request-q4 2009 presentation final

8/3/2019 Request-Q4 2009 Presentation Final

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Fiscal Year 2009 Investor CallFebruary 25, 2010


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Agenda

2009 Highlights

Financial Results

Q & A

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2009 Highlights (1)

Key Value Drivers Delivered in 2009

OrganicGrowth M&A CapitalStructure

Unitym edia, 2nd largest

MSO in Germany

Sold 38% J:COM interest

maturities

~$400 mm of buybacks,

~$540 mm of capacity

.

advanced service adds

Rebased revenue growth

of 4% each quarter

for cash proceeds of~$4.0 bn

VTR minority stake

resolved ut el iminated

Over $3.5 bn of available

pro forma liquidity at YE

Positioned to further

7% rebased OCF growth

at high end of guidance

47% FCF grow th well

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(1) Please see Appendix for definitions of and information on rebased growth, OCF, FCF and available liquidity.


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Steady Subscriber Growth (1)

184168 168 Avg

Broadband Net Adds_________________________________ Voice Net Adds_________________________________

140

128 130 124

147132

Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '09 Q2 '09 Q3 '09 Q4 '09

322(30)

_________________________________ _________________________________

212198 199

(96)

(80)

(55)

Avg(77)

Avg203

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Q1 '09 Q2 '09 Q3 '09 Q4 '09Q1 '09 Q2 '09 Q3 '09 Q4 '09

(1) Refers to net subscriber changes on an organic basis. Figures are shown in thousands. Average reflects the average net organic changes of the first three quarters of 2009.


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Accelerating Digital Growth(1)

Digital Cable Additions_________________________________

HD & DVR Subscriptions_________________________________

(Organic RGU growth, excluding J:COM, in 000s) (Excludes J:COM, in 000s)

1,090 1,218

1.71.9

43%HD/DVR RGUs HD/DVR Pen %

54112%

0.50.6

0.81.0

1.3.

2007 2008 2009 2008 2009

Record digital additions for the year

4.3mm digital RGUs, 38% penetration

DVR/HD penetration 43% at year end

HD ramping, over 600,000 adds in 09

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~ g a up over ana og o now aunc e n mar e s

(1) All statistics on this slide exclude J:COM. Please see Appendix for definitions of ARPU, HD and DVR and the calculation of DVR/HD penetration.


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Driving Next-Gen Broadband

3.0 Footprint Expanding_____________________________

and Delivering_____________________________

Germany

9 European markets launched

60% of UPCs homes enabled

Netherlands

Poland

Czech Telenet & Unity added

Offering up to 120 Mbps ~

Belgium

Switzerland

Slovakia

average UPC customer in 09

Repositioning tiers & bundles

Austria

Hungary Q4 net adds in NL up >200%

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Netherlands Leading The Way

Record Data Additions_________________________________

Video Performance Improving_________________________________

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2317

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Digital Adds Video Losses,

NationalLaunch

7 4

15

27(20)

(11)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Accretive broadband acquisition ARPU

Simplified bundling: 45 triple play offer

60% HD / DVR penetration at YE09

Enriched content: Disney, HD, Catch up TV

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~ o u c sa es are ps or a ove ~ o uy ra e, > mm s reams n ec

(1) Please see Appendix for the definition of VoD.


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Key 2010 Objectives (1)

Leverage Fiber Power across footprint

Increase digital penetration & reduce churn

Reduce capital intensity across all markets

Drive improved operational performance in 2010

Capitalize on M&A; reignite buyback activity

9(1) Please see Appendix for the definition of digital penetration.


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Agenda

2009 Highlights

Financial Results

Q & A

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2009 Financial Highlights (1)

($mm)

Revenue OCF

Rebased Growth of 4% Rebased Growth of 7%

$10,498

,

$4,500

$4,878

6%

2009 OCF rowth at hi h end of uidance ran e

11(1) Please see Appendix for the definition and reconciliation of OCF and for information on rebased growth.


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2009 Divisional Results

Full Year Results ended December 31 , 2009_________________________________________________

($mm) Revenue

e ase

Growth(1 )

OCF(1 )

e ase

Growth(1 )

UPC Broadband $ 4,117 1% $ 2,031 3%

Telenet (Belgium) 1,686 7% 833 13%

VTR (Chile) 701 6% 288 5%

Austar (Australia) 534 7% 185 12%

Corporate & Other 471 -- (6) --

exc . : , ,

J:COM (Japan) 3,572 5% 1,546 9%

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, ,

(1) Please see Appendix for the definition and information on rebased growth, and definition and reconciliation of OCF.


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2009 Quarterly Performance (1)

Revenue OCF

$3,040

4% 4% 4%Rebased

Growth4%

1 281$1,307

7% 8% 8% 4%

$2,563

$2,653

$2,824

$1,122$1,169

Q1 Q2 Q3 Q4(2)

Rebased revenue rowth rate stable in 2009

Q1 Q2 Q3 Q4(2)

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(1) Please see Appendix for the definition and reconciliation of OCF and for information on rebased growth.(2) Figures have been adjusted for Slovenia as a discontinued operation.


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CapEx Trending Lower (1)

CapEx / Revenue CapEx by Category $2.2 bn

24.9%

22.4%22.5%

20.2%

LGI Consolidated Ex J:COM

Support

61%

17%

CPE & SI

Network

2008 20092008 2009

$1.7 bn$1.9 bn$2.2 bn$2.4 bn

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Capital intensity declining across nearly all markets

(1) CapEx is categorized and defined as follows for this slide: (i) customer premise equipment (CPE) and scalable infrastructure (SI); (ii) Network which consists of line extensionsand upgrade / rebuild; and (iii) support which consists of support capital and other including Chellomedia.


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Free Cash Flow Ramping(1)

LGI Consolidated ($mm)

$1,106

47%

2009 FCF grow th driven by:

Cash flow from o s u 7%

$444 $751

105%

CapEx down 5%

Positively impacted by FX

~70% of 09 FCF from J:COM

Strong Q4 FCF at UPC & VTR

Q4 '08 Q4 '09 2008 2009

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(1) Please see Appendix for a definition and reconciliation of FCF


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PF Balance Sheet & Liquidity(*)

Gross Leverage(1)(2)

5.2x

Completed Unitymedia financing in Q4

PF Debt & Cash of $23.0 bn & $4.6 bn(2)

. x

Net Leverage

(1)(2)

Average PF borrow ing cost of ~ 7.3% (3)

~ 95% of PF debt due 2013 & beyond

(4)

Adj. 2008 PF Adj. 2009

4.0x 4.2x Targeting leverage of 4x 5x

Over $3.5 bn of PF parent l iquidity(5)

Adj. 2008 PF Adj. 2009

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Exten e over 9 i ion o maturities in t e ast twe ve mont s

(*) Please see Appendix for accompanying footnotes.


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2010 Outlook vs. 2009 (1)

Improved rebased revenue growth(2)

(3)

CapEx as % of revenue declining(4)

Significant normalized FCF growth(5)

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(1) 2010 outlook metrics reflect targeted performance as compared to 2009 reported results, adjusted to account for J:COM as a discontinued operation, for both periods.(2) Our 2010 outlook for revenue reflects a targeted rebased growth rate as compared to our 2009 rebased revenue growth of 3%, excluding J:COM.(3) Our 2010 outlook for OCF margin reflects targeted performance as compared to our 2009 OCF margin of 44%, excluding J:COM.

(4) Our 2010 outlook for CapEx reflects a targeted measure as a percentage of revenue as compared to our 2009 CapEx as a percentage of revenue of 22.4%, excluding J:COM.(5) Our 2010 outlook for FCF reflects targeted performance as compared to our 2009 reported FCF of approximately $375 million, excluding J:COM.


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Appendix


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Appendix

Definitions and Additional Information

Revenue Generat ing Unit (RGU) is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, InternetSubscriber or Telephony Subscriber. A home, residential multiple dwelling unit, or commercial unit may contain one or more RGUs. For example, if aresidential customer in our Austrian system subscribed to our digital cable service, telephony service and broadband internet service, the customer

. , , , , .are counted on a unique premise basis such that a given premise does not count as more than one RGU for any given service. On the other hand, if

an individual receives our service in two premises (e.g. a primary home and a vacation home), that individual will count as two RGUs. Each bundledcable, internet or telephony service is counted as a separate RGU regardless of the nature of any bundling discount or promotion. Non-payingsubscribers are counted as subscribers during their free promotional service period. Some of these subscribers may choose to disconnect after theirfree service period. Services offered without charge on a permanent basis (e.g. VIP subscribers, free service to employees) are not counted as RGUs.

Average Revenue Per Uni t (ARPU) refers to the average monthly subscription revenue per average RGU. ARPU per customer relationship refersto the average monthly subscription revenue per average customer relationship. In both cases, the amounts are calculated by dividing the averagemonthly subscription revenue (excluding installation, late fees and mobile telephony revenue) for the indicated period, by the average of the openingand closing balances for RGUs or customer relationships, as the case may be, for the period. Unless otherwise indicated, the growth rate for ARPU per

customer relationship for LGI and UPC is not adjusted for currency impacts.

rgan c c anges exc u e s o acqu re en es a e a e o acqu s on u nc u e e mpac o c anges n s rom e a e oacquisition. Organic figures represent changes on a net basis.

Digital penetration is calculated by dividing digital cable RGUs by the total of digital and analog cable RGUs.

HD / DVR penet ra ti on is calculated by dividing the sum of HD and DVR customers by total digital cable RGUs.

DVR , HD and VoD refer to digital video recorder, high definition, and video-on-demand, respectively.

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Appendix

Free Cash Flow Definition and Reconciliation

We define FCF as net cash provided by the operating activities of our continuing operations less the capital expenditures of our continuing operations,each as reported in our consolidated statements of cash flows. Adjusted FCF represents FCF less the non-cash capital lease additions of our

. .

We believe that our presentation of FCF and Adjusted FCF provides useful information to our investors because these measures can be used to gaugeour ability to service debt and fund new investment opportunities. FCF and Adjusted FCF should not be understood to represent our ability to funddiscretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at thisamount. Investors should view FCF and Adjusted FCF as supplements to, and not substitutes for, GAAP measures of liquidity included in ourconsolidated cash flow statements. he following table highlights the reconciliation of our continuing operations net cash provided by operatingactivities to FCF and FCF to Adjusted FCF for the indicated periods.

Three months ended Year endedDecem er 31, Decem er 31,

2009 2008 2009 2008 in millionsNet cash provided by operating activities .............. $ 1,072.9 $ 908.5 $ 3,341.7 $ 3,111.5Capital expenditures ........................................... (628.5) (691.2) (2,235.3) (2,360.4)

FCF .............................................................. $ 444.4 $ 217.3 $ 1,106.4 $ 751.1

FCF ................................................................... $ 444.4 $ 217.3 $ 1,106.4 $ 751.1

Capital lease additions......................................... (62.2) (57.5) (217.6) (166.5)

Adjusted FCF ................................................. $ 382.2 $ 159.8 $ 888.8 $ 584.6

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Appendix

Balance Sheet Snapshot

(1) Our gross and net leverage ratios are defined as total debt (including capital lease obligations) and net debt to annualized OCF of the latestquarter.

(2) Our 2009 pro forma adjusted gross and net leverage ratios are computed by adjusting our year end balances for the Unitymedia and J:COMTransactions at December 31, 2009 exchange rates to arrive at pro forma net debt of $18.5 billion, consisting of debt (including capital leaseobligations) and cash (including restricted cash related to our debt instruments) of approximately $23.0 billion and $4.6 billion, respectively.These pro forma numerator amounts are then further adjusted to exclude our $1.0 billion loan backed by shares we hold in SumitomoCorporation and the borrowings and cash collateral account associated with the VTR Bank Facility. The applicable adjusted pro forma debt andnet debt balances are then divided by the sum of: (a) the annualized LGI fourth quarter OCF (after deducting J:COM's fourth quarter OCF); and(b) the annualized nine-month OCF for Unitymedia as determined under accounting principles generally accepted in the U.S. (GAAP). Our2008 adjusted gross and net leverage ratios are adjusted to exclude our $1.0 billion loan backed by shares we hold in Sumitomo Corporationand the borrowings and cash collateral account associated with the VTR Bank Facility.

(3) Our fully-swapped debt borrowing cost represents the weighted average interest rate on our aggregate variable and fixed rate indebtedness,including the effects of derivative instruments, discounts and commitment fees, but excluding the impact of financing costs.

(4) Pro forma for the J:COM Transaction.

(5) Available liquidity refers to liquidity available to the parent and reflects the total of our cash at the parent and our non-operating subsidiariesadjusted for the J:COM and Unitymedia Transactions, cash at UPC Holding B.V. and its subsidiaries (excluding VTR), and the amount availableto borrow at our UPC Broadband Holding credit facility upon completion of our fourth quarter bank reporting requirements. The contribution toli uidit from the J:COM ransaction is resented on a re-tax basis.

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request-q4 2009 presentation final

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