2. “Safe Harbor”
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
Forward-Looking Statements: The following slides contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including our expectations with respect to our future growth prospects, the timing
and impact of our roll-out of digital products and services, and our borrowing availability; our insight and expectations
p g p , g y; g p
regarding competition in our markets; the impact of our M&A activity on our operations and financial performance; our
expectations concerning future repurchases of our stock; and other information and statements that are not historical fact.
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 and willingness to upgrade to our more advanced offerings, our ability to
meet competitive challenges continued growth in services for digital television at a reasonable cost and the positive impact of
challenges,
such growth on our European video ARPU, the effects of changes in technology and regulation, our ability to achieve expected
operational efficiencies and economies of scale, and our ability to generate expected revenue and operating cash flow, control
capital expenditures as measured by percentage of revenue and achieve assumed margins, as well as other factors detailed
from time to time in the Company's filings with the Securities and Exchange Commission (“SEC”) including our most recently
filed Form 10-K and Form 10-Q. These forward-looking statements speak only as of the date of this presentation. The
Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any 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 Relating to Defined Terms:
Please refer to the Appendix at the end of this presentation, as well as the Company’s Press Release dated May 7, 2008 and
SEC fili
filings, f d fi iti
for definitions of th f ll i t
f the following terms which may b used h i i l di
hi h be d herein including: O
Operating C h Fl
ti Cash Flow (“OCF”) F
(“OCF”), Free C h
Cash
Flow (“FCF”), Unlevered FCF, Revenue Generating Units (“RGUs”), Average Revenue per Unit (“ARPU”), and OCF Margin, as
well as GAAP reconciliations.
2
4. Q1 2008 Highlights
Consolidated OCF(1) of $1.1 billion Organic
Growth
Rebased OCF growth of 14%
Achieved record 42% OCF margin Capital
M&A
Structure
Few actionable M&A opportunities
Completed several small acquisitions in Q1 (JP & CZ)
Exploring opportunities in emerging markets
St o g qu d ty continued stock buybacks
Strong liquidity & co t ued stoc buybac s
Purchased over $900 mm YTD; ~$650 mm remaining on program
Ample undrawn capacity available to maintain leverage
(1) Please see Appendix for information on rebased growth, the definition of OCF and OCF margin and the reconciliation of OCF. 4
5. Q1 Highlights
Q1 2008 Q1 2007
Total RGUs (000s) 24,383 22,811
Total Customers (000s) 16,123
16 123 15,942
15 942
Organic RGU Adds 301,600 357,000
Revenue ($mm) $2,611 $2,106
(1)
OCF ($mm) $1,101 $825
(1)
OCF Margin % 42.2% 39.2%
(1) Please see Appendix for definition of OCF and OCF Margin, as well as our OCF reconciliation.
5
6. Rebased Revenue Growth (1)
Most operations at or above FY guidance range
14%
10%
9%
7-9% guidance range
7%
6%
3%
Austar VTR Telenet J:COM Total LGI UPC
(1) Please see Appendix for information on rebased growth. 6
7. Subscriber Growth Trends
Net Additi
N t Additions (000’ )
(000’s)
Total RGUs Video
4 6
438
385
357
302
Average
266
(34)
(54)
(57)
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
Voice Data
217 219 214
191 190 182
177
Average
172
161 159
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
7
8. Key Performance Factors
Operating Update
Performance Factor
Up 10% over Q1 ’07
Penetration of advanced
services (digital, voice & Higher revenue and gross margin products
data) is ramping Driving customer ARPUs up ~6%
Net adds up 47% over Q1 ’07
07
Digital video is launched Digital cable penetration 27% and growing
and making a difference
Digital video ARPU uplift of 25% - 50%
_ Broadband competition and voice usage
Voice & data ARPUs
Aggressive bundling to drive market share
(especially in Europe)
remain under pressure Accelerating DOCSIS 3.0 speed upgrades
_ Primarily three markets (NL, AT, CZ)
Higher churn in low-end Digital and retention strategies taking hold
video sub base in Europe
Romania back to positive RGU growth
8
9. UPC Broadband Update
Operational Highlights Organic VAS Growth(1) (000s)
432
Growth across all advanced services Average = 306
g
319
Digital becoming 2008 growth engine
304
285
Organic voice adds up 14% from new bundles 188
“Mega” broadband will extend speed advantage
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
Strong OCF growth & margin expansion
OCF Growth(2) ($mm)
Not sacrificing spend on sales & marketing
$514
UPC sales 84,000 ahead of Q1 last year
$389
Competition continuing as expected
32%
ARPU compression & analog losses
Special situations in RO, HU, & AT
Q '07 Q '08
Q1 Q1
13% Rebased Growth
(1) VAS is defined as value-added services which includes digital cable and DTH,
broadband internet and telephony.
(2) Please see Appendix for the OCF definition and reconciliation and for information on
9
rebased growth.
10. Digital Cable Update
European Highlights Digital Cable RGUs (000s)
Digital deployed across all markets in Q2
g py Q 1,380
1,255
Digital revenue growth at UPC over 35% 1,108
1,020
969
Digital penetration of 16% vs. 11% last year
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
Advanced features deployed in 7 countries
NL Digital ARPU(1)
Netherlands Spotlight
€10
Advanced services gaining traction €8
€4
NL digital penetration now 27%
25%
Successfully reducing churn
Q4 '06 Q4 '07 Q1 '08
Momentum bu d g around HD
o e tu building a ou d
Up 150% since Q4 ’06
(1) Represents incremental digital ARPU, above €16.37 analog rate.
10
11. VTR Update
Organic VAS Growth (000s)
Operational Themes & Results
85
Further penetrating value added services
p g 68 68
69
Digital penetration > 25%
49 Avg = 68
All new triple play sales are digital
Focus on 2P bundles (Data & Voice)
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
Reached 1 mm customers at end of Q1 ’08
OCF(1) ($mm)
56% of customer base is bundled
$76
Competition increasing in Southern Region $55
Q1 OCF financial performance was strong 39%
OCF margin > 40%
>70% OCF conversion ratio(2)
Q1 '07 Q1 '08
Focus on SG&A & FTE cost controls
19% Rebased Growth
(1) Please see Appendix for information on rebased growth and for the definition and reconciliation of OCF.
(2) Represents the variance between reported Q1 2008 OCF and rebased Q1 2007 OCF divided by the variance
for reported Q1 2008 revenue and rebased Q1 2007 revenue.
11
12. J:COM Update
Organic VAS Growth (000s)
Operational Themes & Results
Organic adds were up 7% over Q1 ’07
07 187
185 174 144
Digital penetration now stands at 70% 137
Avg = 165
Launched 160 Mbps nationwide
Gross adds stronger in 160 Mbps areas Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08
Reviewing data tiering strategy
OCF(1) ($mm)
Competitive FTTH growth slowing
$284
Completed 2 M&A deals (Kyoto & Kobe) $218
Consistent OCF growth with margin of ~42%
g g 30%
Realizing cost savings from JTV
More effective sales channels
Q1 '07 Q1 '08
J:COM announced dividend (this summer)
dd d d(h )
11% Rebased Growth
12
(1) Please see Appendix for information on rebased growth and for the definition and reconciliation of OCF.
14. Financial Highlights
(US$ in Millions)
(1)
Revenue OCF
$1,101
$2,611
$2,106
$825
24% 34%
Q1 '07 Q1 '08 Q1 '07 Q1 '08
Rebased Growth of 6% Rebased Growth of 14%
(1) Please see Appendix for the definition and reconciliation of OCF and for information on rebased growth.
14
15. Financial Breakdown
(In US$ Millions)
Operating Cash Flow(1)
Revenue
Q1 Rebased Q1 Rebased
Growth(2) Growth(2)
2008 2008
Western Europe
p $ 782 3% $ 404 12%
C & E Europe 335 4% 170 9%
Other(3) 3 -- (60) --
UPC Broadband 1,119
, 3% 514 13%
Telenet (Belgium) 374 9% 175 12%
J:COM (Japan) 679 7% 284 11%
VTR (Chile) 187 10% 76 19%
Other 252 -- 53 --
Total LGI $ 2,611 6% $ 1,101 14%
(1) Please see Appendix for a definition and reconciliation of OCF.
(2) Please see Appendix for information on rebased growth.
(3) Represents central and corporate operations of UPC Broadband. 15
16. OCF Margin & Conversion
OCF Margin(1) OCF Conversion(2)
42.2% 89%
54%
39.2%
300
bps
Q1 '07 Q1 '08 Q1 '07 Q1 '08
OCF margin and conversion continue to improve
(1) Please see Appendix for definition of OCF Margin.
(2) For Q1 2008, represents the variance between reported Q1 2008 OCF and rebased Q1 2007 OCF divided by the variance for reported Q1 2008
revenue and rebased Q1 2007 revenue. For Q1 2007, represents the variance between reported Q1 2007 OCF and rebased Q1 2006 OCF divided by
16
the variance for reported Q1 2007 revenue and rebased Q1 2006 revenue.
17. Free Cash Flow & CapEx
CapEx (% of Rev)
Free Cash Flow(1)
(In US$ Millions)
$128
24%
20%
$58
122%
Q1 '07 Q1 '08 Q1 '07 Q1 '08
Higher cash from operations $520 mm of CapEx in Q1 ’08
FCF positively impacted by FX 45% CPE-related
Large outflows associated with CapEx down year-over-year,
cash interest & taxes in quarter after neutralizing FX
(1) Please see Appendix for a definition and reconciliation of FCF.
17
18. Balance Sheet Snapshot
For periods ended
Dec. 31, 2007 Mar. 31, 2008
(US$ in Millions)
Total Debt $ 18,353 $ 19,524
T t l Cash(1)
Total C h (2,520)
( ) (1,854)
( )
Net Debt $ 15,833 $ 17,671
Leverage(2)
Gross L
G 4.8x
48 4.4x
44
Net Leverage(2) 4.1x 4.0x
Leverage ratios have decreased from Q4
(1) Cash includes restricted cash related to our debt instruments of approximately $485 million at December 31, 2007 and at March 31, 2008.
(2) Gross and Net Leverage equals total and net debt, respectively, divided by annualized OCF for the three months ended as of the date indicated.
18
19. Conclusions
OCF growth & margin expansion ahead of plan
Positive subscriber trends in advanced services
Competitive challenges being addressed
Ample liquidity for stock buybacks and future M&A
19
21. Appendix
Definitions and Additional Information
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 broadband Internet service, the customer would constitute three RGUs. Total RGUs is the sum of Analog Cable, 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. Please refer to our May 7, 2008 press release for additional subscriber definitions.
Average Revenue Per Unit (“ARPU”) refers to the average monthly subscription revenue per average RGU. ARPU per customer relationship refers to the average
monthly subscription revenue per average customer relationship. In both cases, the amounts are calculated by dividing the average monthly subscription revenue
(excluding installation and mobile telephony revenue) for the indicated period, by the average of the opening and closing balances for RGUs or customer
relationships, as the case may be, for the period. RGUs and customer relationships of entities acquired during the period are normalized.
OCF margin is calculated by dividing OCF by total revenue for the applicable period.
Information on Rebased Growth: For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2008, we
have adjusted our historical revenue and OCF for the three months ended March 31, 2007, respectively to (i) include the pre-acquisition revenue and OCF of certain
entities acquired during 2007 and 2008 in our rebased amounts for the three months ended March 31, 2007 to the same extent that the revenue and OCF of such
entities are included in our results for the three months ended March 31, 2008, (ii) exclude the pre-disposition revenue and OCF of certain entities that were
disposed of during 2007 and 2008 from our rebased amounts for the three months ended March 31 2007 to the same extent that such entities were excluded from
31,
our results for the three months ended March 31, 2008, and (iii) reflect the translation of our rebased amounts for the three months ended March 31, 2007 at the
applicable average exchange rates that were used to translate our results for the three months ended March 31, 2008. The acquired entities that have been included
in whole or in part in the determination of our rebased revenue and OCF for the three months ended March 31, 2007 include JTV Thematics, Telesystems Tirol, ten
small acquisitions in Europe and three small acquisitions in Japan. Additionally, the disposed entities that were excluded in whole or in part from the determination of
our rebased revenue and OCF for the three months ended March 31, 2007 include our broadband communications operations in Brazil and Peru and our Liveshop
operations in the Netherlands. In terms of acquired entities, we have reflected the revenue and OCF of these acquired entities in our 2007 rebased amounts based
on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements) as adjusted for the estimated
statements),
effects of (i) any significant differences between U.S. generally accepted accounting principles (“GAAP”) and local generally accepted accounting principles, (ii) any
significant effects of post-acquisition purchase accounting adjustments, (iii) any significant differences between our accounting policies and those of the acquired
entities and (iv) other items we deem appropriate. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be
given that we have identified all adjustments necessary to present the revenue and OCF of these entities on a basis that is comparable to the corresponding post-
acquisition amounts that are included in our historical 2008 results or that the pre-acquisition financial statements we have relied upon do not contain undetected
errors. The adjustments reflected in our 2007 rebased amounts have not been prepared with a view towards complying with Article 11 of the SEC's Regulation S-X.
In addition the rebased growth percentages are not necessarily indicative of the revenue and OCF that would have occurred if these transactions had occurred on
addition,
the dates assumed for purposes of calculating our rebased 2007 amounts or the revenue and OCF that will occur in the future. The rebased growth percentages
have been presented as a basis for assessing 2008 growth rates on a comparable basis, and are not presented as a measure of our pro forma financial performance
for 2007. Therefore, we believe our rebased data is not a non-GAAP measure as contemplated by Regulation G or Item 10 of Regulation S-K.
21
22. Appendix
Operating Cash Flow Definition and Reconciliation
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 stock-based compensation, depreciation and amortization, provisions for litigation, and impairment, restructuring and other operating charges
or credits). 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 (i) readily view operating trends, (ii) perform analytical comparisons and benchmarking between segments and (iii) identify strategies to improve
operating performance in the different countries in which we operate. 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. However, our definition of operating cash flow may differ from cash flow measurements provided by other public companies. A
reconciliation of total segment operating cash fl
ili i f l i h flow to our l
loss b f
before i
income taxes and minority i
d i i interests i presented b l
is d below. OOperating cash fl
i h flow should b viewed
h ld be i d
as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings (loss), cash flow from operating activities
and other GAAP measures of income.
Three months ended
March 31,
2008 2007
amounts in millions
Total segment operating cash flow...................................................... $ 1,100.7 $ 824.6
Stock-based compensation expense .................................................... (40.3) (43.5)
Depreciation and amortization ............................................................ (704.1) (594.0)
Impairment, restructuring and other operating credits (charges), net..... 1.5 (5.3)
Operating income .......................................................................... 357.8 181.8
Interest expense ............................................................................... (279.6) (233.0)
Interest and dividend income ............................................................. 34.8
34 8 24.4
24 4
Share of results of affiliates, net ......................................................... 2.5 13.6
Realized and unrealized losses on derivative instruments, net................ (335.4) (10.3)
Foreign currency transaction gains, net ............................................... 172.6 24.3
Unrealized gains (losses) due to changes in fair values of certain
22.0 (71.6)
investments and debt, net ................................................................
Other expense, net ............................................................................ (0.4) (3.0)
Loss before income taxes and minority interests .............................. $ (25.7) $ (73.8)
22
23. Appendix
Free Cash Flow Definition and Reconciliation
FCF is defined as net cash provided by operating activities less capital expenditures, each as reported in our consolidated statements of cash flows. Adjusted FCF
represents FCF less non-cash capital lease additions. Unlevered FCF represents FCF excluding cash paid for interest and excluding cash flows on derivative
instruments that hedge interest rate risk. FCF, Adjusted FCF and Unlevered FCF are not GAAP measures of liquidity. We believe that our presentation of FCF,
Adjusted FCF and Unlevered FCF provides useful information to our investors because these measures can be used to gauge our ability to service debt and fund
j p gg y
new investment opportunities. These FCF measures should not be understood to represent our ability to fund discretionary amounts, as we have various
mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at these amounts. Investors should view these FCF measures
as a supplement to, and not a substitute for, GAAP measures of liquidity included in our consolidated cash flow statements. The table below highlights the
reconciliation of net cash from operating activities to FCF, FCF to Adjusted FCF and FCF to Unlevered FCF for the three months ended March 31, 2008 and 2007,
respectively:
Three months ended
Th th dd
March 31,
2008 2007
Amounts in millions
Net cash provided by continuing operations ........................... $ 647.5 $ 562.7
Capital expenditures ............................................................ (519.8) (505.2)
FCF ............................................................................... $ 127.7 $ 57.5
FCF .................................................................................... $ 127.7 $ 57.5
(41.4) (48.3)
Capital lease additions..........................................................
Adjusted FCF .................................................................. $ 86.3 $ 9.2
FCF .................................................................................... $ 127.7 $ 57.5
473.2 210.4
Cash interest .......................................................................
(39.2) 25.3
Cash flows on interest-related derivative instruments .............
Unlevered FCF ................................................................ $ 561.7 $ 293.2
23
