SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 28, 2003
United Pan-Europe Communications N.V.
(Exact name of registrant as specified in its charter)
The Netherlands
(State or Other Jurisdiction of Incorporation)
000-25365
(Commission File Number)
98-0191997
(I.R.S. Employer Identification Number)
Boeing Avenue 53
1119 PE, Schiphol Rijk
The Netherlands
(Address and zip code of principal executive offices)
(31) 20-778-9840
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description
99.1 Press release dated February 28, 2003 of
United Pan-Europe Communications N.V.
announcing the completion of its impairment
test on its goodwill as at January 1, 2002.
99.2 Update to the Unaudited Pro Forma Condensed
Consolidated Balance Sheets of United
Pan-Europe Communications N.V. as of
September 30, 2002.
99.3 Update to the Unaudited Pro Forma Condensed
Consolidated Statements of Operations of
United Pan-Europe Communications N.V. for the
nine months ended September 30, 2002.
99.4 Update to the Selected Consolidated Financial
Data of United Pan-Europe Communications N.V.
as of, and for the nine months ended,
September 30, 2002.
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Item 9. Regulation FD Disclosure.
On February 28, 2003, United Pan-Europe Communications N.V. (the
"Company") issued a press release stating that the Company had completed the
impairment analysis required by the Company's adoption of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142") and APB 18, "The Equity Method of Accounting for Investments in Common
Stock" ("APB 18"), with respect to the amount of goodwill recorded on the
Company's balance sheet as at January 1, 2002. As a result of such analysis and
as more fully described below, the Company will record a non-cash impairment
charge of approximately EUR 1.5 billion to the Company's consolidated statements
of operations for the fiscal year ended December 31, 2002. A copy of the press
release issued by the Company is attached hereto as Exhibit 99.1 and is
incorporated herein by reference in its entirety.
The Company adopted SFAS 142, effective January 1, 2002. Under SFAS
142, goodwill and intangible assets with indefinite lives are no longer
amortized, but are tested for impairment on an annual basis and whenever
indicators of impairment arise. In addition, goodwill on equity method
investments is no longer amortized, but is tested for impairment in accordance
with APB 18. The analysis required under SFAS 142 and APB 18 is based on fair
value and is required to be performed with respect to each of the Company's
reporting units. All recognized intangible assets that are deemed not to have an
indefinite life are amortized over their estimated useful lives.
The Company completed the analysis required under SFAS 142 and APB 18
in two steps. First, the Company engaged an external party to compare the fair
value of each of the Company's reporting units to their respective carrying
amounts, including goodwill. If the fair value of a reporting unit exceeded its
carrying amount, the goodwill of the reporting unit was considered not impaired.
If the carrying amount of a reporting unit exceeded its fair value, the
reporting unit was considered impaired, and the Company was required to
undertake the second step of the analysis. Under the second step, the Company
was required to quantify the amount of the impairment. As previously disclosed
in the second amended disclosure statement (the "Disclosure Statement"), which
was filed as an exhibit to the Form 8-K with the U.S. Securities and Exchange
Commission ("SEC") on January 9, 2003 (File No. 000-25365), the Company
determined that certain of its reporting units were impaired. However, at the
time the Company filed Disclosure Statement, the Company had not completed the
second step of the analysis. As such, the Disclosure Statement does not contain
the effect of the impairment charge described herein.
As a result of the completion of the second step of the analysis, the
Company will record a non-cash charge of approximately EUR 1.5 billion to the
Company's consolidated statements of operations for the fiscal year ended
December 31, 2002. The charge will be recorded as a cumulative effect of a
change in accounting principle at the date of adoption. At this time, the
Company is continuing the impairment analysis with respect to the amount of the
impairment of the remaining goodwill and intangible assets of its reporting
units for the fiscal year ended December 31, 2002. When the Company completes
such analysis, it may be required to record a significant additional impairment
charge, which will be reflected in the Company's annual report
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on Form 10-K for the fiscal year ended December 31, 2002 that will be filed with
the SEC by March 31, 2003.
The outcome of such analysis has resulted in an update to the
Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September 30,
2002, previously disclosed on page 129 of the Disclosure Statement, attached as
Exhibit 99.2 hereto, in an update to the Unaudited Pro Forma Condensed
Consolidated Statement of Operations for the nine months ended September 30,
2002, previously disclosed on page 132 of the Disclosure Statement, attached as
Exhibit 99.3 hereto, and in an update of the Selected Consolidated Financial
Data as of and for the nine months ended September 30, 2002, previously
disclosed on page 118 of the Disclosure Statement, attached as Exhibit 99.4
hereto.
The outcome of this impairment test has resulted in the following
adjustments to certain projected financial figures (the "Projections")
previously disclosed in the Disclosure Statement. The financial information is
stated in millions of Euros.
1. The projected amount of Net income (loss) for the financial year 2002
of (564) as mentioned on page F-2 of the Disclosure Statement is
adjusted to (2,063).*
2. The projected amount of Total assets for the years ended December 31,
2002, 2003 and 2004 of 6,924, 6,436 and 6,185 respectively as
mentioned on page F-2 of the Disclosure Statement is adjusted to
5,425, 4,937 and 4,686, respectively.*
3. The projected amount of Goodwill and intangible assets for the years
ended December 31, 2002, 2003 and 2004 of 2,889 as mentioned on page
F-2 of the Disclosure Statement is adjusted to 1,390.*
4. The projected amount of Total shareholders equity for the years ended
December 31, 2002, 2003 and 2004 of (5,035), 1,837 and 1,592
respectively as mentioned on page F-2 of the Disclosure Statement is
adjusted to (6,534), 338 and 93, respectively.*
* A further impairment charge may result as part of the Company's annual
goodwill impairment test as required by SFAS 142, as at December 31,
2002. The outcome of this impairment charge will be recorded in the
annual financial statements for the fiscal year ended December 31,
2002 and will be made publicly available before the end of March 2003.
This information is not currently available.
Cautionary Statement Regarding Projections
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The Projections are based upon the Company's business plan and should
be read in conjunction with (i) the assumptions, qualifications and footnotes to
the tables containing the Projections previously disclosed in the Disclosure
Statement, (ii) the historical consolidated financial information (including the
notes and schedules thereto) and the other information set forth in the
Company's Annual Report of Form 10-K for the fiscal year ended December 31, 2001
and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September
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30, 2002 and (iii) the information contained under the heading "Risk Factors" of
the Disclosure Statement.
The Company's financial forecasts (upon which the Projections attached
as an exhibit to this Current Report on Form 8-K (this "Report") are based in
part) are, in general, prepared solely for internal use and capital budgeting
and other management decisions and are subjective in many respects and thus
susceptible to multiple interpretations and periodic revisions based on actual
experience and business developments. The Projections also reflect numerous
assumptions made by management of the Company with respect to industry
performance, general business, economic, market and financial conditions and
other matters. Such assumptions regarding future events, including, in
particular, the effect of income tax exemptions in The Netherlands, the
Company's restructuring on subscriber growth and other factors related to the
restructuring, are difficult to predict, and many are beyond the Company's
control. Accordingly, there can be no assurance that the assumptions made by the
Company in preparing the Projections will prove accurate. It is expected that
there will be differences between actual and projected results, and actual
results may be materially greater or less than those contained in the
Projections.
The inclusion of the Projections as an exhibit to this Report should
not be regarded as an indication that the Company, New UPC, Inc. ("New UPC") or
their respective affiliates, representatives or advisors consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of the Company, New UPC or any of their
respective affiliates, representatives or advisors makes any representation to
any person regarding the projections, and none of them has an obligation or
intends to (i) update or otherwise revise the Projections (even in the event
that any or all of the assumptions underlying the Projections are shown to be in
error), (ii) include such updated or revised information in any documents that
may be required to be filed with the SEC or (iii) otherwise make such updated or
revised information publicly available.
The Projections were prepared exclusively, and in good faith, by the
management of the Company using assumptions believed to be reasonable and
applied in a manner consistent with past practice. Most of the assumptions about
the operations of the Company's and the business of the Company and its
subsidiaries (the "UPC Group") after the assumed date of effectiveness of the
restructuring of March 31, 2003 which are utilized in the Projections are based,
in part, on economic, competitive, and general business conditions prevailing at
the time they were originally prepared. Any future changes in these conditions
may materially impact the Company's ability to achieve the Projections.
The Projections, while presented with numerical specificity, are
necessarily based on a variety of estimates and assumptions which, though
considered reasonable by the Company's management when taken as a whole, may not
be realized, and are inherently subject to significant known and unknown
business, economic and competitive uncertainties and contingencies, including,
among others, many of which are beyond the Company's control and which may cause
the Company's actual financial condition, results or performance to be
materially different from those projected. Consequently, the Projections
contained herein should not be regarded as a representation by the Company or
any other person as to the accuracy of the Projections or to the Company's
ability to achieve the projected results or performance. In addition, there can
be no assurance that the assumptions made by the Company's management in
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preparing the Projections will prove accurate. Some assumptions inevitably will
not materialize. Further, events and circumstances occurring subsequent to the
date on which the Projections were prepared may be different from those assumed
or, alternatively, may have been unanticipated, and the occurrence of these
events may affect the Company's and the UPC Group's financial results in a
material and possibly adverse manner. The Projections, therefore, are not fact
and should not be relied upon as a guaranty or other assurance of the actual
results that will occur. The inclusion of the Projections as an exhibit to this
Report should not be regarded as an indication that the Company or any of its
affiliates, representatives or advisors consider the Projections to be a
reliable prediction of future events, and the Projections should not be relied
upon as such. Readers of this Report are cautioned not to place undue reliance
on the Projections.
The Company's management prepared the Projections solely for purposes
of complying with the requirements of the of the United States Bankruptcy Code
(the "U.S. Bankruptcy Code"). The Projections were not prepared with a view
toward compliance with the published guidelines of the SEC, the American
Institute of Certified Public Accountants, or any other regulatory or
professional agency or body, generally accepted accounting principles or
consistency with the Company's historical consolidated financial statements.
Neither Arthur Andersen Amstelveen, The Netherlands, the Company's predecessor
independent auditors, nor KPMG Accountants N.V., the Company's current
independent auditors, nor Lazard Freres & Co., the Company's financial advisors,
has compiled or examined the Projections or performed any procedures with
respect to the Projections, nor have they expressed any opinion or any other
form of assurance on the Projections or the achievability of the results or
performance indicated by the Projections, and assume no responsibility for, and
disclaim any association with, the Projections.
Cautionary Statement Regarding Forward-Looking Statements
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This Report and the Projections contain forward-looking statements
(any statement other than those made solely with respect to historical fact)
based upon management's beliefs, as well as assumptions made by and data
currently available to management. This information has been, or in the future
may be, included in reliance on the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on a variety of assumptions that may not be realized and are subject to
significant business, economic, judicial and competitive risks and
uncertainties, including those set forth below, many of which are beyond the
Company's control. The Company's actual operations, financial condition, cash
flows or operating results may differ materially from those expressed or implied
by any such forward-looking statements. These statements relate to the Company's
future plans, objectives, expectations and intentions. These statements may be
identified by the use of words like "believes," "expects," "may," "will,"
"would," "should," "seeks," "pro forma," "anticipates" and similar expressions.
The Company undertakes no obligation to update or revise any such
forward-looking statements.
The forward-looking statements and the Company's liquidity, capital
resources and results of operations are subject to a number of risks and
uncertainties including, but not limited to, the following: the ability of the
Company to continue as a going concern; the ability of the Company and its
subsidiaries to operate pursuant to the terms of their existing credit
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facilities and arrangements; the ability to fund, develop and execute the
Company's business plan; the ability of the Company to restructure its
outstanding indebtedness on a satisfactory and timely basis; the ability of the
Company to consummate the plan of reorganization (the "Plan") under the U.S.
Bankruptcy Code and to ratify and consummate the plan of compulsory composition
(Akkoord) (the "Akkoord") under the Dutch Bankruptcy Code (Faillissementswet);
the ramifications of any restructuring; risks associated with not completing the
restructuring consistent with the Company's timetable; risks associated with
third parties seeking and obtaining approval of the U.S. Bankruptcy Court or the
Amsterdam Court (Rechtbank) to take actions inconsistent with, or detrimental
to, the consummation of the Plan and the Akkoord; potential adverse developments
with respect to the Company's liquidity or results of operations; competitive
pressures from other companies in the same or similar lines of business as the
Company; trends in the economy as a whole which may affect subscriber confidence
and demand for the goods and services supplied by the Company; the ability of
the Company to predict consumer demand as a whole, as well as demand for
specific goods and services; the acceptance and continued use by subscribers and
potential subscribers of the Company's services; changes in technology and
competition; the Company's ability to achieve expected operational efficiencies
and economies of scale and its ability to generate expected revenue and achieve
assumed margins; the ability of the Company to attract, retain and compensate
key executives and other personnel; the ability of the Company to maintain
existing arrangements and/or enter into new arrangements with third party
providers and contract partners; potential adverse publicity, as well as other
factors detailed from time to time in the Company's filings with the SEC. Given
these uncertainties, readers are cautioned not to place undue reliance on the
forward-looking statements contained in this Report and the Projections.
The above information can also be obtained from the Company's website
at http://www.upccorp.com.
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Limitation on Incorporation by Reference
In accordance with General Instruction B.2 of Form 8-K, the
information in this Item 9 shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall such information be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a
filing. The information set forth in this Item 9 will not be deemed an admission
as to the materiality of any information required to be disclosed solely to
satisfy the requirements of Regulation FD.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/Anton A.M. Tuijten
--------------------------------------
Name: Anton A.M. Tuijten
Title: Member of the Board of Management
and General Counsel
Dated: March 3, 2003
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EXHIBIT INDEX
Exhibit Number Description
99.1 Press release dated February 28, 2003 of
United Pan-Europe Communications N.V.
announcing the completion of its impairment
test on its goodwill as at January 1, 2002.
99.2 Update to the Unaudited Pro Forma Condensed
Consolidated Balance Sheets of United
Pan-Europe Communications N.V. as of
September 30, 2002.
99.3 Update to the Unaudited Pro Forma Condensed
Consolidated Statements of Operations of
United Pan-Europe Communications N.V. for the
nine months ended September 30, 2002.
99.4 Update to the Selected Consolidated Financial
Data of United Pan-Europe Communications N.V.
as of, and for the nine months ended,
September 30, 2002.
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