England and Wales | 001-35961 | 98-1112770 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification #) |
LIBERTY GLOBAL PLC | ||
By: | /s/ RANDY L. LAZZELL | |
Randy L. Lazzell | ||
Vice President |
Liberty Global Reports Full Year and Fourth Quarter 2018 Results | ||||||
Announced the sale of UPC Switzerland for a total enterprise value of CHF 6.3 billion1 ($6.3 billion2) Vodafone transaction remains on track for mid-2019 completion FY 2018 continuing operations operating income up 10% to $839 million; rebased OCF growth of 3.5% and 4.3% for Full Company3 Achieved all continuing operations full-year 2018 guidance Full company3 FCF target achieved Repurchased $2 billion of stock in 2018 Denver, Colorado: February 27, 2019 Liberty Global plc today announced its three months ("Q4") and full year ("FY") 2018 financial results. Our operations in Germany, Hungary, Romania and the Czech Republic, along with our DTH operations and our former operations in Austria (collectively, the "Discontinued European Operations") and the former LiLAC Group have been accounted for as discontinued operations. Unless otherwise indicated, the information in this release relates only to our continuing operations. As used in this release, the term "Full Company" includes our continuing operations and the Discontinued European Operations. For additional information, including the reasons that we present selected information on a Full Company basis, see note 3. In addition, on January 1, 2018, we adopted new revenue recognition rules on a prospective basis and a new presentation of certain components of our pension expense on a retrospective basis. All information in this release is presented on a comparable basis with respect to both of these accounting changes. For additional information concerning our discontinued operations and these accounting changes, see notes 4 and 5. CEO Mike Fries stated, "The past fourteen months have been transformational for Liberty Global. After two decades of buying, building and growing world-class cable operations in Europe, we have announced or completed transactions in six of our twelve markets at premium valuations. Together these deals represent an aggregate enterprise value of $31 billion and net cash proceeds to the company, when completed, of $16 billion6. It has long been our ambition to create or enable national champions, and we couldn’t be more proud of these fixed-mobile combinations, which will challenge incumbents, accelerate innovation and benefit customers for years to come. | Continuing Operations 2018 | |||||
Full Year | Q4 | |||||
Net Adds 30K | (33K) | |||||
Revenue Growth7 2.2% | 1.2% | |||||
OCF Growth7 3.5% | 2.9% | |||||
Discontinued Operations 2018 | ||||||
Full Year | Q4 | |||||
Net Adds 366K | 104K | |||||
Revenue Growth7 5.4% | 3.8% | |||||
OCF Growth7 6.1% | 4.8% | |||||
Full Company3 2018 | ||||||
Full Year | Q4 | |||||
OCF Growth7 4.3% | 3.4% | |||||
Adj. FCF (As reported) $1.4 bn | $1.4 bn | |||||
Adj. FCF (Guidance FX)8 $1.6 bn | ||||||
NASDAQ: LBTYA | LBTYB | LBTYK |
"After these transactions, in addition to a significant cash balance, a $2 billion9 strategic investment portfolio and over $2 billion in net tax assets, we will continue to be the largest cable operator in the U.K., Ireland, Belgium, Poland and Slovakia. Together our operations serve 23 million RGUs and generate $11 billion of annual revenue. We also serve another 10 million RGUs and generate over $4 billion of annual revenue in The Netherlands through our 50/50 JV with Vodafone. Each of these businesses is entering a new period of reduced capital intensity and meaningful operating free cash flow ("OFCF") growth. | Also, in connection with the changing scope of our business, we initiated a broader reorganization plan in January, which will result in a leaner operating structure. As we move through the year, we will have further updates on this initiative. We will be hosting an earnings call this afternoon at 5:00 p.m. EST to discuss our 2018 results, the just announced UPC Switzerland transaction and our 2019 financial guidance. We hope you can join us." | |
Contacts Investor Relations Matt Coates +44 20 8483 6333 John Rea +1 303 220 4238 Stefan Halters +1 303 784 4528 Corporate Communications Molly Bruce +1 303 220 4202 Matt Beake +44 20 8483 6428 Corporate Website www.libertyglobal.com | About Liberty Global Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is the world’s largest international TV and broadband company, with operations in 10 European countries under the consumer brands Virgin Media, Unitymedia, Telenet and UPC. We invest in the infrastructure and digital platforms that empower our customers to make the most of the video, internet and communications revolution. Our substantial scale and commitment to innovation enable us to develop market-leading products delivered through next-generation networks that connect 21 million customers subscribing to 45 million TV, broadband internet and telephony services. We also serve 6 million mobile subscribers and offer WiFi service through 12 million access points across our footprint.* In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million fixed-line and 5 million mobile services, as well as significant investments in ITV, All3Media, ITI Neovision, LionsGate, the Formula E racing series and several regional sports networks. |
Liberty Global (continuing operations unless otherwise noted) | Q4 2018 | YoY Growth(i) | FY 2018 | YoY Growth(i) | ||||||||||
Subscribers | ||||||||||||||
Organic RGU Net Additions (Losses) | (32,500 | ) | 30,000 | |||||||||||
Financial (in USD millions) | ||||||||||||||
Revenue | ||||||||||||||
Continuing operations | $ | 2,949.1 | 1.2 | % | $ | 11,957.9 | 2.2 | % | ||||||
OCF: | ||||||||||||||
Continuing operations | $ | 1,301.6 | 2.9 | % | $ | 5,151.5 | 3.5 | % | ||||||
Full Company(ii) | 3.4 | % | 4.3 | % | ||||||||||
Operating income | $ | 252.2 | 73.2 | % | $ | 839.1 | 10.3 | % | ||||||
Adjusted FCF: | ||||||||||||||
Continuing operations | $ | 1,077.9 | $ | 107.8 | ||||||||||
Pro forma continuing operations(iii) | $ | 1,121.8 | $ | 388.7 | ||||||||||
Full Company | $ | 1,412.9 | $ | 1,397.2 | ||||||||||
Cash provided by operating activities | $ | 1,277.5 | $ | 3,985.0 | ||||||||||
Cash provided (used) by investing activities | $ | (193.8 | ) | $ | 601.5 | |||||||||
Cash used by financing activities | $ | (871.0 | ) | $ | (6,286.6 | ) |
(i) | Revenue and OCF YoY growth rates are on a rebased basis |
(ii) | Full Company rebased OCF growth in the Q4 and FY periods includes the net positive impacts of certain German channel carriage settlements of $10.5 million and $47.4 million, respectively |
(iii) | Pro forma Adjusted FCF gives pro forma effect to certain increases in our recurring cash flows that we have or expect to realize following the disposition of the Discontinued European Operations. For additional details, see the information and reconciliation included within the Glossary |
Three months ended | Year ended | |||||||||||
December 31, | December 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Organic RGU net additions (losses) by product | ||||||||||||
Video | (74,900 | ) | (31,600 | ) | (160,400 | ) | (50,100 | ) | ||||
Data | 24,800 | 42,700 | 98,100 | 243,800 | ||||||||
Voice | 17,600 | (7,400 | ) | 92,300 | 66,300 | |||||||
Total | (32,500 | ) | 3,700 | 30,000 | 260,000 | |||||||
Organic RGU net additions (losses) by market | ||||||||||||
U.K./Ireland | 23,500 | 7,700 | 285,900 | 336,200 | ||||||||
Belgium | (54,400 | ) | (11,800 | ) | (154,200 | ) | (53,700 | ) | ||||
Switzerland | (48,600 | ) | (22,500 | ) | (187,600 | ) | (40,800 | ) | ||||
Continuing CEE (Poland and Slovakia) | 47,000 | 30,300 | 85,900 | 18,300 | ||||||||
Total | (32,500 | ) | 3,700 | 30,000 | 260,000 | |||||||
Organic Mobile SIM additions (losses) by product | ||||||||||||
Postpaid | 68,200 | 116,500 | 316,900 | 357,200 | ||||||||
Prepaid | (40,500 | ) | (23,400 | ) | (163,400 | ) | (216,900 | ) | ||||
Total | 27,700 | 93,100 | 153,500 | 140,300 | ||||||||
Organic Mobile SIM additions by market | ||||||||||||
U.K./Ireland | 17,400 | 32,800 | 68,300 | 12,500 | ||||||||
Belgium | 1,900 | 50,800 | 54,500 | 94,600 | ||||||||
Other | 8,400 | 9,500 | 30,700 | 33,200 | ||||||||
Total | 27,700 | 93,100 | 153,500 | 140,300 |
• | Cable Product Performance: During Q4 we lost 33,000 RGUs, as compared to a gain of 4,000 RGUs in the prior-year period, as an improved performance in our CEE operations and at Virgin Media was more than offset by weakness in Belgium and Switzerland. From a product perspective, video and data adds showed a year-over-year decrease, while telephony net adds increased year-over-year |
• | U.K./Ireland: Q4 RGU additions of 23,500 were 3x higher than the prior-year period, driven by success in our Project Lightning footprint |
• | Belgium: RGU attrition of 54,000 in Q4 was primarily due to intensified competition |
• | Switzerland: Lost 49,000 RGUs in Q4, compared to a loss of 22,500 in Q4 2017, primarily due to heightened competition |
• | Continuing CEE (Poland and Slovakia): Gained 47,000 RGUs in Q4, as compared to 30,000 added in the prior-year period, mainly driven by stronger video, broadband and voice adds in Poland |
• | Mobile: Added 28,000 mobile subscribers in Q4, as 68,000 postpaid additions were partially offset by continued attrition in our low-ARPU prepaid base |
◦ | U.K./Ireland added 17,000 mobile subscribers in Q4 as postpaid growth was partially offset by low-ARPU prepaid losses. The penetration of 4G at Virgin Media increased to 79% of |
◦ | Belgium added 2,000 mobile subscribers during Q4 |
◦ | Switzerland added 8,500 mobile subscribers in Q4, driven by bundling success |
Three months ended | Increase/(decrease) | Year ended | Increase/(decrease) | ||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||
Revenue | 2018 | 20175 | % | Rebased % | 2018 | 20175 | % | Rebased % | |||||||||||||||||||
in millions, except % amounts | |||||||||||||||||||||||||||
Continuing operations: | |||||||||||||||||||||||||||
U.K./Ireland | $ | 1,694.3 | $ | 1,709.6 | (0.9 | ) | 2.4 | $ | 6,875.1 | $ | 6,385.8 | 7.7 | 3.9 | ||||||||||||||
Belgium | 733.3 | 758.1 | (3.3 | ) | (0.7 | ) | 2,993.6 | 2,861.6 | 4.6 | (1.1 | ) | ||||||||||||||||
Switzerland | 325.6 | 345.5 | (5.8 | ) | (5.1 | ) | 1,326.0 | 1,366.2 | (2.9 | ) | (3.7 | ) | |||||||||||||||
Continuing CEE | 119.1 | 125.4 | (5.0 | ) | (0.5 | ) | 492.2 | 466.5 | 5.5 | 1.0 | |||||||||||||||||
Central and Corporate | 76.8 | 51.6 | 48.8 | 22.1 | 274.2 | 189.4 | 44.8 | 28.8 | |||||||||||||||||||
Intersegment eliminations | — | (6.3 | ) | N.M. | N.M. | (3.2 | ) | (14.6 | ) | N.M. | N.M. | ||||||||||||||||
Total continuing operations | $ | 2,949.1 | $ | 2,983.9 | (1.2 | ) | 1.2 | $ | 11,957.9 | $ | 11,254.9 | 6.2 | 2.2 | ||||||||||||||
Discontinued European Operations(i): | |||||||||||||||||||||||||||
Germany | $ | 704.8 | $ | 702.0 | 0.4 | 3.6 | $ | 2,930.9 | $ | 2,645.7 | 10.8 | 5.9 | |||||||||||||||
Austria | — | 104.3 | (100.0 | ) | — | 253.7 | 396.2 | (36.0 | ) | 3.4 | |||||||||||||||||
Discontinued CEE | 191.0 | 192.2 | (0.6 | ) | 4.3 | 774.6 | 716.7 | 8.1 | 4.3 | ||||||||||||||||||
Intersegment eliminations | (1.1 | ) | (0.9 | ) | N.M. | N.M. | (5.4 | ) | (3.4 | ) | N.M. | N.M. | |||||||||||||||
Total discontinued European operations | $ | 894.7 | $ | 997.6 | (10.3 | ) | 3.8 | $ | 3,953.8 | $ | 3,755.2 | 5.3 | 5.4 | ||||||||||||||
• | Reported revenue for the three months and full year ended December 31, 2018, decreased 1.2% and increased 6.2% year-over-year, respectively |
◦ | The full-year results were primarily driven by the impact of (i) positive foreign exchange ("FX") movements, mainly related to the strengthening of the British Pound and Euro against the U.S. dollar, and (ii) organic revenue growth |
• | Rebased revenue grew 1.2% and 2.2% in the Q4 and full-year 2018 periods, respectively. The result in the full-year period included: |
◦ | A $6.4 million headwind from the release of unclaimed customer credits in Switzerland in H1 2017 |
◦ | A $5.6 million headwind from the expected recovery of VAT paid in prior periods with respect to copyright fees in Belgium, which benefited revenue in H1 2017 |
◦ | The unfavorable $3.9 million impact due to the reversal during the first quarter of 2018 of revenue in Switzerland that was recognized during prior-year periods |
◦ | The favorable impact of $3.8 million of mobile subscription revenue recognized in the U.K. during the third quarter of 2018 related to the expected recovery of certain prior-period VAT payments |
• | U.K./Ireland: Rebased revenue growth of 2.4% in Q4 reflects (i) 3.0% rebased growth in our residential cable business supported by subscriber growth and accelerating cable ARPU, (ii) 1.3% rebased decline in residential mobile revenue (including interconnect and mobile handset revenue), reflecting a lower volume of mobile handset sales and a reduction in subscription revenue due to lower out-of-bundle usage and regulatory changes such as roam-like-home, and (iii) 3.1% rebased revenue growth in our B2B business, driven by continued growth in our SOHO base |
• | Belgium: Rebased revenue decline of 0.7% in Q4 was mainly driven by the net effect of (i) higher B2B growth, (ii) lower mobile revenue and (iii) lower cable subscription revenue due to lower video subscribers |
• | Switzerland: Rebased revenue declined 5.1% in Q4, primarily due to the net effect of (i) lower residential cable subscription revenue, which was driven primarily by competitive pressures, (ii) an increase in B2B revenue and (iii) higher mobile revenue |
• | Continuing CEE (Poland and Slovakia): Rebased revenue declined 0.5% in Q4, due to the net effect of a decrease in residential cable subscription revenue and growth in our B2B business |
• | Central and Corporate: Rebased revenue increased 22.1% in Q4 due largely to the low-margin sale of customer premises equipment to the VodafoneZiggo JV, which began in the second quarter of 2018 |
• | Operating income of $252.2 million and $145.6 million in Q4 2018 and Q4 2017, respectively, representing an increase of 73.2% year-over-year. For the year ended December 31, 2018, our operating income of $839.1 million reflects an increase of 10.3% as compared to $760.5 million in YTD 2017 |
• | The increase in operating income in the Q4 period resulted from the net effect of (i) a decrease in depreciation and amortization expense, (ii) an increase in impairment, restructuring and other operating items, net, (iii) an increase in share-based compensation expense and (iv) higher OCF, as further described below |
• | The increase in operating income in the YTD period resulted from the net effect of (i) higher OCF, as further described below, (ii) an increase in impairment, restructuring and other operating items, net, (iii) an increase in depreciation and amortization expense and (iv) an increase in share-based compensation expense |
Three months ended | Increase/(decrease) | Year ended | Increase/(decrease) | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||
OCF | 2018 | 20175 | % | Rebased % | 2018 | 20175 | % | Rebased % | ||||||||||||||||||||
in millions, except % amounts | ||||||||||||||||||||||||||||
Continuing operations: | ||||||||||||||||||||||||||||
U.K./Ireland | $ | 788.9 | $ | 805.8 | (2.1 | ) | 1.2 | $ | 3,057.2 | $ | 2,857.9 | 7.0 | 3.5 | |||||||||||||||
Belgium | 355.3 | 327.0 | 8.7 | 12.1 | 1,480.0 | 1,296.6 | 14.1 | 7.9 | ||||||||||||||||||||
Switzerland | 182.2 | 199.5 | (8.7 | ) | (8.0 | ) | 748.7 | 829.7 | (9.8 | ) | (10.4 | ) | ||||||||||||||||
Continuing CEE | 63.9 | 64.9 | (1.5 | ) | 3.2 | 249.1 | 234.3 | 6.3 | 2.0 | |||||||||||||||||||
Central and Corporate | (88.4 | ) | (108.3 | ) | 18.4 | 7.5 | (371.7 | ) | (415.8 | ) | 10.6 | 11.5 | ||||||||||||||||
Intersegment eliminations | (0.3 | ) | 0.6 | N.M. | N.M. | (11.8 | ) | (9.5 | ) | N.M. | N.M. | |||||||||||||||||
Total continuing operations | $ | 1,301.6 | $ | 1,289.5 | 0.9 | 2.9 | $ | 5,151.5 | $ | 4,793.2 | 7.5 | 3.5 | ||||||||||||||||
OCF margin - continuing operations | 44.1 | % | 43.2 | % | 43.1 | % | 42.6 | % | ||||||||||||||||||||
Discontinued European Operations(i): | ||||||||||||||||||||||||||||
Germany | $ | 469.6 | $ | 457.3 | 2.7 | 6.0 | $ | 1,888.5 | $ | 1,689.1 | 11.8 | 7.1 | ||||||||||||||||
Austria | — | 58.7 | (100.0 | ) | — | 137.3 | 218.4 | (37.1 | ) | 3.0 | ||||||||||||||||||
Discontinued CEE | 80.0 | 80.1 | (0.1 | ) | 5.1 | 306.1 | 282.5 | 8.4 | 4.8 | |||||||||||||||||||
Intersegment eliminations | 4.5 | 12.0 | N.M. | N.M. | 30.9 | 41.2 | N.M. | N.M. | ||||||||||||||||||||
Total discontinued European operations | $ | 554.1 | $ | 608.1 | (8.9 | ) | 4.8 | $ | 2,362.8 | $ | 2,231.2 | 5.9 | 6.1 | |||||||||||||||
Full Company | 3.4 | 4.3 |
(i) | For information concerning our discontinued operations, see note 4. |
• | Reported OCF for the three months and full year ended December 31, 2018 increased 0.9% and 7.5% year-over-year, respectively |
◦ | The YTD result was primarily driven by (i) the aforementioned positive impact of FX movements and (ii) organic growth |
• | Rebased OCF growth of 2.9% in Q4 and 3.5% in YTD 2018 included: |
◦ | For the YTD period, the net unfavorable impact on our revenue of certain items, as discussed in the "Revenue Highlights" section above |
◦ | Higher costs of $34.3 million in U.K./Ireland in the YTD period resulting from the net impact of credits recorded during the second quarter of 2017 ($28.8 million), the fourth quarter of 2017 ($10.5 million) and the second quarter of 2018 ($5.0 million) in connection with a telecommunications operator's agreement to compensate Virgin Media and other communications providers for certain prior-period contractual breaches related to network charges |
◦ | A favorable impact of $29.1 million in the YTD period due to the expected settlement of a portion of our 2018 annual incentive compensation with Liberty Global ordinary shares through a shareholding incentive program that was implemented in the fourth quarter of 2017 |
◦ | Unfavorable network tax increases of $4.8 million and $22.5 million, respectively, following an increase in the rateable value of our existing U.K. networks, which is being phased in over a six-year period ending in 2022 |
◦ | Unfavorable increases in costs in the U.K. of $2.7 million and $9.1 million, respectively, due to accruals in the second and fourth quarters of 2018 related to a fine imposed by OfCom for certain contractual breaches. This was settled in the fourth quarter of 2018 and we are currently appealing this fine |
• | As compared to the prior-year periods, our Q4 and YTD 2018 OCF margins were up 90 and 50 basis points, respectively, to 44.1% and 43.1% |
• | U.K./Ireland: Rebased OCF growth of 1.2% was attributable to the aforementioned credits recorded in Q4 2017 related to prior-period contractual breaches related to network charges, combined with increased programming costs and higher network taxes, which partially offset revenue growth and lower marketing costs |
• | Belgium: Rebased OCF growth of 12.1%, largely driven by lower direct costs as a result of the migration of subscribers to our own mobile network |
• | Switzerland: Rebased OCF decline of 8.0% in Q4, largely due to the aforementioned residential cable subscription revenue decline |
• | Continuing CEE (Poland and Slovakia): Rebased OCF growth of 3.2% driven by the net effect of a decrease in programming and labor costs and the aforementioned revenue trend |
• | Net earnings (loss) attributable to Liberty Global shareholders was $25.1 million and ($992.0 million) for the three months ended December 31, 2018 and 2017, respectively, and $725.3 million and ($2,778.1 million) during the years ended December 31, 2018 and 2017, respectively |
• | Total principal amount of debt and capital leases: $29.9 billion for continuing operations |
• | Leverage ratios13: At December 31, 2018, our adjusted gross and net leverage ratios for the Full Company were 5.0x and 4.8x, respectively. |
• | Average debt tenor14: Approximately 7 years, with ~76% not due until 2024 or thereafter for continuing operations |
• | Borrowing costs: Blended fully-swapped borrowing cost of our debt was 4.3% for continuing operations |
• | Liquidity12: $4.0 billion for our continuing operations, including (i) $1.5 billion of cash at December 31, 2018 and (ii) aggregate unused borrowing capacity15 under our credit facilities of $2.5 billion |
Revenue | OCF | |||||||||||||||
Three months ended December 31, | Year ended December 31, | Three months ended December 31, | Year ended December 31, | |||||||||||||
2017 | 2017 | 2017 | 2017 | |||||||||||||
in millions | ||||||||||||||||
Continuing operations: | ||||||||||||||||
Acquisitions | $ | 18.6 | $ | 75.8 | $ | 2.9 | $ | 25.2 | ||||||||
Revenue Recognition (ASU 2014-09) | (3.9 | ) | (21.5 | ) | (7.6 | ) | (31.9 | ) | ||||||||
Dispositions(i) | (0.3 | ) | (21.1 | ) | 8.0 | (1.2 | ) | |||||||||
Foreign Currency | (89.2 | ) | 396.5 | (35.0 | ) | 159.5 | ||||||||||
Total increase (decrease) | $ | (74.8 | ) | $ | 429.7 | $ | (31.7 | ) | $ | 151.6 | ||||||
Discontinued European Operations: | ||||||||||||||||
Revenue Recognition (ASU 2014-09) | $ | (2.3 | ) | $ | (17.3 | ) | $ | (2.2 | ) | $ | (12.0 | ) | ||||
Dispositions | (101.0 | ) | (169.0 | ) | (56.8 | ) | (94.4 | ) | ||||||||
Foreign Currency | (35.2 | ) | 163.2 | (22.9 | ) | 91.2 | ||||||||||
Total decrease | $ | (138.5 | ) | $ | (23.1 | ) | $ | (81.9 | ) | $ | (15.2 | ) | ||||
Full Company: | ||||||||||||||||
Acquisitions | $ | 18.6 | $ | 75.8 | $ | 2.9 | $ | 25.2 | ||||||||
Revenue Recognition (ASU 2014-09) | (6.2 | ) | (38.8 | ) | (9.8 | ) | (43.9 | ) | ||||||||
Dispositions(i) | (101.3 | ) | (190.1 | ) | (48.8 | ) | (95.6 | ) | ||||||||
Foreign Currency | (124.4 | ) | 559.7 | (57.9 | ) | 250.7 | ||||||||||
Total increase (decrease) | $ | (213.3 | ) | $ | 406.6 | $ | (113.6 | ) | $ | 136.4 |
(i) | Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV, Liberty Latin America and UPC Austria. These adjustments result in an equal amount of fees in both the 2018 and 2017 periods for those services that are deemed to be temporary in nature. The net amount of these adjustments resulted in increases in revenue and OCF of $8.4 million and $9.1 million, respectively, for the three months ended December 31, 2017 and $8.0 million and $6.9 million, respectively, for the full year ended December 31, 2017. |
Capital | Debt & Capital | Cash | ||||||||||||||
Lease | Lease | and Cash | ||||||||||||||
Debt(ii), (iii) | Obligations | Obligations | Equivalents | |||||||||||||
in millions | ||||||||||||||||
Liberty Global and unrestricted subsidiaries | $ | 1,553.2 | $ | 47.1 | $ | 1,600.3 | $ | 1,344.0 | ||||||||
Virgin Media(iv) | 15,809.4 | 69.1 | 15,878.5 | 21.2 | ||||||||||||
UPC Holding | 5,988.5 | 29.9 | 6,018.4 | 14.8 | ||||||||||||
Telenet | 5,964.2 | 475.2 | 6,439.4 | 100.5 | ||||||||||||
Total | $ | 29,315.3 | $ | 621.3 | $ | 29,936.6 | $ | 1,480.5 |
(i) | Except as otherwise indicated, the amounts reported in the table include the named entity and its subsidiaries. |
(ii) | Debt amounts for UPC Holding and Telenet include notes issued by special purpose entities that are consolidated by the respective subsidiary. |
(iii) | Debt amounts for UPC Holding include those amounts that are not a direct obligation of the entities to be disposed within the UPC Holding borrowing group. Certain of these obligations have been or are expected to be repaid with portions of the proceeds from the disposition of UPC Austria and the Vodafone Disposal Group. |
(iv) | The Virgin Media borrowing group includes certain subsidiaries of Virgin Media, but excludes the parent entity, Virgin Media Inc. The cash and cash equivalents amount includes cash and cash equivalents held by the Virgin Media borrowing group, but excludes cash and cash equivalents held by Virgin Media Inc. This amount is included in the amount shown for Liberty Global and unrestricted subsidiaries. |
Three months ended December 31, | ||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Continuing operations | Discontinued European Operations | Full Company | ||||||||||||||||||||||
in millions, except % amounts | ||||||||||||||||||||||||
Customer premises equipment | $ | 202.1 | $ | 192.4 | $ | 38.8 | $ | 65.9 | $ | 240.9 | $ | 258.3 | ||||||||||||
New Build & Upgrade | 166.4 | 255.8 | 71.2 | 83.2 | 237.6 | 339.0 | ||||||||||||||||||
Capacity | 128.5 | 150.3 | 37.0 | 40.6 | 165.5 | 190.9 | ||||||||||||||||||
Baseline | 291.2 | 239.8 | 38.8 | 55.0 | 330.0 | 294.8 | ||||||||||||||||||
Product & Enablers | 183.2 | 266.7 | 45.9 | 38.7 | 229.1 | 305.4 | ||||||||||||||||||
Total P&E Additions | 971.4 | 1,105.0 | $ | 231.7 | $ | 283.4 | $ | 1,203.1 | $ | 1,388.4 | ||||||||||||||
Reconciliation of P&E Additions to capital expenditures: | ||||||||||||||||||||||||
Assets acquired under capital-related vendor financing arrangements(i) | (519.2 | ) | (601.9 | ) | ||||||||||||||||||||
Assets acquired under capital leases | (34.6 | ) | (29.6 | ) | ||||||||||||||||||||
Changes in current liabilities related to capital expenditures | (103.2 | ) | (69.7 | ) | ||||||||||||||||||||
Total capital expenditures, net(ii) | $ | 314.4 | $ | 403.8 | ||||||||||||||||||||
Capital expenditures, net: | ||||||||||||||||||||||||
Third-party payments | $ | 340.8 | $ | 451.6 | ||||||||||||||||||||
Proceeds received for transfers to related parties(iii) | (26.4 | ) | (47.8 | ) | ||||||||||||||||||||
Total capital expenditures, net | $ | 314.4 | $ | 403.8 | ||||||||||||||||||||
P&E Additions as % of revenue5 | 32.9 | % | 37.0 | % |
Year ended December 31, | ||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Continuing operations | Discontinued European Operations | Full Company | ||||||||||||||||||||||
in millions, except % amounts | ||||||||||||||||||||||||
Customer premises equipment | $ | 930.3 | $ | 851.3 | $ | 243.3 | $ | 310.1 | $ | 1,173.6 | $ | 1,161.4 | ||||||||||||
New Build & Upgrade | 698.1 | 864.5 | 289.8 | 293.5 | 987.9 | 1,158.0 | ||||||||||||||||||
Capacity | 434.3 | 512.9 | 129.6 | 113.0 | 563.9 | 625.9 | ||||||||||||||||||
Baseline | 922.4 | 747.0 | 185.0 | 196.7 | 1,107.4 | 943.7 | ||||||||||||||||||
Product & Enablers | 720.5 | 727.8 | 131.3 | 148.0 | 851.8 | 875.8 | ||||||||||||||||||
Total P&E Additions | 3,705.6 | 3,703.5 | $ | 979.0 | $ | 1,061.3 | $ | 4,684.6 | $ | 4,764.8 | ||||||||||||||
Reconciliation of P&E Additions to capital expenditures: | ||||||||||||||||||||||||
Assets acquired under capital-related vendor financing arrangements(i) | (2,175.5 | ) | (2,336.2 | ) | ||||||||||||||||||||
Assets acquired under capital leases | (102.4 | ) | (106.7 | ) | ||||||||||||||||||||
Changes in current liabilities related to capital expenditures | 25.3 | (10.6 | ) | |||||||||||||||||||||
Total capital expenditures, net(ii) | $ | 1,453.0 | $ | 1,250.0 | ||||||||||||||||||||
Capital expenditures, net: | ||||||||||||||||||||||||
Third-party payments | $ | 1,552.7 | $ | 1,586.5 | ||||||||||||||||||||
Proceeds received for transfers to related parties(iii) | (99.7 | ) | (336.5 | ) | ||||||||||||||||||||
Total capital expenditures, net | $ | 1,453.0 | $ | 1,250.0 | ||||||||||||||||||||
P&E Additions as % of revenue5 | 31.0 | % | 32.9 | % |
(i) | Amounts exclude related VAT of $80 million and $102 million during the three months ended December 31, 2018 and 2017, respectively, and $347 million and $387 million during the full year ended December 31, 2018 and 2017, respectively, that were also financed by our vendors under these arrangements. |
(ii) | The capital expenditures that we report in our consolidated statements of cash flows do not include amounts that are financed under vendor financing or capital lease arrangements. Instead, these expenditures are reflected as non-cash additions to our property and equipment when the underlying assets are delivered, and as repayments of debt when the related principal is repaid. |
(iii) | Primarily relates to transfers of centrally-procured property and equipment to our discontinued operations and the VodafoneZiggo JV. |
Three months ended December 31, | % | Rebased | ||||||||||||
2018 | 20175 | Change | % Change | |||||||||||
Liberty Global | $ | 60.18 | $ | 60.81 | (1.0 | %) | 2.0 | % | ||||||
U.K. & Ireland (Virgin Media) | £ | 51.71 | £ | 50.73 | 1.9 | % | 2.0 | % | ||||||
Belgium (Telenet) | € | 57.11 | € | 55.18 | 3.5 | % | 3.5 | % | ||||||
UPC | € | 37.57 | € | 37.63 | (0.2 | %) | (1.3 | %) |
ARPU per Mobile Subscriber | ||||||||||||||
Three months ended December 31, | % | Rebased | ||||||||||||
2018 | 20175 | Change | % Change | |||||||||||
Liberty Global: | ||||||||||||||
Including interconnect revenue | $ | 18.19 | $ | 19.95 | (8.8 | %) | (1.4 | %) | ||||||
Excluding interconnect revenue | $ | 14.49 | $ | 15.68 | (7.6 | %) | (1.3 | %) |
Consolidated Operating Data — December 31, 2018 | |||||||||||||||||||||||||
Video | |||||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | DTH Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | |||||||||||||||
Continuing operations: | |||||||||||||||||||||||||
U.K. | 14,417,300 | 14,410,300 | 5,509,400 | — | 3,872,000 | — | 3,872,000 | 5,224,600 | 4,571,200 | 13,667,800 | 3,039,500 | ||||||||||||||
Belgium | 3,350,700 | 3,350,700 | 2,115,000 | 201,200 | 1,738,700 | — | 1,939,900 | 1,657,800 | 1,256,100 | 4,853,800 | 2,731,000 | ||||||||||||||
Switzerland(v) | 2,338,200 | 2,338,200 | 1,115,800 | 437,200 | 645,800 | — | 1,083,000 | 700,300 | 519,600 | 2,302,900 | 146,300 | ||||||||||||||
Ireland | 923,000 | 890,500 | 437,200 | 4,500 | 266,600 | — | 271,100 | 375,700 | 352,300 | 999,100 | 81,500 | ||||||||||||||
Poland | 3,463,800 | 3,408,900 | 1,447,800 | 180,500 | 1,042,700 | — | 1,223,200 | 1,175,200 | 654,300 | 3,052,700 | 3,200 | ||||||||||||||
Slovakia | 613,900 | 599,100 | 194,100 | 27,700 | 142,300 | — | 170,000 | 136,800 | 84,400 | 391,200 | — | ||||||||||||||
Total continuing operations | 25,106,900 | 24,997,700 | 10,819,300 | 851,100 | 7,708,100 | — | 8,559,200 | 9,270,400 | 7,437,900 | 25,267,500 | 6,001,500 | ||||||||||||||
Discontinued European Operations: | |||||||||||||||||||||||||
Germany | 13,136,200 | 13,060,200 | 7,175,900 | 4,675,500 | 1,607,500 | — | 6,283,000 | 3,615,500 | 3,380,800 | 13,279,300 | 283,300 | ||||||||||||||
Romania | 3,153,800 | 3,118,000 | 965,900 | 222,000 | 698,600 | — | 920,600 | 592,400 | 573,300 | 2,086,300 | — | ||||||||||||||
Hungary | 1,828,000 | 1,810,600 | 862,900 | 68,300 | 623,600 | — | 691,900 | 694,400 | 677,100 | 2,063,400 | 109,900 | ||||||||||||||
Czech Republic | 1,549,100 | 1,529,300 | 616,400 | 170,300 | 369,200 | — | 539,500 | 506,100 | 194,000 | 1,239,600 | — | ||||||||||||||
DTH | — | — | 780,800 | — | — | 780,800 | 780,800 | 11,200 | 11,200 | 803,200 | — | ||||||||||||||
Total Discontinued European Operations | 19,667,100 | 19,518,100 | 10,401,900 | 5,136,100 | 3,298,900 | 780,800 | 9,215,800 | 5,419,600 | 4,836,400 | 19,471,800 | 393,200 |
Subscriber Variance Table - December 31, 2018 vs September 30, 2018 | |||||||||||||||||||||||||
Video | |||||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | DTH Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | |||||||||||||||
Continuing operations: | |||||||||||||||||||||||||
U.K. | 92,700 | 97,500 | 9,500 | — | (29,400 | ) | — | (29,400 | ) | 21,700 | 30,500 | 22,800 | 8,300 | ||||||||||||
Belgium | 9,000 | 9,000 | (20,700 | ) | (8,500 | ) | (17,800 | ) | — | (26,300 | ) | (8,700 | ) | (19,400 | ) | (54,400 | ) | 1,900 | |||||||
Switzerland(v) | 10,600 | 10,600 | (32,000 | ) | (20,600 | ) | (10,900 | ) | — | (31,500 | ) | (12,100 | ) | (5,000 | ) | (48,600 | ) | 8,500 | |||||||
Ireland | 10,900 | 11,500 | (500 | ) | (2,000 | ) | 2,400 | — | 400 | 600 | (300 | ) | 700 | 9,100 | |||||||||||
Poland | 33,000 | 33,700 | 16,900 | 800 | 9,600 | — | 10,400 | 21,700 | 10,400 | 42,500 | (100 | ) | |||||||||||||
Slovakia | 2,100 | 2,100 | 700 | 600 | 900 | — | 1,500 | 1,600 | 1,400 | 4,500 | — | ||||||||||||||
Total continuing operations | 158,300 | 164,400 | (26,100 | ) | (29,700 | ) | (45,200 | ) | — | (74,900 | ) | 24,800 | 17,600 | (32,500 | ) | 27,700 | |||||||||
Discontinued European Operations: | |||||||||||||||||||||||||
Germany | 53,000 | 53,200 | — | 1,500 | (19,700 | ) | — | (18,200 | ) | 41,700 | 41,500 | 65,000 | (2,200 | ) | |||||||||||
Romania | 7,400 | 7,500 | (9,200 | ) | (14,300 | ) | 6,000 | — | (8,300 | ) | (500 | ) | 5,500 | (3,300 | ) | — | |||||||||
Hungary | 11,400 | 11,500 | 4,300 | (4,500 | ) | 6,800 | — | 2,300 | 6,300 | 11,600 | 20,200 | 6,600 | |||||||||||||
Czech Republic | 5,300 | 5,400 | 600 | (2,300 | ) | 5,000 | — | 2,700 | 2,800 | 9,300 | 14,800 | — | |||||||||||||
DTH | — | — | 6,600 | — | — | 6,600 | 6,600 | 200 | 200 | 7,000 | — | ||||||||||||||
Total Discontinued European Operations | 77,100 | 77,600 | 2,300 | (19,600 | ) | (1,900 | ) | 6,600 | (14,900 | ) | 50,500 | 68,100 | 103,700 | 4,400 |
Subscriber Variance Table - December 31, 2018 vs September 30, 2018 | |||||||||||||||||||||||
Video | |||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | ||||||||||||||
Organic Change Summary: | |||||||||||||||||||||||
U.K. | 92,700 | 97,500 | 9,500 | — | (29,400 | ) | (29,400 | ) | 21,700 | 30,500 | 22,800 | 8,300 | |||||||||||
Belgium | 9,000 | 9,000 | (20,700 | ) | (8,500 | ) | (17,800 | ) | (26,300 | ) | (8,700 | ) | (19,400 | ) | (54,400 | ) | 1,900 | ||||||
Other Europe | 56,600 | 57,900 | (14,900 | ) | (21,200 | ) | 2,000 | (19,200 | ) | 11,800 | 6,500 | (900 | ) | 17,500 | |||||||||
Total Organic Change | 158,300 | 164,400 | (26,100 | ) | (29,700 | ) | (45,200 | ) | (74,900 | ) | 24,800 | 17,600 | (32,500 | ) | 27,700 |
(i) | We have approximately 194,600 “lifeline” customers that are counted on a per connection basis, representing the least expensive regulated tier of video cable service, with only a few channels. |
(ii) | In Switzerland, we offer a 2 Mbps internet service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Internet Subscribers in Switzerland include 76,300 subscribers who have requested and received this service. |
(iii) | In Switzerland, we offer a basic phone service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Telephony Subscribers in Switzerland include 149,500 subscribers who have requested and received this service. |
(iv) | In a number of countries, our mobile subscribers receive mobile services pursuant to prepaid contracts. As of December 31, 2018, our mobile subscriber count included 489,400 and 376,700 prepaid mobile subscribers in Belgium and the U.K., respectively. |
(v) | Pursuant to service agreements, Switzerland offers enhanced video, broadband internet and telephony services over networks owned by third-party cable operators (“partner networks”). A partner network RGU is only recognized if there is a direct billing relationship with the customer. At December 31, 2018, Switzerland’s partner networks account for 126,200 Cable Customer Relationships, 298,400 RGUs, which include 107,000 Enhanced Video Subscribers, 109,000 Internet Subscribers, and 82,400 Telephony Subscribers. Subscribers to our enhanced video services provided over partner networks receive basic video services from the partner networks as opposed to our operations. Due to the fact that we do not own these partner networks, we do not report homes passed for Switzerland’s partner networks. |
1 | Based on December 31, 2018 balances and including certain other debt items, including vendor financing and capital leases. |
2 | Convenience translation based on USD/CHF spot rate of 1.00. |
3 | The term "Full Company" includes our continuing operations and our Discontinued European Operations, which is the basis (i) on which analyst consensus estimates for our key performance indicators are currently derived and on which we originally provided our 2018 guidance for OCF, Adjusted FCF and Property and Equipment Additions and (ii) that we use to calculate our respective leverage ratios for debt covenant compliance purposes. We present OCF, Adjusted FCF and Property and Equipment Additions on a Full Company basis in order to allow readers to track our performance against analyst consensus estimates and our original 2018 guidance, as applicable. |
4 | On December 29, 2017, the former LiLAC Group was split-off into a separate public company. On May 9, 2018, we agreed to sell our operations in Germany, Hungary, Romania and the Czech Republic and on December 21, 2018, we agreed to sell the operations of UPC DTH. On July 31, 2018, we sold our operations in Austria. As a result of the foregoing, the former LiLAC Group and our operations in Germany, Austria, Hungary, Romania, the Czech Republic and UPC DTH have all been accounted for as discontinued operations in our 10-K. Unless otherwise indicated, the information in this release relates only to our continuing operations. For additional information regarding our discontinued operations, see note 6 to the consolidated financial statements included in our 10-K. |
5 | Effective January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), on a prospective basis. All applicable 2017 amounts in this release are presented on a pro forma basis that gives effect to the adoption of ASU 2014-09 as if such adoption had occurred on January 1, 2017. In addition, on January 1, 2018, we adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”) on a retrospective basis. Accordingly, the operating income and OCF amounts for the 2017 periods in this release have been retrospectively revised to reflect the impact of ASU 2017-07. For additional information regarding these accounting changes, see note 2 to the consolidated financial statements included in our 10-K. |
6 | Reflects estimated cash proceeds, as of announcement date of the respective transactions, from pending disposals to Vodafone ($12.1bn), Sunrise ($2.6bn) and M7 ($0.2bn) (at December 31, 2018 fx rates) and $1.1bn from the already closed UPC Austria disposal, after the repayment of debt that we attributed to UPC Austria. |
7 | The indicated growth rates are rebased for acquisitions, dispositions, FX and other items that impact the comparability of our year-over-year results. Please see Rebase Information for information on rebased growth. |
8 | Absolute 2018 U.S. dollar guidance figures based on FX rates as of February 13, 2018; EUR/USD 1.23; USD/GBP 1.38. |
9 | Represents our fair value and equity method investments (excluding the VodafoneZiggo JV) at December 31, 2018, adjusted for the value of our share collars on Lionsgate and ITV plc. |
10 | Includes subscription and non-subscription revenue. For additional information regarding how we define our revenue categories, see note 19 to the consolidated financial statements included in our 10-K. |
11 | Total B2B includes subscription (SOHO) and non-subscription revenue. B2B and SOHO growth rates include upsell from our residential businesses. |
12 | Liquidity refers to cash and cash equivalents plus the maximum undrawn commitments under subsidiary borrowing facilities, without regard to covenant compliance calculations. |
13 | Consistent with how we calculate our leverage ratios under our debt agreements, we calculate our debt ratios on a Full Company basis, with the gross and net debt ratios defined as total debt and net debt, respectively, divided by annualized OCF of the latest quarter. Net debt is defined as total debt less cash and cash equivalents. For purposes of these calculations, debt is measured using swapped foreign currency rates, consistent with the covenant calculation requirements of our subsidiary debt agreements, and excludes the loans backed or secured by the shares we hold in ITV plc and Lions Gate Entertainment Corp. We have not presented leverage ratios on a continuing operations basis as we believe that such a presentation would overstate our leverage and would not be representative of the actual leverage ratios that we will report once all dispositions are completed. This is due to the fact that our continuing operations exclude all of the OCF of the entities to be disposed but include a portion of the debt that we expect to repay with the proceeds from such dispositions. For additional information, see the details of our pro forma Adjusted FCF within the Glossary and note 6 to the consolidated financial statements included in our 10-K. |
As of and for the quarter ended December 31, 2018 | |||
in millions, except ratios | |||
Consolidated Debt to Annualized Consolidated OCF: | |||
Debt and capital lease obligations before deferred financing costs, discounts and premiums | $ | 39,876.2 | |
Principal related projected derivative cash payments | (1,433.7 | ) | |
ITV Collar Loan | (1,379.6 | ) | |
Lionsgate Collar Loan | (82.9 | ) | |
Adjusted debt and capital lease obligations before deferred financing costs, discounts and premiums | $ | 36,980.0 | |
Annualized quarterly OCF | $ | 7,422.8 | |
Consolidated debt to annualized consolidated OCF ratio | 5.0 | ||
Consolidated Net Debt to Annualized Consolidated OCF: | |||
Adjusted debt and capital lease obligations before deferred financing costs, discounts and premiums | $ | 36,980.0 | |
Cash and cash equivalents | (1,486.7 | ) | |
Adjusted net debt and capital lease obligations before deferred financing costs, discounts and premiums | $ | 35,493.3 | |
Annualized quarterly OCF | $ | 7,422.8 | |
Consolidated net debt to annualized consolidated OCF ratio | 4.8 |
14 | For purposes of calculating our average tenor, total third-party debt excludes vendor financing. |
15 | Our aggregate unused borrowing capacity of $2.5 billion represents the maximum undrawn commitments under the applicable facilities of our continuing operations without regard to covenant compliance calculations. Upon completion of the relevant December 31, 2018 compliance reporting requirements for our credit facilities, and assuming no further changes from quarter-end borrowing levels, we anticipate that the borrowing capacity of our continuing operations will continue to be $2.5 billion. |
Three months ended December 31, | |||||||||||||||||||||||
2018 | 2017(i) | 2018 | 2017(i) | 2018 | 2017(i) | ||||||||||||||||||
Continuing operations | Discontinued European Operations | Full Company | |||||||||||||||||||||
in millions | |||||||||||||||||||||||
Net cash provided by operating activities of our continuing operations | $ | 1,277.5 | $ | 1,003.1 | $ | 485.2 | $ | 489.8 | $ | 1,762.7 | $ | 1,492.9 | |||||||||||
Cash payments for direct acquisition and disposition costs | 9.0 | 1.8 | 0.1 | — | 9.1 | 1.8 | |||||||||||||||||
Expenses financed by an intermediary(ii) | 459.8 | 391.3 | 136.5 | 48.5 | 596.3 | 439.8 | |||||||||||||||||
Capital expenditures, net | (314.5 | ) | (403.7 | ) | (128.2 | ) | (172.0 | ) | (442.7 | ) | (575.7 | ) | |||||||||||
Principal payments on amounts financed by vendors and intermediaries | (340.0 | ) | (387.6 | ) | (155.7 | ) | (108.9 | ) | (495.7 | ) | (496.5 | ) | |||||||||||
Principal payments on certain capital leases | (13.9 | ) | (17.2 | ) | (2.9 | ) | (2.7 | ) | (16.8 | ) | (19.9 | ) | |||||||||||
Adjusted FCF | 1,077.9 | $ | 587.7 | $ | 335.0 | $ | 254.7 | $ | 1,412.9 | $ | 842.4 | ||||||||||||
Pro forma adjustments for sale of the Discontinued European Operations related to: | |||||||||||||||||||||||
Interest and derivative payments(iii) | 4.1 | ||||||||||||||||||||||
Transition services agreements(iv) | 39.8 | ||||||||||||||||||||||
Pro forma Adjusted FCF(v) | $ | 1,121.8 |
Year ended December 31, | |||||||||||||||||||||||
2018 | 2017(i) | 2018 | 2017(i) | 2018 | 2017(i) | ||||||||||||||||||
Continuing operations | Discontinued European Operations | Full company | |||||||||||||||||||||
in millions | |||||||||||||||||||||||
Net cash provided by operating activities of our continuing operations | $ | 3,985.0 | $ | 3,442.7 | $ | 1,978.1 | $ | 1,691.5 | $ | 5,963.1 | $ | 5,134.2 | |||||||||||
Cash payments for direct acquisition and disposition costs | 23.0 | 8.7 | 0.1 | — | 23.1 | 8.7 | |||||||||||||||||
Expenses financed by an intermediary(ii) | 1,883.7 | 1,343.9 | 392.1 | 163.0 | 2,275.8 | 1,506.9 | |||||||||||||||||
Capital expenditures, net | (1,453.0 | ) | (1,250.0 | ) | (517.2 | ) | (703.1 | ) | (1,970.2 | ) | (1,953.1 | ) | |||||||||||
Principal payments on amounts financed by vendors and intermediaries | (4,258.0 | ) | (2,721.5 | ) | (551.6 | ) | (337.8 | ) | (4,809.6 | ) | (3,059.3 | ) | |||||||||||
Principal payments on certain capital leases | (72.9 | ) | (78.6 | ) | (12.1 | ) | (8.0 | ) | (85.0 | ) | (86.6 | ) | |||||||||||
Adjusted FCF | 107.8 | $ | 745.2 | $ | 1,289.4 | $ | 805.6 | $ | 1,397.2 | $ | 1,550.8 | ||||||||||||
Pro forma adjustments for sale of Discontinued European Operations related to: | |||||||||||||||||||||||
Interest and derivative payments(iii) | 91.7 | ||||||||||||||||||||||
Transition services agreements(iv) | 189.2 | ||||||||||||||||||||||
Pro forma Adjusted FCF(v) | $ | 388.7 |
(i) | Adjusted free cash flow for the three months and year ended December 30, 2017 has been restated to reflect our January 1, 2018 adoption of ASU 2016-18, Restricted Cash. |
(ii) | For purposes of our consolidated statements of cash flows, expenses financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our consolidated statements of cash flows. For purposes of our Adjusted Free Cash Flow definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary. |
(iii) | No debt, interest expense or derivative instruments of the UPC Holding borrowing group, other than with respect to certain borrowings that are direct obligations of the entities to be disposed, has been allocated to discontinued operations in the consolidated financial statements that are included in our 10-K. Notwithstanding the foregoing, we expect to use proceeds from the dispositions of the Vodafone Disposal Group and UPC DTH, and have used proceeds from the July 31, 2018 sale of UPC Austria, to repay debt of the UPC Holding borrowing group to the extent necessary to maintain a leverage ratio that is approximately four to five times UPC Holding's Covenant EBITDA. As a result, this pro forma adjustment represents the estimated interest and related derivative payments that would not have been made by UPC Holding if the sale of the Discontinued European Operations had been completed on January 1, 2018. These estimated payments are calculated based on the Discontinued European Operation's pro rata share of UPC Holding's OCF and UPC Holding's aggregate interest and derivative payments during the applicable period. Although we believe that these estimated payments represent a reasonable estimate of the reduction in annual interest and related derivative payments that will occur as a result of the sale of the Discontinued European Operations, no assurance can be given that the actual debt repayments will result in reductions equivalent to the amounts presented. No pro forma adjustments are required with respect to Unitymedia's interest and derivative payments as substantially all of Unitymedia’s debt and related derivative instruments are direct obligations of entities within the Vodafone Disposal Group. As a result, the interest and related derivative payments associated with such debt and derivative instruments of Unitymedia are included in discontinued operations. |
(iv) | Represents our preliminary estimate of the net cash flows that we would have received from transition services agreements if the sale of the Discontinued European Operations had occurred on January 1, 2018. The estimated net cash flows are based on the estimated revenue that we expect to recognize from our transition services agreements during the first 12 months following the completion of the sale of the Discontinued European Operations, less the estimated incremental costs that we expect to incur to provide such transition services. |
(v) | Represents the Adjusted FCF that we estimate would have resulted if the sale of the Discontinued European Operations had been completed on January 1, 2018. Actual amounts may differ from the amounts assumed for purposes of this pro forma calculation. For example, our Pro forma Adjusted FCF does not include any future benefits related to reductions in our corporate costs as a result of our operating model rationalization or any other potential future operating or capital cost reductions attributable to our continuing or discontinued operations. |
Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||||||||||||
2018 | 20173 | 2018 | 20173 | ||||||||||||||||||||||||||||
Continuing operations | Full Company | Continuing operations | Full Company | Continuing operations | Full Company | Continuing operations | Full Company | ||||||||||||||||||||||||
in millions | |||||||||||||||||||||||||||||||
Operating income | $ | 252.4 | $ | 781.2 | $ | 145.6 | $ | 479.5 | $ | 839.1 | $ | 2,776.8 | $ | 760.5 | $ | 1,886.2 | |||||||||||||||
Share-based compensation expense | 75.0 | 79.5 | 60.4 | 63.9 | 206.0 | 221.2 | 162.2 | 174.0 | |||||||||||||||||||||||
Depreciation and amortization | 924.0 | 929.1 | 1,064.0 | 1,333.7 | 3,858.2 | 4,238.0 | 3,790.6 | 4,857.0 | |||||||||||||||||||||||
Impairment, restructuring and other operating items, net | 50.2 | 65.9 | 19.5 | 20.5 | 248.2 | 278.3 | 79.9 | 107.2 | |||||||||||||||||||||||
Total OCF | $ | 1,301.6 | $ | 1,855.7 | $ | 1,289.5 | $ | 1,897.6 | $ | 5,151.5 | $ | 7,514.3 | $ | 4,793.2 | $ | 7,024.4 |
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