AMSTERDAM -- (Business Wire)

UPC Holding B.V. (“UPC Holding”) is today providing selected, preliminary unaudited financial and operating results for the three months ended March 31, 2012 (“Q1”). UPC Holding is an indirectly owned subsidiary of Liberty Global, Inc. (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK). A copy of this press release will be posted to the Liberty Global website (www.lgi.com). In addition, UPC Holding’s condensed consolidated financial statements with the accompanying notes are expected to be posted prior to the end of May 2012.

Financial and operating highlights for the three months ended March 31, 2012, as compared to the results for the same period last year (unless noted), include:

• Organic RGU¹ additions increased 55% to 198,000
• Revenue increased 7% to €1.04 billion, reflecting rebased² growth of 3%
• Operating cash flow (“OCF”)³ improved 8% to €497 million, representing rebased growth of 3%
• Operating income increased by 10% year-over-year to €237 million
• Capital expenditures as a percentage of revenue declined to 19% of revenue
• Approximately 95% of consolidated third-party debt is due 2016 and beyond

Financial Results

Our consolidated revenue increased 7% to €1.04 billion for the three months ended March 31, 2012, as compared to €977 million for the corresponding prior year period. In addition to organic growth and the positive contribution from acquisitions, particularly Aster in Poland, our revenue growth was also favorably impacted by foreign currency (“FX”) movements. Our organic growth continues to be driven by higher subscriber volumes, with broadband internet generating our fastest year-over-year revenue growth. Adjusting for FX movements and acquisitions, we achieved rebased revenue growth of 3% for the three months ended March 31, 2012. This growth rate was consistent with the rebased growth rate we reported for the three months ended December 31, 2011.

In terms of year-over-year rebased revenue growth, our Chilean operation (“VTR”) delivered growth of 7% in Q1 2012, driven in part by the positive impact of nearly 120,000 RGU additions gained by VTR in the last twelve months. Moving to our European operations (“UPC Europe”), we generated rebased revenue growth of 2% on a combined basis, with our Western European businesses delivering rebased growth of 3% and our Central and Eastern European (“CEE”) businesses posting close to flat year-over-year rebased growth. For UPC Europe, our Irish and Dutch operations were the fastest growing in the quarter, as they realized rebased revenue growth of 6% and 5%, respectively. In addition, our Swiss operation continued to gain modest momentum, as it generated 3% rebased revenue growth in Q1, its best quarterly result in three-and-a-half years.

Our consolidated OCF increased by 8% to €497 million for the three months ended March 31, 2012, as compared to €462 million for the corresponding 2011 period. On a rebased basis, we achieved year-over-year rebased growth of 3% for Q1. Geographically, our rebased performance was led by our Western European operations, which delivered 4% rebased growth. Of particular note, our Irish, Dutch and Swiss operations generated rebased OCF of 7%, 6% and 4%, respectively, in the quarter. Rounding out our remaining operations, our Chilean operation realized an increase of 3%, while our CEE operations posted a decline of 1%. As we look to the remainder of the year, we would expect our rebased OCF growth to be weighted towards the second half of the year.

We reported a consolidated OCF margin⁴ of 47.6% for the three months ended March 31, 2012, reflecting a 30 basis point increase over our consolidated OCF margin of 47.3% for the corresponding prior year period. The modest year-over-year increase was due principally to a 60 basis point improvement at UPC Europe. UPC Europe generated an OCF margin of 48.9% in Q1 2012, with our Western European and CEE operations delivering OCF margins of 54.8% and 49.0%, respectively. Our two largest markets, the Netherlands and Switzerland, continued to realize operating leverage, as they each posted year-over-year margin improvement. Beyond Europe, our Chilean operation posted a year-over-year decrease in OCF margin of 120 basis points to 40.8%, resulting in part from higher subscriber acquisition and marketing costs.

For the three months ended March 31, 2012, we incurred capital expenditures of €202 million or 19% of revenue, as compared to €207 million or 21% of revenue for the corresponding prior year period. Geographically, our Q1 2012 capital expenditures as a percentage of revenue for UPC Europe and VTR were 19% and 22%, respectively, which represented a year-over-year decline of 260 basis points for UPC Europe and an increase of 250 basis points for VTR. In terms of our overall additions to property and equipment in Q1 2012, approximately 65% were attributable to customer premises equipment and scalable infrastructure, 20% pertained to line extensions and upgrade/rebuild activity, and the remaining 15% were largely related to support capital.

Subscriber Statistics

At March 31, 2012, we provided service to 18.1 million RGUs, consisting of 9.3 million video, 5.2 million broadband internet and 3.6 million telephony RGUs. As compared to our RGU count at December 31, 2011, our RGUs increased by 330,000 during the first quarter of 2012. This increase includes 198,000 organic RGU additions and 127,000 RGUs that were added effective January 1, 2012, when we began counting small office home office (“SOHO”) RGUs for external reporting purposes.⁵

Our customer base at March 31, 2012 totaled 10.3 million customers, including 5.4 million single-play, 2.0 million double-play, and 2.9 million triple-play customers. This translates into 47% of our customer base subscribing to more than one product or a bundling ratio of 1.75 products per customer. The success of our bundles, which leverage our “3.0” speed advantage, has been a key factor in driving our triple-play penetration from 24% to 28% of our customer base in just the last twelve months.

For the quarter ended March 31, 2012, our organic RGU additions totaled 198,000 RGUs, of which approximately 14,000 were SOHO RGUs. These RGU additions reflect growth of 55% or 70,000 RGUs above our first quarter 2011 additions and represent our best first quarter in five years. Of these additions, our Western European operations contributed 114,000 or 57%, as each of our four markets demonstrated year-over-year improvement. In particular, our Swiss operation added 29,000 RGUs in the quarter, more than tripling its Q1 2011 performance and delivering its best quarterly result since Q1 2008, largely on the strength of attractive bundles. In addition to our Western European operations, our CEE and Chilean operations gained 54,000 and 30,000 RGUs, reflecting a year-over-year improvement of 67% and 26%, respectively.

In terms of video, we experienced a loss of 61,000 RGUs for the three months ended March 31, 2012, as compared to a video loss of 54,000 RGUs for the respective prior year period. In addition, we added 149,000 digital cable subscribers during the quarter, ending the period with a digital penetration⁶ of 56%. Our digital cable additions are a reflection of our focus on improving the video experience through better time shifting and on-demand functionality, expansion of HD channel line-ups and premium tiers. Of our 4.8 million digital cable subscribers, approximately 53% or 2.5 million have selected our HD and/or DVR service.⁷ As we look forward, we anticipate that our commercial deployment of the Horizon platform will begin in Q3 in the Netherlands, followed by Switzerland.

We added 118,000 broadband internet and 141,000 telephony subscribers in the first quarter of 2012, representing year-over-year growth of 15% and 80%, respectively. Our improvement in telephony additions across most of our footprint stemmed from increasing consumer demand for our superior triple-play bundles. At March 31, 2012, we had aggregate broadband internet and telephony penetrations⁸ of 32% and 23%, respectively. In light of these figures, we believe we have an opportunity to further drive these penetrations on the strength of our bundled offers, whereby we can capitalize on our speed leadership and the ability to add attractively priced telephony products to the bundle.

Summary of Third-Party Debt and Cash and Cash Equivalents

The following table details our consolidated third-party debt and cash and cash equivalents as of the dates indicated:⁹

At March 31, 2012, we reported€9.0 billion of third-party debt and €84 million of cash and cash equivalents. As compared to December 31, 2011, our third-party debt decreased modestly by €93 million, primarily as a result of the weakening of the U.S. dollar relative to the euro during the first quarter. In terms of maturity and borrowing cost at March 31, 2012, approximately 95% of our third-party debt was due in 2016 and beyond and our debt borrowing cost¹⁰ was approximately 8.8% on a fully-swapped basis.

In February 2012, we issued $750 million (€563 million) of 6.875% Senior Secured Notes due 2022 at UPCB Finance VI Limited. UPCB Finance VI Limited is a special purpose financing entity which is owned 100% by a charitable trust. The proceeds of this offering were used to fund Facility AD under the UPC Broadband Holding Bank Facility. The gross proceeds from Facility AD were used to repay in full amounts outstanding under Facilities M, N and O, respectively. In addition, in February 2012, certain lenders under the UPC Broadband Holding Bank Facility agreed to extend €536 million of commitments under Facility S (December 2016) into Facility AE, maturing in December 2019 with an interest rate of EURIBOR plus 3.75%.

Borrowing Capacity & Covenant Calculations

UPC Broadband Holding B.V. (“UPC Broadband Holding”), our wholly-owned subsidiary, is a borrower and we are a guarantor of outstanding indebtedness under the UPC Broadband Holding Bank Facility.As of March 31, 2012, UPC Broadband Holding had maximum undrawn commitments under Facilities Q, W and AA of the UPC Broadband Holding Bank Facility of €1.1 billion, of which we estimate that approximately €210 million will be available upon completion of our first quarter compliance reporting requirements.

Similarly, based on the results for March 31, 2012 and subject to the completion of our first quarter bank reporting requirements, (i) the ratio of Senior Debt to Annualized EBITDA (last two quarters annualized), as defined and calculated in accordance with the UPC Broadband Holding Bank Facility, was 3.86x, and (ii) the ratio of Total Debt to Annualized EBITDA (last two quarters annualized), as defined and calculated in accordance with the UPC Broadband Holding Bank Facility was 4.67x.¹¹

UPC Broadband Holding Bank Facility

The following table details the key terms of the UPC Broadband Holding Bank Facility at March 31, 2012:

About UPC Holding

UPC Holding connects its customers to the world of entertainment, communications and information, by offering advanced video, voice and broadband internet services. As of March 31, 2012, UPC Holding operated state-of-the-art networks in Europe and Chile, serving 10 million customers in 10 countries.

Disclaimer

This press release contains forward-looking statements, including our expectations with respect to our future growth prospects and phasing of our rebased OCF growth, our continued ability to increase our organic RGU additions and further grow the penetration of our advanced services and our assessment of our liquidity and access to capital markets, including our borrowing availability; our expectations with respect to the timing and impact of our expanded roll-out of advanced products and services, including our Horizon platform; our insight and expectations regarding competitive and economic factors in our markets; the impact of our M&A activity on our operations and financial performance; 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 our services and their willingness to upgrade to our more advanced offerings, our ability to meet challenges from competition and economic factors, the continued growth in services for digital television at a reasonable cost, the effects of changes in technology and regulation, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and operating cash flow, control capital expenditures as measured by a percentage of revenue and achieve assumed margins, the impact of our future financial performance, or market conditions generally, on the availability, terms and deployment of capital, as well as other factors detailed from time to time in Liberty Global's filings with the Securities and Exchange Commission including Liberty Global’s most recently filed Forms 10-K and 10-Q. These forward-looking statements speak only as of the date of this release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

We are required under the terms of the indentures for the UPC Holding senior notes and the UPCB Finance Limited, UPCB Finance II Limited, UPCB Finance III Limited, UPCB Finance V Limited and UPCB Finance VI Limited senior secured notes to provide certain financial information regarding UPC Holding to bondholders on a quarterly basis. UPC Broadband Holding, our wholly-owned subsidiary, is a borrower and we are a guarantor of outstanding indebtedness under the UPC Broadband Holding Bank Facility, which also requires the provision of certain financial and related information to the lenders. This press release is being issued at this time, in connection with those obligations, due to the contemporaneous release by Liberty Global of its March 31, 2012 results. The financial information contained herein is preliminary and subject to change. We presently expect to issue our condensed consolidated financial statements prior to the end of May 2012, at which time they will be posted to the investor relations section of the Liberty Global website (www.lgi.com) under the fixed income heading. Copies will also be available from the Trustee for the senior notes and the senior secured notes.

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Revenue and Operating Cash Flow

In the following tables, we present the preliminary revenue and operating cash flow of our reportable segments for the three months ended March 31, 2012, as compared to the corresponding prior year period. All of the reportable segments derive their revenue primarily from broadband communications services, including video, broadband internet and telephony services. Most reportable segments also provide B2B services. At March 31, 2012, our UPC Europe operating segments provided broadband communications services in nine European countries and direct-to-home satellite (“DTH”) services to customers in the Czech Republic, Hungary, Romania, and Slovakia through a Luxembourg-based organization that we refer to as “UPC DTH”. Our Other Western Europe segment includes our broadband communications operating segments in Austria and Ireland. Our Central and Eastern Europe segment includes our broadband communications operating segments in the Czech Republic, Hungary, Poland, Romania and Slovakia. UPC Europe’s central and other category includes (i) the UPC DTH operating segment, (ii) costs associated with certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions and (iii) intersegment eliminations within UPC Europe. VTR provides broadband communications services in Chile.

For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2012, we have adjusted our historical revenue and OCF for the three months ended March 31, 2011 to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2011 and 2012 in our rebased amounts for the three months ended March 31, 2011 to the same extent that the revenue and OCF of such entities are included in our results for the three months ended March 31, 2012 and (ii) reflect the translation of our rebased amounts for the three months ended March 31, 2011 at the applicable average foreign currency exchange rates that were used to translate our results for the three months ended March 31, 2012.

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, 2011 include Aster and three small entities in Europe. We have reflected the revenue and OCF of the acquired entities in our 2011 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 effects of (i) any significant differences between GAAP and local generally accepted accounting principles, (ii) any significant effects of acquisition accounting adjustments, (iii) any significant differences between our accounting policies and those of the acquired entities and (iv) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate non-recurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. 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 results or that the pre-acquisition financial statements we have relied upon do not contain undetected errors. The adjustments reflected in our rebased amounts have not been prepared with a view towards complying with Article 11 of the Securities and Exchange Commission'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 the dates assumed for purposes of calculating our rebased amounts or the revenue and OCF that will occur in the future. The rebased growth percentages have been presented as a basis for assessing growth rates on a comparable basis, and are not presented as a measure of our pro forma financial performance. Therefore, we believe our rebased data is not a non-GAAP financial measure as contemplated by Regulation G or Item 10 of Regulation S-K.

The selected financial data contained herein is preliminary and unaudited and subject to possible adjustments in connection with the publication of UPC Holding’s March 31, 2012 condensed consolidated financial statements. In each case, the following tables present (i) the amounts reported by each of our reportable segments for the comparative periods, (ii) the euro change and percentage change from period to period and (iii) the percentage change from period to period on a rebased basis.

Revenue

Operating Cash Flow

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. Operating cash flow is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding stock-based compensation, related-party fees and allocations, depreciation and amortization and impairment, restructuring and other operating charges or credits). Other operating charges or credits include (i) gains and losses on the disposition of long-lived assets, (ii) direct acquisition costs, such as third-party due diligence, legal and advisory costs, and (iii) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe operating cash flow is a meaningful measure and is superior to available GAAP measures because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure 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. We believe our operating cash flow measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other companies. Operating cash flow should be viewed 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 or cash flows. A reconciliation of total segment operating cash flow to our operating income is presented below.

Capital Expenditures

The following table provides property and equipment additions for UPC Holding for the indicated periods:

The table below highlights the categories of our property and equipment additions for the indicated periods and reconciles those additions to the capital expenditures that we present in our condensed consolidated statements of cash flows:

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RGUs, Customers and Bundling²

The following table provides information on the breakdown of our RGUs and customer base and highlights our customer bundling metrics at March 31, 2012, December 31, 2011, and March 31, 2011:

ARPU per Customer Relationship³

The following table provides ARPU per customer relationship for the indicated periods:

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Footnotes for Operating Data and Subscriber Variance Tables

Contacts:

UPC Holding B.V.
Investor Relations
Christopher Noyes, +1 303.220.6693
or
Corporate Communications
Bert Holtkamp, +31 20.778.9800

Source: UPC Holding B.V.