shown J:COM as if it was consolidated. Please refer to Appendix. Page 14
Leverage & Liquidity (US$ millions) 3/31/05 6/30/05 Total Debt $6,642 $6,492 Total Cash (3,094) (1,913) Net Debt $3,548 $4,579 Gross Leverage (1) 3.7x 3.8x Net Leverage (1) 2.0x 2.7x Additional Potential Liquidity Bank Revolvers (2) $841 $825 Other Investments (3) 1,036 1,081 Total 1,877 1,906 Total Liquidity $4,971 $3,819 (1) Gross and Net Leverage equals total and net debt, respectively, divided by Operating Cash Flow annualized for the three months ended as of the date indicated. (2) Represents the amounts available under the bank facilities for UPC Broadband and J:COM (e.g., as of June 30, 2005, Euro 533mm/US$645mm available of the Euro 1 billion committed of UPC Broadband s facilities). (3) Market values of SBS, Austar, and News Corp and estimated fair value of ABC Family Preferred as of June 30, 2005. Page 15
Liberty Global Guidance 2005 Guidance Organic RGU Additions (1) 1.1m 1.2m Ending RGUs (2) 16.7m 16.8m Revenue (3) Operating Cash Flow (4) $5.1b $5.2b $1.8b $1.9b Capex (% of Revenue) (5) ~25% (1) Our RGU figures use a single count method whereby we do not double count a digital video subscriber as an analog subscriber. The RGU addition forecast assumes continued demand for our broadband Internet, telephony, and digital video products. (2) Includes 1.7 million RGUs either acquired or expected to be acquired during 2005. The year-end 2005 RGU forecast assumes the completion of our previously announced Romanian and Irish acquisitions. (3) Assumes full year 2005 average FX rates of approximately $1.25 per Euro, 109 Yen per dollar, and 580 Chilean pesos per dollar, as well as completion of the NTL Ireland transaction. (4) To the extent that our organic RGU growth exceeds our guidance range, we would expect to report lower operating cash flow due to the associated increase in marketing and subscriber acquisition costs. (5) Includes capital lease additions. Page 16
Conclusions Q2 Results Demonstrate Execution Momentum Strong Leading into Second Half of Year 2005 LGI Guidance Targets Set Liberty Global Investor Conference Scheduled for September 28 th in NYC Page 17
Second Quarter Investor Call August 11, 2005
Operating Cash Flow Definition Appendix Operating cash flow is not a GAAP measure. Operating cash flow is the primary measure used by our chief operating decision maker 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 and SG&A expenses (excluding depreciation and amortization, stock-based compensation, impairment of long-lived assets and restructuring and other charges). 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 would distort 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. A reconciliation of total segment operating cash flow to our consolidated earnings (loss) before income taxes and minority interests is presented herein. Investors should view operating cash flow as a supplement to, and not a substitute for, operating income, net earnings, cash flow from operating activities and other GAAP measures of income as a measure of operating performance. Page 19
Appendix Other Definitions Revenue Generating Unit ( RGU ) is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephone Subscriber. A home may contain one or more RGUs. For example, if a residential customer in our Austrian system subscribed to our digital cable service, telephone service and high-speed broadband Internet access service, the customer would constitute three RGUs. Total RGUs is the sum of Analog, Digital Cable, DTH, MMDS, Internet and Telephone 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. The RGU data herein excludes all RGU data relating to NTL Ireland, which had approximately 360,000 RGUs as of March 31, 2005. Average Revenue Per Unit ( ARPU ) is calculated as follows: average total monthly broadband revenue for the period as indicated, divided by the average of the opening and closing RGUs or customer relationships, as applicable, for the period. Page 20
Appendix GAAP Reconciliations Reconciliation of Operating Cash Flow to Earnings (Loss) Before Income Taxes and Minority Interests (1) Three months ended Six months ended (amounts in thousands) June 30, 2005 March 31, 2005 June 30, 2004 June 30, 2005 June 30, 2004 Total segment operating cash flow $ 428,452 $ 448,875 $ 196,783 $ 877,327 $ 402,211 Stock-based compensation credits (charges) (42,871) (18,655) 11,002 (61,526) (52,743) Depreciation and amortization (345,824) (327,591) (221,497) (673,415) (443,009) Impairment of long-lived assets (167) - (16,623) (167) (16,623) Restructuring and other credits (charges) 2,255 (4,863) (4,962) (2,608) (8,784) Operating income (loss) 41,845 97,766 (35,297) 139,611 (118,948) Interest expense (86,728) (91,028) (81,501) (177,756) (153,986) Interest and dividend income 22,317 20,536 16,228 42,853 25,194 Share of earnings (losses) of affiliates, net 4,517 (21,324) 22,755 (16,807) 38,845 Realized and unrealized gains on derivative instruments, net 69,301 85,868 88,416 155,169 75,385 Foreign currency transaction losses, net (136,885) (64,762) (6,272) (201,647) (27,130) Gain (loss) on extinguishment of debt (651) (11,980) 3,871 (12,631) 35,787 Gains (losses) on disposition of assets, net (43,994) 69,572 26,566 25,578 24,724 Other income (expense), net 589 684 (103) 1,273 (8,360) Earnings (loss) before income taxes and minority interests $ (129,689) $ 85,332 $ 34,663 $ (44,357) $ (108,489) (1) We are unable to provide a reconciliation of forecasted Operating Cash Flow, to the most directly comparable GAAP measure, net income (loss), as applicable, 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. Page 21
Appendix GAAP Reconciliations Free Cash Flow is not a GAAP measure of liquidity. We define Free Cash Flow as net cash provided by operating activities less capital expenditures and capital lease additions. Our definition of free cash flow includes capital lease additions which are used to finance capital expenditures. From an accounting perspective, capital expenditures that are financed by capital lease arrangements are treated as non-cash activities and accordingly are not included in the capital expenditure amounts presented in our condensed consolidated statements of cash flows. 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. Three months ended Six months ended (amounts in thousands) June 30, 2005 March 31, 2005 June 30, 2004 June 30, 2005 June 30, 2004 Net cash provided by operating activities $ 281,354 $ 303,017 $ 168,809 $ 584,371 $ 303,528 Capital expenditures (301,734) (248,690) (106,389) (550,424) (195,935) Capital lease additions (41,231) (30,183) - (71,414) - Free cash flow (deficit) $ (61,611) $ 24,144 $ 62,420 $ (37,467) $ 107,593 Page 22
Appendix Pro Forma Revenue Three months ended Increase Increase (decrease) June 30, (decrease) excluding FX 2005 2004 $ % $ % amounts in thousands, except % amounts Europe (UPC Broadband) The Netherlands $ 195,535 $ 172,568 $ 22,967 13.3 $ 14,151 8.2 France 128,285 30,982 97,303 314.1 95,695 308.9 Austria 81,744 75,929 5,815 7.7 2,126 2.8 Other Western Europe 114,216 65,373 48,843 74.7 45,123 69.0 Total Western Europe 519,780 344,852 174,928 50.7 157,095 45.6 Hungary 71,086 51,726 19,360 37.4 15,518 30.0 Other Central and Eastern Europe 84,723 59,621 25,102 42.1 15,032 25.2 Total Central and Eastern Europe 155,809 111,347 44,462 39.9 30,550 27.4 Total Europe (UPC Broadband) 675,589 456,199 219,390 48.1 187,645 41.1 Japan (J:COM) 412,898 364,047 48,851 13.4 42,550 11.7 Chile (VTR) 109,213 69,758 39,455 56.6 31,252 44.8 Corporate and other (1) 96,708 65,094 31,614 48.6 28,887 44.4 Intersegment eliminations (18,136) (10,642) (7,494) (70.4) (6,683) (62.8) Pro Forma Revenue 1,276,272 944,456 331,816 35.1 283,651 30.0 Elimination of equity affiliate (J:COM) - (364,047) 364,047 NM NM NM Total Revenue $ 1,276,272 $ 580,409 $ 695,863 NM NM NM This table provides revenue by reportable segment for the three months ended June 30, 2005, as compared to corresponding prior year period. In each case, the tables present (i) the amounts reported by each of our reportable segments for the comparative interim periods, (ii) the U.S. dollar change and percentage change from period to period, and (iii) the U.S. dollar equivalent of the change and the percentage change from period to period, after removing foreign currency effects (FX). The comparisons that exclude FX assume that exchange rates remained constant during the periods that are included in each table. Other Western Europe includes our operating segments in Ireland, Norway, Sweden and Belgium. Other Central and Eastern Europe includes our operating segments in Poland, Czech Republic, Slovak Republic, Romania and Slovenia. (1) Includes (i) certain less significant segments that provide video programming and other services in Europe and Argentina and broadband services in Puerto Rico, Brazil and Peru, and (ii) our corporate segment. Pro Forma Revenue is presented to highlight what total revenues would have been had J:COM been consolidated in 2004. Page 23
Appendix Pro Forma Revenue (cont.) Six months ended Increase Increase (decrease) June 30, (decrease) excluding FX 2005 2004 $ % $ % amounts in thousands, except % amounts Europe (UPC Broadband) The Netherlands $ 399,997 $ 348,239 $ 51,758 14.9 $ 33,431 9.6 France 260,188 62,202 197,986 318.3 194,648 312.9 Austria 166,761 152,218 14,543 9.6 6,850 4.5 Other Western Europe 204,211 122,172 82,039 67.2 73,544 60.2 Total Western Europe 1,031,157 684,831 346,326 50.6 308,473 45.0 Hungary 143,330 102,384 40,946 40.0 29,691 29.0 Other Central and Eastern Europe 168,592 117,130 51,462 43.9 29,070 24.8 Total Central and Eastern Europe 311,922 219,514 92,408 42.1 58,761 26.8 Total Europe (UPC Broadband) 1,343,079 904,345 438,734 48.5 367,234 40.6 Japan (J:COM) 819,035 723,414 95,621 13.2 81,468 11.3 Chile (VTR) 194,102 141,441 52,661 37.2 43,847 31.0 Corporate and other (1) 191,323 133,121 58,202 43.7 52,637 39.5 Intersegment eliminations (36,017) (22,298) (13,719) (61.5) (12,108) (54.3) Pro Forma Revenue 2,511,522 1,880,023 631,499 33.6 533,078 28.4 Elimination of equity affiliate (J:COM) - (723,414) 723,414 NM NM NM Total Revenue $ 2,511,522 $ 1,156,609 $ 1,354,913 NM NM NM This table provides revenue by reportable segment for the six months ended June 30, 2005, as compared to corresponding prior year period. In each case, the tables present (i) the amounts reported by each of our reportable segments for the comparative interim periods, (ii) the U.S. dollar change and percentage change from period to period, and (iii) the U.S. dollar equivalent of the change and the percentage change from period to period, after removing foreign currency effects (FX). The comparisons that exclude FX assume that exchange rates remained constant during the periods that are included in each table. Other Western Europe includes our operating segments in Ireland, Norway, Sweden and Belgium. Other Central and Eastern Europe includes our operating segments in Poland, Czech Republic, Slovak Republic, Romania and Slovenia. (1) Includes (i) certain less significant segments that provide video programming and other services in Europe and Argentina and broadband services in Puerto Rico, Brazil and Peru, and (ii) our corporate segment. Pro Forma Revenue is presented to highlight what total revenues would have been had J:COM been consolidated in 2004. Page 24
Appendix Pro Forma Operating Cash Flow Three months ended Increase Increase (decrease) June 30, (decrease) excluding FX 2005 2004 $ % $ % amounts in thousands, except % amounts Europe (UPC Broadband) The Netherlands $ 85,344 $ 86,129 $ (785) (0.9) $ (4,384) (5.1) France 21,265 1,470 19,795 1,346.6 19,711 1,340.9 Austria 34,899 30,493 4,406 14.4 2,836 9.3 Other Western Europe 41,832 23,364 18,468 79.0 16,899 72.3 Total Western Europe 183,340 141,456 41,884 29.6 35,062 24.8 Hungary 27,251 19,956 7,295 36.6 5,827 29.2 Other Central and Eastern Europe 34,547 23,224 11,323 48.8 7,360 31.7 Total Central and Eastern Europe 61,798 43,180 18,618 43.1 13,187 30.5 Total Europe (UPC Broadband) 245,138 184,636 60,502 32.8 48,249 26.1 Japan (J:COM) 147,175 145,144 2,031 1.4 193 0.1 Chile (VTR) 35,283 23,987 11,296 47.1 8,659 36.1 Corporate and other (1) 856 (11,840) 12,696 107.2 12,482 105.4 Pro Forma Operating Cash Flow 428,452 341,927 86,525 25.3 69,583 20.4 Elimination of equity affiliate (J:COM) - (145,144) 145,144 NM NM NM Total Operating Cash Flow $ 428,452 $ 196,783 $ 231,669 NM NM NM This table provides Operating Cash Flow by reportable segment for the three months ended June 30, 2005, as compared to corresponding prior year period. In each case, the tables present (i) the amounts reported by each of our reportable segments for the comparative interim periods, (ii) the U.S. dollar change and percentage change from period to period, and (iii) the U.S. dollar equivalent of the change and the percentage change from period to period, after removing foreign currency effects (FX). The comparisons that exclude FX assume that exchange rates remained constant during the periods that are included in each table. Other Western Europe includes our operating segments in Ireland, Norway, Sweden and Belgium. Other Central and Eastern Europe includes our operating segments in Poland, Czech Republic, Slovak Republic, Romania and Slovenia. (1) Includes (i) certain less significant segments that provide video programming and other services in Europe and Argentina and broadband services in Puerto Rico, Brazil and Peru, and (ii) our corporate segment. Pro Forma Operating Cash Flow is presented to highlight what total Operating Cash Flow would have been had J:COM been consolidated in 2004. Page 25
Appendix Pro Forma Operating Cash Flow (cont.) Six months ended Increase Increase (decrease) June 30, (decrease) excluding FX 2005 2004 $ % $ % amounts in thousands, except % amounts Europe (UPC Broadband) The Netherlands $ 190,674 $ 177,181 $ 13,493 7.6 $ 4,752 2.7 France 46,407 4,084 42,323 1,036.3 42,003 1,028.5 Austria 71,104 62,051 9,053 14.6 5,771 9.3 Other Western Europe 74,261 44,897 29,364 65.4 26,018 58.0 Total Western Europe 382,446 288,213 94,233 32.7 78,544 27.3 Hungary 55,782 40,133 15,649 39.0 11,237 28.0 Other Central and Eastern Europe 70,062 46,006 24,056 52.3 15,070 32.8 Total Central and Eastern Europe 125,844 86,139 39,705 46.1 26,307 30.5 Total Europe (UPC Broadband) 508,290 374,352 133,938 35.8 104,851 28.0 Japan (J:COM) 315,587 286,672 28,915 10.1 23,220 8.1 Chile (VTR) 65,958 49,017 16,941 34.6 13,970 28.5 Corporate and other (1) (12,508) (21,158) 8,650 40.9 8,670 41.0 Pro Forma Operating Cash Flow 877,327 688,883 188,444 27.4 150,711 21.9 Elimination of equity affiliate (J:COM) - (286,672) 286,672 NM NM NM Total Operating Cash Flow $ 877,327 $ 402,211 $ 475,116 NM NM NM This table provides Operating Cash Flow by reportable segment for the six months ended June 30, 2005, as compared to corresponding prior year periods. In each case, the tables present (i) the amounts reported by each of our reportable segments for the comparative interim periods, (ii) the U.S. dollar change and percentage change from period to period, and (iii) the U.S. dollar equivalent of the change and the percentage change from period to period, after removing foreign currency effects (FX). The comparisons that exclude FX assume that exchange rates remained constant during the periods that are included in each table. Other Western Europe includes our operating segments in Ireland, Norway, Sweden and Belgium. Other Central and Eastern Europe includes our operating segments in Poland, Czech Republic, Slovak Republic, Romania and Slovenia. (1) Includes (i) certain less significant segments that provide video programming and other services in Europe and Argentina and broadband services in Puerto Rico, Brazil and Peru, and (ii) our corporate segment. Pro Forma Operating Cash Flow is presented to highlight what total Operating Cash Flow would have been had J:COM been consolidated in 2004. Page 26