PRESS RELEASE UPC
UNITED PAN-EUROPE COMMUNICATIONS N.V. RESULTS FOR THE THREE
MONTHS ENDING MARCH 31, 2003
Amsterdam, The Netherlands - May 14, 2003: United Pan-Europe Communications N.V.
("UPC" or the "Company") (EURONEXT Amsterdam: UPC), one of the leading broadband
communications companies in Europe, today announces its operating and financial
results for the first quarter, 2003.
o First quarter 2003 financial targets were met or exceeded, with:
o Revenue growth of 3% from EUR 350m in Q4 2002 to EUR 359m in Q1
2003
o Adjusted EBITDA1 growth of 27% from EUR 84m in Q4 2002 to EUR
106m in Q1 2003.
o Net income before income tax and other items improved to positive EUR
57m in the first quarter of 2003 from a net loss of EUR (396)m in the
fourth quarter 2002
o Adjusted EBITDA less capital expenditure improved from positive EUR
4.0m for the fourth quarter 2002 to positive EUR 64m in the first
quarter 2003
Management Comments
Commenting on UPC's results, John F. Riordan, CEO of UPC, said:
"UPC has continued to perform strongly during the first quarter of 2003; our
performance met or exceeded our financial guidance for the quarter.
We continue to prioritise the service we offer our customers and have recently
completed a re-assessment of our brand. The company is implementing a
comprehensive program across its European footprint based on redefined mission,
vision and values, putting the customer at the heart of everything we do.
Customer satisfaction is our key principle of operation and we are dedicated to
offering our eight million customers more choice, better value and an ever
improving quality of service.
Financially we have continued to target cashflow generation and will not chase
less profitable revenue growth. This prudent revenue improvement is driven by
increased take up of our new services and targeted rate increases. We will work
to achieve our financial goals by realising economies of scale across our
network and cost rationalisation through integration synergies.
Since we updated the market with our year-end results at the end of March we
were pleased to announce the extension of waivers under our senior bank facility
until the end of September 2003. This will allow UPC sufficient time to complete
its restructuring process and to deal with the appeal procedure that has been
filed by InterComm Holdings L.L.C. (`ICH') in relation to the decision of the
Amsterdam court of March 13, 2003 to ratify the Akkoord. While, as expected, the
Dutch Court of Appeals rejected ICH's claim at the beginning of April, ICH has
appealed the ratification of the Akkoord to the Dutch Supreme Court.
The Supreme Court has scheduled briefs to be submitted by May 23, 2003 and is
expected to rule on the appeal expeditiously. The Supreme Court will be the
final point of appeal for ICH in relation to the ratification of the Akkoord.
We believe the appeal is without merit. However, the appeal will delay the
Effective Date for emergence from Chapter 11 and Akkoord process and the
completion of the recapitalisation beyond the end of the second quarter 2003. We
will provide more information on the expected timing of completion of the
restructuring as soon as it is available.
_____________________________
1 Adjusted EBITDA represents earnings before interest, tax, depreciation,
amoritsation, stock based compensation, restructuring and impairment charges
1
Finally, I would like to sincerely thank management and staff for their hard
work during the first quarter 2003, in continuing to successfully execute our
revised strategy.
Group Financial Review
UPC's core operations are split into four principal divisions as follows:
1. UPC Distribution - local operating systems providing video, telephone and
internet services for residential customers (Triple Play).
2. UPC Media - broadband internet and interactive digital products and
services, transactional television services such as pay-per-view movies,
digital broadcast and post-production services and thematic channels for
distribution on UPC's network, third party networks and DTH platforms.
3. Priority Telecom - providing network solutions to the business customer. 4.
Investments Division - managing our non-consolidated investment assets.
During April 2003, UPC sold its shares in SBS Broadcasting S.A. to
UnitedGlobalCom for EUR 100m, against a book value at March 31, 2003 of EUR
63m. UPC will continue to focus on rationalising its investment portfolio
to maximise value.
Revenue
For the Quarter ended
Revenues (EUR '000s)
Q1 2003 Q1 2002 % change
Q on Q
Triple Play Distribution (1) 322,792 297,296 9%
Deconsolidated German EWT/TSS Operations 0 12,491
DTH 9,202 7,212
Other (2) 6,471 9,834
Total UPC Distribution 338,465 326,833 4%
Priority Telecom 26,604 32,116
UPC Media 20,671 18,515
UPC Investments (3) 123 123
Intercompany Eliminations(4) (26,763) (31,275)
UPC Consolidated 359,100 346,312 4%
1. Includes basic cable, digital, telephony and internet revenues. Excludes
Germany.
2. Network revenue, generated by operating, maintenance and leasing agreements
with Priority Telecom, eliminated on consolidation
3. UPC Investment Division has been formed in 2003 and manages our
non-consolidated investment assets
4. Intercompany eliminations are the eliminations of intercompany UPC Media
revenues and network revenues
UPC's consolidated revenue in the three months ending March 31, 2003 was EUR
359m, an increase of 4% from EUR 346m in the first quarter 2002. UPC Triple Play
Distribution revenue from continued operations increased 9% to EUR 323m in Q1
2003, compared to EUR 297m in Q1 2002. Revenues increased due to price rises in
the period and increasing take up of new services.
2
Revenues at Priority Telecom decreased to EUR 27m in the first quarter 2003 from
EUR 32m in the first quarter 2002 as a direct result of its revenue
rationalisation strategy whereby low margin or high price erosion and credit
risk customer contracts are reduced or even eliminated, due to the shifted focus
of resources towards high margin direct business customer contracts, adhering to
Priority's internal margin and profitability guidelines. Priority continues to
refocus its product portfolio to concentrate efforts on profitable products and
services. While Priority anticipates weak market conditions in the business
telecommunications market during 2003 it is proactively introducing initiatives
that will enable it to continue to enhance its profitability and expand the
business during the remainder of the year.
UPC Media performed well in Q1 2003 and generated an increase in revenue 12% in
Q1 2003 compared with Q1 2002 with revenues increasing from EUR 19m in Q1 2002
to EUR 21m in Q1 2003, driven by a strong performance in the internet access
business.
Non GAAP and Other Financial Measures
UPC uses Adjusted EBITDA, a non-GAAP financial measure, as a management tool to
measure and monitor financial performance and as part of the calculation of
Company performance against senior bank facility covenants. As previously
highlighted, Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation, stock based compensation, restructuring and
impairment charges. The most directly comparable financial measure to Adjusted
EBITDA that is calculated and presented in accordance with US GAAP is Income
(loss) before income taxes and other items.
Adjusted EBITDA
For the Quarter Ended
Adjusted EBITDA (EUR '000s)
% change
Q1 2003 Q1 2002 Q on Q
Triple Play Distribution (1) 113,098 67,549 67%
Deconsolidated German EWT/TSS Operations 0 5,521
DTH 1,216 524
Other (2) 5,139 5,827
Corporate (3) (17,861) (14,254)
Total UPC Distribution 101,592 65,167 56%
Priority Telecom (4) 2,601 (4,676)
UPC Media 2,465 (5,575)
UPC Investments (5) (170) (102)
UPC Consolidated 106,488 54,814 94%
1. Includes basic cable, digital, telephony and internet revenues.
2. Other includes network revenue and costs and administrative costs not
attributable to a specific business line
3. Head office activities included in the calculation of UPC Distribution
Adjusted EBITDA
4. Since Priority Telecom's listing, its results are separately announced in
Dutch GAAP, and presented in US GAAP in our financial statements.
Differences may occur as a result of this.
5. UPC Investment Division has been formed in 2003 and manages our
non-consolidated investment assets
UPC consolidated Adjusted EBITDA continued to improve strongly during the first
quarter 2003 increasing 94% to EUR 106m, compared to EUR 55m in Q1 2002. UPC
Triple Play Distribution Adjusted EBITDA increased 67% to EUR 113m in Q1 2003
from EUR 68m in Q1 2002.
3
Q1 2002 Adjusted EBITDA has been restated in the table above following the
reallocation of previously centralized costs including Information Technology
and Other (including marketing) costs to cost centers in the relevant countries.
In addition, from April 2003 certain corporate costs have been transferred into
the UPC Distribution bank group, this change is reflected in the Q1 2003
results. Corporate costs have increased to EUR 18m in Q1 2003 from EUR 14m in Q1
2002 in large part because of certain one-off expenses that occurred in the
period.
Our Central European DTH business, Priority Telecom and UPC Media all
demonstrated significant continued operating improvements in Q1 2003. For the
first quarter 2003, Priority Telecom improved its Adjusted EBITDA loss from EUR
(5)m in the first quarter 2002 to positive EUR 3m in Q1 2003. UPC Media improved
its Adjusted EBITDA loss from EUR (6)m in Q1 2002 to EUR positive 2m Q1 in 2003.
The table below highlights the reconciliation of Adjusted EBITDA to the US GAAP
measure Net Income (loss) before income taxes and other items.
Reconciliation of Adjusted EBITDA to Net Income (loss) before
income taxes and other items (EUR '000s) Q1 2003 Q1 2002 Q4 2002
Adjusted EBITDA 106,488 54,814 83,586
Depreciation and amortisation (166,616) (172,632) (174,921)
Impairment and restructuring charges 0 (3,943) (397,101)
Stock-based compensation and retention bonuses (3,893) (6,790) (3,061)
Net Operating Loss (64,021) (128,551) (491,497)
Interest Income 3,569 5,985 11,042
Interest Expense (82,377) (230,205) (219,372)
Foreign exchange gain (loss) and other income
(expense), net 133,355 (56,057) 237,893
Other income (expense) 66,486 (62,429) 95,246
Net Loss before income taxes and other items 57,012 (471,257) (366,688)
Free Cashflow Reconciliation, Capital Expenditures and Working Capital Update
As previously highlighted, UPC is focused on improving underlying cashflow
generation. The table below demonstrates the positive Free Cashflow of EUR 28m
achieved during the first quarter 2003 driven in part by strong working capital
flows in the quarter. Free Cashflow is a measure management use to monitor the
business and represents net cash provided by operating activities less capital
expenditure. We continue to target tighter working capital management during the
year and recurring Free Cashflow.
4
Free Cashflow Reconciliation (EUR '000s)
Q1 2003
Cash and cash equivalent at beginning of period 255,062
Adjusted EBITDA 106,488
Capital expenditure (42,915)
Accrued and cash pay Interest1 (69,684)
Change in assets and liabilities and other 33,738
Free Cashflow 27,627
Restricted cash deposited (net)2 (18,060)
Repayment of debt net of proceeds (2,429)
Other3 (13,361)
Cashflow after financing activities (6,223)
Cash and cash equivalent at end of period 248,839
1 Total Interest expense minus accreted interest
2 Includes cash to repay PCI Notes
3 Effect of exchange rates on cash, purchase of derivatives and proceeds
received from the sale of assets
Reconciliation of cash provided by operating activities to Free Cashflow
Reconciliation of cash provided by operating activities to Free
Cashflow (EUR 000's) Q1 2003
Net cash provided by operating activities 70,542
Capital expenditure (42,915)
Free Cashflow 27,627
Capital expenditure at EUR 43m for the quarter from EUR 102m in Q1 2002 was
below expectations for the quarter due to continued management control and the
subscriber growth achieved in the quarter. This reduction in capital expenditure
reflects both the variable nature of UPC's capital expenditure requirements and
the company's ongoing focused investment in new build and upgrade; ensuring this
investment generates a NPV (net present value) positive return.
The table below highlights our capital expenditure for the first quarter 2003,
classified in accordance with NCTA cable industry guidelines.
5
Capital expenditures (EUR '000s) Q1 2003
Customer premise equipment 17,296
Commercial spending 0
Scalable infrastructure 6,180
Line extensions 6,735
Upgrade / Rebuild 2,359
Support capital 9,747
Intangibles 598
Total Capital Expenditures 42,915
In addition, working capital flows were strong. Seasonal subscriber prepayments
and deposits particularly in Austria and the deferral of payment of a portion of
the costs associated with our restructuring (due to the ongoing appeal process)
resulting in cash balances (including restricted cash) increasing to EUR 285m at
the end of Q1 2003 from EUR 273 at year end 2002, with an increase in subscriber
prepayments of EUR 48m in the first quarter 2003 compared to Q4 2002.
Update Quarter 1, 2003 compared with Quarter 4, 2002
UPC's financial performance in the first quarter 2003 was inline with or
exceeded our financial guidance for the quarter. In the three months ended March
31, 2003, total consolidated revenues grew 3% compared to the fourth quarter of
2002. Total revenues from triple pay distribution also increased 3% quarter over
quarter to EUR 323m in Q1 2003 compared with EUR 315m in the fourth quarter
2002. Total consolidated Adjusted EBITDA increased 27% to EUR 106m in Q1 2003
compared with EUR 84m in Q4 2002. Net operating loss before income taxes and
other items improved from negative EUR (396)m in Q4 2002 to positive EUR 57m in
Q1 2003.
Consolidated Operating Statistics
The table below shows operating statistics for UPC on a consolidated basis:
UPC continues to drive ARPU growth per basic cable subscriber, and has now
reached EUR 20.91 in Q1 2003 in Western Europe from 19.22 in Q1, 2002, a 9%
increase in the period. In Eastern Europe ARPU per basic cable subscriber has
increased to EUR 9.01 in Q1 2003 from EUR 8.54 in Q1, 2002, an increase of 6% in
the period. Across all properties, ARPU per RGU increased during the twelve
months to March 31, 2003 by 6% to EUR 13.74 per RGU from 12.97 in Q1, 2002.
As highlighted in our year-end 2002 results we did not expect our subscriber
numbers to significantly increase during Q1 2003 due to the implementation of
the new subscriber management system, involving the consolidation of a number of
customer databases in the Netherlands. This new system has enabled a systematic
reduction in the period over which an overdue account is disconnected for
non-payment of service fees and has resulted in a reduction in the number of
subscribers in the Netherlands during the first quarter 2003. Net subscriber
growth has however been strong in all other respects and UPC added 32,000 new
service subscribers during the quarter.
6
Consolidated Operating Statistics
Q1 2003 Q1 2002
(all figures in '000s)
Total Homes Passed (1) 10,273 10,149
Two-way Homes Passed (1) 5,510 5,242
Basic Cable Subscribers 6,621 6,595
Digital Subscribers 129 121
Telephony Subscribers (2) 462 465
Internet Subscribers (3) 706 565
Net Service Subscribers 1,297 1,150
DTH Subscribers 151 112
Total Residential RGUs (4) 8,069 7,857
Disposed operations
Germany (EWT / TSS) 0 579
Total Disposed operations 0 579
Total consolidated RGUs 8,069 8,436
- -------------------------------------------------------------------------------
ARPU per RGU (5) EUR 13.74 EUR 12.97
ARPU per basic West European cable subscriber (6) EUR 20.91 EUR 19.22
ARPU per basic East European cable subscriber (6) EUR 9.01 EUR 8.54
1) Excludes Germany EWT / TSS
2) Includes residential cable and non-cable telephony subscribers.
3) Includes residential and third party ISP subscribers
4) Sum of basic cable, digital, Internet telephony and DTH subscribers
5) ARPU calculations exclude Germany but include DTH. In EUR per month,
calculated as straight line average: quarterly revenues divided by average
of opening and closing subs in the quarter
6) Basic cable, Internet, telephony, digital revenue (excludes DTH) divided by
basic cable subscribers (excluding Germany)
Net Results
UPC generated net income of EUR 46m, during Q1 2003 compared with a net loss of
EUR (1,990)m for Q1 2002. Net income has been achieved in the first quarter 2003
as a result in part of foreign currency gains of EUR 133m and other income and
expense of EUR 66m, due to the sale of our cable business in Israel.
Additionally we no longer accrue for the interest on our senior notes during our
restructuring, in accordance with Statement of Position (SOP) 90 - 7. We do not
expect to generate net profit for the full year 2003.
2003 Outlook
The Company continues to prioritise Adjusted EBITDA and Free Cashflow generation
over revenue growth and will not be providing a further update to its revenue
guidance for the full year 2003. However it is anticipated that revenue growth
will be lower than the 12% annual growth previously highlighted.
A key variable for UPC's 2003 financial results continues to be the resolution
of the court case regarding minimum programme guarantees. In addition, the
Company's
7
financial results will be impacted by its success in reaching its targeted net
additions of 430,000 subscribers during the year. The Company is currently
undergoing a reforecast which may be impacted by the items noted above, however
it currently reaffirms its Adjusted EBITDA and capital expenditure guidance for
the full year 2003.
This press release should be read in conjunction with the Company's audited
financial statements and notes, which will be filed on Form 10Q with the SEC on
May 15, 2003. This filing will be found on the UPC website at www.upccorp.com.
United Pan-Europe Communications N.V. is one of the leading broadband
communications and entertainment companies in Europe. Through its broadband
networks, UPC provides television, Internet access, telephony and programming
services. UPC's shares are traded on Euronext Amsterdam Exchange (UPC) and in
the United States on the Over The Counter Bulletin Board (UPCOY). UPC is
majority owned by UnitedGlobalCom, Inc. (NASDAQ: UCOMA).
NOTE: Except for historical information contained herein, this release contains
forward-looking statements, which 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 company's ability
to restructure its outstanding indebtedness on a satisfactory and timely basis,
the ramifications of any restructuring, the acceptance and continued use by
subscribers and potential subscribers of the Company's services, changes in the
technology and competition, our ability to achieve expected operational
efficiencies and economies of scale, our ability to generate expected 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.
For further information please contact:
- ------------------------------------- -----------------------------------------
Claire Appleby Bert Holtkamp
Director of Investor Relations Director of Corporate Communications
0044 (0) 207 647 8233 0031 20 778 9447 or 0031 655 38 0594
Email: ir@upccorp.com Email: corpcomms@upccorp.com
- ------------------------------------- -----------------------------------------
Also, please visit www.upccorp.com for further information about UPC
8
As at March 31, 2003
--------------------------------------------------------------------------------------------------
---------- --------- ---------- --------- ------------ ---------- ---------- ---------- ----------
Homes in Two Way
UPC Paid in Service Area Homes Passed Homes Passed Analog Basic Basic
Ownership (1) (2) (3) Subscribers(4) Penetration
----------- ------------ ------------ ------------ -------------- -----------
Multi Channel TV
Norway........................ 100.0% 529,000 482,600 196,200 336,200 69.7%
Sweden........................ 100.0% 770,000 421,600 264,300 274,000 65.0%
Belgium....................... 100.0% 530,000 153,600 153,600 130,600 85.0%
France........................ 92.0% 2,656,600 1,356,200 669,400 462,700 34.1%
The Netherlands............... 100.0% 2,651,700 2,588,100 2,337,400 2,311,700 89.3%
Austria....................... 95.0% 1,081,400 923,300 920,100 502,200 54.4%
---------- ---------- --------- ---------
Total Western Europe....... 8,218,700 5,925,400 4,541,000 4,017,400
========== ========== ========= =========
Poland........................ 100.0% 1,869,600 1,869,600 199,400 994,500 53.2%
Hungary....................... 98.9-100% 1,001,100 957,800 512,200 691,200 72.2%
Czech Republic................ 98.9-100% 913,000 679,800 240,200 297,600 43.8%
Romania....................... 100.0% 659,600 458,400 - 326,200 71.2%
Slovak Republic............... 95.0-100% 517,800 381,800 17,300 293,600 76.9%
---------- ---------- --------- ---------
Total Eastern Europe....... 4,961,100 4,347,400 969,100 2,603,100
Total...................... 13,179,800 10,272,800 5,510,100 6,620,500
========== ========== ========= =========
Direct to Total Video
Home Digital Subscribers
(DTH)(5) Subscribers(6) (7)
----------- -------------- ------------
Multi Channel TV
Norway........................ - 32,600 368,800
Sweden........................ - 17,800 291,800
Belgium....................... - - 130,600
France........................ - 7,600 470,300
The Netherlands............... - 49,700 2,361,400
Austria....................... - 21,300 523,500
----------- -------------- -----------
Total Western Europe....... - 129,000 4,146,400
=========== ============== ===========
Poland........................ - - 994,500
Hungary....................... 82,400 - 773,600
Czech Republic................ 58,200 - 355,800
Romania....................... - - 326,200
Slovak Republic............... 10,100 - 303,700
---------- --------------- -----------
Total Eastern Europe....... 150,700 - 2,753,800
========== =============== ===========
Total...................... 150,700 129,000 6,900,200
========== =============== ===========
(1) "Homes in Service Area" represents the number of homes in a certain
franchise area that can potentially be served.
(2) "Homes Passed" represents the number of homes that can be connected to our
distribution system without further extending the cable network
distribution plant.
(3) "Two-way Homes Passed" represents the number of homes passed by our network
where customers can request and receive the installation of a two-way
addressable set-top box, cable modem and/or voice port which, in most
cases, allows for the provision of video, voice and data (broadband)
services.
(4) "Analog Basic Subscriber" is a home or commercial unit that receives our
basic cable service.
(5) "DTH Subscriber" is a home or commercial unit with one or more television
sets that receives our video programming broadcast directly to the home via
geosynchronous satellites.
(6) "Digital Subscriber" is a home or commercial unit with one or more digital
converter boxes that receives our digital service. A digital subscriber is
also counted as an Analog Basic Subscriber.
(7) "Total Video Subscribers" is the sum of Analog Basic Subscribers, Direct to
Home and Digital Subscribers.
9
As at March 31, 2003
------------------------------------------------------------------------
UPC Paid in Homes Subscribers Lines
Ownership Serviceable (1) Residential (2) Residential (3)
Cable Telephony
Norway...................... 100.0% 135,100 22,900 25,400
France...................... 92.0% 669,400 55,800 57,300
The Netherlands............. 100.0% 1,593,300 165,700 195,500
Austria..................... 95.0% 899,700 149,800 151,200
------------ ------------ ------------
Total cable telephony.... 3,297,500 394,200 429,400
============ ============ ============
Non-cable Telephony
Czech Republic(4).............. 99.9-100.0% 17,700 3,100 3,100
Hungary(4)..................... 98.9-100.0% 84,900 64,900 71,400
------------ ------------ ------------
Total non-cable telephony 102,600 68,000 74,500
============ ============ ============
Total.................... 3,400,100 462,200 503,900
============ ============ ============
===================================================================================================================
(1) "Telephony Homes Serviceable" represents the number of homes that can be
connected to our cable distribution system, or our copper (twisted pair)
network in certain areas, where customers can request and receive voice
services.
(2) "Residential telephony Subscriber" is a home with one or more voice ports
connected to our broadband network, or our copper (twisted pair) networks
in certain areas, where a customer has requested and is receiving voice
services.
(3) "Telephony Lines" are the number of lines provided to our Telephony
Subscribers.
(4) Hungary (Monor) and Czech Republic offer traditional telephone services.
-10-
As at March 31, 2003
------------------------------------------------------------------------
UPC Paid in Homes Residential 3rd Party ISP
Ownership Serviceable (1) Subscribers (2) Subscribers (3)
Internet
Norway...................... 100.0% 196,200 32,300 -
Sweden...................... 100.0% 264,300 64,600 -
Belgium..................... 100.0% 153,600 25,100 -
France...................... 92.0% 669,400 22,300 -
The Netherlands............. 100.0% 2,337,400 309,200 -
Austria..................... 95.0% 920,100 187,100 -
----------- ----------- -----------
Total Western Europe..... 4,541,000 640,600 -
=========== =========== ===========
Poland...................... 100.0% 199,400 15,800 -
Hungary..................... 98.9-100.0% 451,300 31,600 400
Czech Republic.............. 99.9-100.0% 240,200 17,700 -
Slovak Republic............. 95.0-100.0% 8,200 - -
----------- ----------- -----------
Total Eastern Europe..... 899,100 65,100 400
=========== =========== ===========
Total.................... 5,440,100 705,700 400
=========== =========== ===========
===================================================================================================================
(1) "Internet Homes Serviceable" represents the number of homes that can be
connected to our cable distribution system where customers can request and
receive high-speed Internet access services.
(2) "Residential Internet Subscriber" is a home or commercial unit connected to
our broadband network, where a customer has requested and is receiving
chello broadband high-speed Internet access services.
(3) Internet subscribers who are not served by chello broadband.
-11-
As at
March 31,
2003
-------------
Total RGUs (1)
Norway................................ 424,000
Sweden................................ 356,400
Belgium............................... 155,700
France................................ 548,400
The Netherlands....................... 2,836,300
Austria............................... 860,400
-------------
Total Western Europe............... 5,181,200
=============
Poland................................ 1,010,300
Hungary............................... 870,500
Czech Republic........................ 376,600
Romania............................... 326,200
Slovak Republic....................... 303,700
-------------
Total Eastern Europe............... 2,887,300
=============
Total.............................. 8,068,500
=============
(1) Total Subscribers, or "Total RGUs" is the sum of Analog, Digital, DTH,
Residential, Telephony and Broadband Internet Subscribers.
-12-
- -------------------------------------------------------------------------------------------------------------------------
UNITED PAN-EUROPE COMMUNICATIONS N.V.
CONSOLIDATED BALANCE SHEET
(Stated in thousands of Euros, except par value share and
number of shares)
- -------------------------------------------------------------------------------------------------------------------------
As of As of
March 31, December 31,
2003 2002
ASSETS:
Current assets
Cash and cash equivalents........................................................... 248,839 255,062
Restricted cash..................................................................... 36,412 18,352
Subscriber receivables, net of allowance for doubtful accounts of 43,572 and
52,232, respectively.............................................................. 95,679 95,526
Costs to be reimbursed by affiliated companies...................................... 5,850 4,054
Other receivables................................................................... 38,055 40,588
Deferred financing costs, net....................................................... 56,284 59,375
Prepaid expenses and other current assets........................................... 83,532 79,345
------------- -------------
Total current assets............................................................ 564,651 552,302
Marketable equity securities of parent, at fair value................................. 15,618 12,760
Investments in and advances to affiliated companies................................... 105,854 114,575
Property, plant and equipment, net.................................................... 3,016,594 3,175,363
Goodwill, net......................................................................... 990,822 995,946
Other intangible assets, net.......................................................... 73,595 76,331
Derivative assets..................................................................... 976 -
Other assets.......................................................................... 6,159 3,740
------------- -------------
Total assets.................................................................. 4,774,269 4,931,017
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):
Current liabilities
Not subject to compromise:
Accounts payable, including related party payables of 5,908 and 5,189
respectively...................................................................... 161,672 166,679
Accrued liabilities................................................................. 256,091 281,211
Subscriber prepayments and deposits................................................. 170,105 121,749
Derivative liabilities.............................................................. - 10,133
Short-term debt..................................................................... 59,535 58,363
Current portion of long-term debt................................................... 3,147,014 3,212,302
------------- -------------
Total current liabilities not subject to compromise............................. 3,794,417 3,850,437
------------- -------------
Subject to compromise:
Accounts payable.................................................................... 36,889 36,889
Accrued liabilities................................................................. 342,309 351,500
Current portion of long-term debt, including related party debt of 2,280,824 and
2,358,380 respectively............................................................ 4,881,701 5,043,346
------------- -------------
Total current liabilities subject to compromise................................. 5,260,899 5,431,735
------------- -------------
Long-term liabilities not subject to compromise:
Long term debt...................................................................... 420,589 427,444
Deferred gain on sale of assets..................................................... 150,321 150,321
Other long-term liabilities......................................................... 81,826 83,999
------------- -------------
Total long-term liabilities not subject to compromise........................... 652,736 661,764
------------- -------------
Commitments and contingencies (Note 8)
Minority interests in subsidiaries.................................................... 1,541 1,660
------------- -------------
Convertible preferred stock subject to compromise:
Convertible preferred stock......................................................... 1,664,689 1,664,689
------------- -------------
Shareholders' equity (deficit)
Priority stock, 0.02 par value, 300 shares authorized, issued and outstanding....... - -
Ordinary stock, 0.02 par value, 1,000,000,000 shares authorized, 443,417,525
shares issued and outstanding..................................................... 8,868 443,418
Additional paid-in capital.......................................................... 3,175,136 2,740,586
Deferred compensation............................................................... (12,995) (16,888)
Accumulated Deficit................................................................. (10,007,307) (10,053,630)
Accumulated other comprehensive income.............................................. 236,285 207,246
------------- -------------
Total shareholders' equity (deficit)............................................ (6,600,013) (6,679,268)
------------- -------------
Total liabilities and shareholders' equity (deficit)............................ 4,774,269 4,931,017
============= =============
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UNITED PAN-EUROPE COMMUNICATIONS N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of Euros, except par value share and number of shares)
- ----------------------------------------------------------------------------------- ----------------- ----------------
For the Three Months
Ended March 31,
---------------
2003 2002
---- ----
Service and other revenue..................................................... 359,100 346,312
Operating expense (exclusive of items shown separately below)................. (158,423) (188,031)
Selling, general and administrative expense................................... (98,082) (110,257)
Depreciation and amortization ................................................ (166,616) (172,632)
Impairment and restructuring charges ......................................... - (3,943)
----------- ------------
Operating income (loss) ................................................... (64,021) (128,551)
Interest income .............................................................. 3,569 5,985
Interest expense ............................................................. (82,377) (171,789)
Interest expense - related party ............................................. - (58,416)
Foreign currency exchange gain (loss) ........................................ 133,355 (56,057)
Other income (expense), net .................................................. 66,486 (62,429)
----------- ------------
Net income (loss) before income taxes and other items ..................... 57,012 (471,257)
Reorganization expenses, net ................................................. (7,641) -
Income tax benefit (expense) ................................................. (488) 1,244
Minority interests in subsidiaries ........................................... (65) (190)
Share in results of affiliates, net .......................................... (2,495) (21,303)
----------- ------------
Income (loss) before cumulative effect of change in accounting principle .. 46,323 (491,506)
Cumulative effect of change in accounting principle .......................... - (1,498,871)
----------- ------------
Net income (loss) ......................................................... 46,323 (1,990,377)
=========== ============
Basic and diluted net income (loss) attributable to common shareholders ...... 46,323 (2,026,182)
=========== ============
Net income (loss) per common share:
Basic net income (loss) per ordinary share before cumulative effect of change
in accounting principle................................................. 0.10 (1.19)
Cumulative effect of change in accounting principle ....................... - (3.38)
----------- ------------
Basic net income (loss) .............................................. 0.10 (4.57)
=========== ============
Diluted net income (loss) per ordinary share before cumulative effect of
change in accounting principle ......................................... 0.07 (1.19)
Cumulative effect of change in accounting principle ....................... - (3.38)
----------- ------------
Diluted net income (loss) .............................................. 0.07 (4.57)
=========== ============
Weighted-average number of ordinary shares outstanding:
Basic...................................................................... 443,417,525 443,417,525
=========== ============
Diluted.................................................................... 645,504,396 443,417,525
=========== ============
Other comprehensive income (loss), net of tax:
Net income (loss) ......................................................... 46,323 (1,990,377)
Foreign currency translation adjustments.................................. 19,777 (43,995)
Change in fair value of derivative assets ................................. 6,402 8,002
Change in unrealized gain in available-for-sale securities ................ 2,860 3,008
----------- ------------
Comprehensive income (loss)............................................. 75,362 (2,023,362)
=========== ============
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UNITED PAN-EUROPE COMMUNICATIONS N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of Euros)
- ----------------------------------------------------------------------------------------------------------------------
For the Three Months
Ended March 31,
---------------
2003 2002
---- ----
Cash flows from operating activities:
Net income (loss) ..................................................................... 46,323 (1,990,377)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization ...................................................... 166,616 172,632
Non cash impairment and restructuring charges ...................................... - 3,943
Reorganization expenses ............................................................ 7,641 -
Stock-based compensation expense ................................................... 3,893 6,790
Accretion of interest expense ...................................................... 12,693 90,418
Amortization of deferred financing costs ........................................... 3,235 4,926
Foreign exchange (gain) losses,net ................................................. (128,421) 59,059
Loss on derivative assets .......................................................... 4,383 177,809
Cumulative effect of change in accounting principle ................................ - 1,498,871
Minority interests in subsidiaries ................................................. 65 190
Share in results of affiliated companies ........................................... 2,495 21,303
Gain on extinguishment of liabilities .............................................. - (124,511)
Gain on DIC loan ................................................................... (69,364) -
Other............................................................................... (113) 2,978
Changes in assets and liabilities:
Decrease in restricted cash ..................................................... - 30,314
Increase in receivables ......................................................... (4,070) (1,874)
Increase (decrease) in other current liabilities ................................ 16,499 (40,249)
Increase in deferred taxes and other long-term liabilities ...................... 8,667 26,252
-------- --------
Net cash flows from operating activities .............................................. 70,542 (61,526)
-------- --------
Cash flows from investing activities:
Restricted cash deposited, net ........................................................ (18,060) -
Purchase of derivatives ............................................................... (9,090) -
Dividends received .................................................................... - 8,031
Capital expenditures .................................................................. (42,915) (102,017)
Proceeds received from the sale of assets ............................................. 663 -
Acquisitions, net of cash acquired .................................................... - (24,060)
-------- --------
Net cash flows from investing activities .............................................. (69,402) (118,046)
-------- --------
Cash flows from financing activities:
Proceeds from long-term and short-term borrowings...................................... 1,381 657
Repayments of long-term and short-term borrowings...................................... (3,810) (31,874)
-------- --------
Net cash flows from financing activities............................................... (2,429) (31,217)
-------- --------
Effect of exchange rates on cash ...................................................... (4,934) (3,002)
-------- --------
Net decrease in cash and cash equivalents ............................................. (6,223) (213,791)
Cash and cash equivalents at beginning of period....................................... 255,062 855,001
-------- --------
Cash and cash equivalents at end of period............................................. 248,839 641,210
======== ========
Supplemental cash flow disclosures:
Cash paid for reorganization expenses............................................... (2,868) -
======== ========
Cash paid for interest.............................................................. (63,703) (10,680)
======== ========
Cash received for interest.......................................................... 2,200 7,786
======== ========
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15