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UNITEDGLOBALCOM, INC. TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ý Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
or
o Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File No. 000-496-58
UnitedGlobalCom, Inc.
(Exact name of Registrant as specified in its charter)
| State of Delaware (State or other jurisdiction of incorporation or organization) |
84-1602895 (I.R.S. Employer Identification No.) |
4643 South Ulster Street, #1300 Denver, Colorado (Address of principal executive offices) |
80237 (Zip code) |
Registrant's telephone number, including area code: (303) 770-4001
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
The number of shares outstanding of the Registrant's common stock as of November 7, 2002 was:
Class A
common stock – 102,954,698 shares
Class B common stock – 8,870,332 shares
Class C common stock – 303,123,542 shares
UNITEDGLOBALCOM, INC.
TABLE OF CONTENTS
1
UnitedGlobalCom, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value and number of shares)
(Unaudited)
| |
September 30, 2002 |
December 31, 2001 |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 403,376 | $ | 920,140 | |||||
| Restricted cash | 49,531 | 86,625 | |||||||
| Short-term liquid investments | 104,012 | 78,946 | |||||||
| Subscriber receivables, net of allowance for doubtful accounts of $72,992 and $51,405, respectively | 129,472 | 152,025 | |||||||
| Notes receivable, related parties | 8,197 | 310,904 | |||||||
| Other receivables, including related party receivables of $8,233 and $32,145, respectively | 49,362 | 107,704 | |||||||
| Deferred financing costs, net of accumulated amortization of $40,453 and $39,178, respectively | 99,853 | 132,564 | |||||||
| Business transferred under contractual arrangement | – | 78,672 | |||||||
| Other current assets, net | 84,648 | 75,671 | |||||||
| Total current assets | 928,451 | 1,943,251 | |||||||
| Investments in affiliates, accounted for under the equity method, net | 160,951 | 231,625 | |||||||
| Property, plant and equipment, net | 3,582,917 | 3,692,485 | |||||||
| Goodwill and other intangible assets, net | 2,987,223 | 2,843,922 | |||||||
| Deferred financing costs, net of accumulated amortization of $164 and $7,688, respectively | 192 | 18,371 | |||||||
| Derivative assets | – | 131,320 | |||||||
| Business transferred under contractual arrangement | – | 143,124 | |||||||
| Other assets, net | 8,555 | 34,542 | |||||||
| Total assets | $ | 7,668,289 | $ | 9,038,640 | |||||
| Liabilities and Stockholders' Deficit | |||||||||
| Current liabilities | |||||||||
| Accounts payable, including related party payables of $1,700 and $1,347, respectively | $ | 138,289 | $ | 350,813 | |||||
| Accrued liabilities | 548,010 | 697,827 | |||||||
| Subscriber prepayments and deposits | 124,900 | 88,975 | |||||||
| Derivative liabilities | 69,346 | – | |||||||
| Short-term debt | 156,000 | 77,614 | |||||||
| Notes payable, related party | 102,728 | – | |||||||
| Current portion of senior notes and other long-term debt, related party | – | 2,314,992 | |||||||
| Current portion of senior notes and other long-term debt | 5,896,971 | 6,074,502 | |||||||
| Business transferred under contractual arrangement | – | 607,350 | |||||||
| Other current liabilities | 8,325 | 11,052 | |||||||
| Total current liabilities | 7,044,569 | 10,223,125 | |||||||
| Senior discount notes and senior notes | 402,453 | 1,565,856 | |||||||
| Other long-term debt | 66,458 | 78,037 | |||||||
| Deferred gain on sale of assets | 148,022 | – | |||||||
| Business transferred under contractual arrangement | 641,812 | 228,012 | |||||||
| Deferred taxes | 161,195 | 80,300 | |||||||
| Other long-term liabilities | 129,256 | 148,135 | |||||||
| Total liabilities | 8,593,765 | 12,323,465 | |||||||
| Commitments and contingencies | |||||||||
| Minority interests in subsidiaries | 1,323,001 | 1,240,665 | |||||||
| Series B convertible preferred stock, stated at liquidation value, nil and 113,983 shares issued and outstanding, respectively | – | 29,990 | |||||||
| Stockholders' deficit | |||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized, nil shares issued and outstanding | – | – | |||||||
| Series C convertible preferred stock, nil and 425,000 shares issued and outstanding, respectively | – | 425,000 | |||||||
| Series D convertible preferred stock, nil and 287,500 shares issued and outstanding, respectively | – | 287,500 | |||||||
| Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 110,358,938 and 98,042,205 shares issued, respectively | 1,104 | 981 | |||||||
| Class B common stock, $0.01 par value, 1,000,000,000 shares authorized, 8,870,332 and 19,027,130 shares issued and outstanding, respectively | 89 | 190 | |||||||
| Class C common stock, $0.01 par value, 400,000,000 shares authorized, 303,123,542 and nil shares issued and outstanding, respectively | 3,031 | – | |||||||
| Additional paid-in capital | 3,689,511 | 1,537,944 | |||||||
| Deferred compensation | (34,506 | ) | (74,185 | ) | |||||
| Treasury stock, at cost, 7,404,240 and 5,604,948 shares of Class A common stock, respectively | (34,162 | ) | (29,984 | ) | |||||
| Accumulated deficit | (5,182,302 | ) | (6,437,290 | ) | |||||
| Accumulated other comprehensive income (loss) | (691,242 | ) | (265,636 | ) | |||||
| Total stockholders' deficit | (2,248,477 | ) | (4,555,480 | ) | |||||
| Total liabilities and stockholders' deficit | $ | 7,668,289 | $ | 9,038,640 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
UnitedGlobalCom, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share amounts
and number of shares)
(Unaudited)
| |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2002 |
2001 |
2002 |
2001 |
||||||||||||
| Revenue | $ | 384,736 | $ | 391,865 | $ | 1,113,508 | $ | 1,185,860 | ||||||||
| Operating expenses (exclusive of items shown separately below) | (203,520 | ) | (259,760 | ) | (584,569 | ) | (841,080 | ) | ||||||||
| Selling, general and administrative expenses | (104,628 | ) | (177,799 | ) | (344,632 | ) | (518,463 | ) | ||||||||
| Depreciation and amortization | (201,173 | ) | (275,578 | ) | (538,810 | ) | (823,824 | ) | ||||||||
| Impairment and restructuring charges | 1,390 | (34,136 | ) | (21,505 | ) | (296,168 | ) | |||||||||
| Operating income (loss) | (123,195 | ) | (355,408 | ) | (376,008 | ) | (1,293,675 | ) | ||||||||
| Interest income, including related party income of $1,350, $10,867, $4,498 and $25,735, respectively | 3,680 | 31,126 | 26,297 | 88,148 | ||||||||||||
| Interest expense, including related party expense of $1,985, $17,502, $22,734 and $21,929, respectively | (157,212 | ) | (264,871 | ) | (495,707 | ) | (811,918 | ) | ||||||||
| Proceeds from litigation settlement | – | 4,619 | – | 194,830 | ||||||||||||
| Provision for loss on investments | (8,035 | ) | (334,660 | ) | (22,525 | ) | (334,660 | ) | ||||||||
| Foreign currency exchange gain (loss), derivative losses and other expenses, net | (78,161 | ) | 50,623 | 257,718 | (254,417 | ) | ||||||||||
| Income (loss) before other items | (362,923 | ) | (868,571 | ) | (610,225 | ) | (2,411,692 | ) | ||||||||
| Income tax (expense) benefit, net | (16,736 | ) | (198 | ) | (65,328 | ) | 773 | |||||||||
| Minority interests in subsidiaries | (45,450 | ) | 19,997 | (87,862 | ) | 125,350 | ||||||||||
| Share in results of affiliates, net | 1,970 | (52,248 | ) | (75,778 | ) | (122,737 | ) | |||||||||
| Income (loss) from continuing operations before extraordinary gain and cumulative effect of change in accounting principle | (423,139 | ) | (901,020 | ) | (839,193 | ) | (2,408,306 | ) | ||||||||
| Extraordinary gain on early extinguishment of debt, net of income tax | – | – | 2,098,199 | – | ||||||||||||
| Cumulative effect of change in accounting principle | – | – | – | 32,574 | ||||||||||||
| Net income (loss) | $ | (423,139 | ) | $ | (901,020 | ) | $ | 1,259,006 | $ | (2,375,732 | ) | |||||
| Basic net income (loss) attributable to common stockholders | $ | (423,139 | ) | $ | (913,961 | ) | $ | 1,254,832 | $ | (2,414,531 | ) | |||||
| Diluted net income (loss) attributable to common stockholders | $ | (423,139 | ) | $ | (913,961 | ) | $ | 1,259,006 | $ | (2,414,531 | ) | |||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic net income (loss) before extraordinary gain and cumulative effect of change in accounting principle | $ | (1.02 | ) | $ | (9.19 | ) | $ | (2.21 | ) | $ | (24.80 | ) | ||||
| Extraordinary gain on early extinguishment of debt | – | – | 5.49 | – | ||||||||||||
| Cumulative effect of change in accounting principle | – | – | – | 0.33 | ||||||||||||
| Basic net income (loss) | $ | (1.02 | ) | $ | (9.19 | ) | $ | 3.28 | $ | (24.47 | ) | |||||
| Diluted net income (loss) before extraordinary gain and cumulative effect of change in accounting principle | $ | (1.02 | ) | $ | (9.19 | ) | $ | (2.18 | ) | $ | (24.80 | ) | ||||
| Extraordinary gain on early extinguishment of debt | – | – | 5.44 | – | ||||||||||||
| Cumulative effect of change in accounting principle | – | – | – | 0.33 | ||||||||||||
| Diluted net income (loss) | $ | (1.02 | ) | $ | (9.19 | ) | $ | 3.26 | $ | (24.47 | ) | |||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | 413,450,776 | 99,485,929 | 382,202,331 | 98,683,319 | ||||||||||||
| Diluted | 413,450,776 | 99,485,929 | 385,631,354 | 98,683,319 | ||||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Net income (loss) | $ | (423,139 | ) | $ | (901,020 | ) | $ | 1,259,006 | $ | (2,375,732 | ) | |||||
| Foreign currency translation adjustments | (24,697 | ) | (125,208 | ) | (436,465 | ) | (122,128 | ) | ||||||||
| Change in fair value of derivative assets | (10 | ) | (19,278 | ) | 10,504 | (24,471 | ) | |||||||||
| Change in unrealized gain on available-for-sale securities | (77 | ) | (913 | ) | 432 | 36,625 | ||||||||||
| Cumulative effect on other comprehensive income of change in accounting principle | – | – | – | 523 | ||||||||||||
| Amortization of cumulative effect of change in accounting principle | (1 | ) | (62 | ) | (77 | ) | (181 | ) | ||||||||
| Comprehensive income (loss) | $ | (447,924 | ) | $ | (1,046,481 | ) | $ | 833,400 | $ | (2,485,364 | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
UnitedGlobalCom, Inc.
Condensed Consolidated Statement of Stockholders' Deficit
(In thousands, except number of shares)
(Unaudited)
| |
Series C Preferred Stock |
Series D Preferred Stock |
Class A Common Stock |
Class B Common Stock |
Class C Common Stock |
|
|
|
|
|
|
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
|
|
Treasury Stock |
|
Accumulated Other Comprehensive Income (Loss) |
|
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| |
Additional Paid-In Capital |
Deferred Compensation |
Accumulated Deficit |
|
||||||||||||||||||||||||||||||||||||||||||
| |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Total |
|||||||||||||||||||||||||||||||||
| Balances, December 31, 2001 | 425,000 | $ | 425,000 | 287,500 | $ | 287,500 | 98,042,205 | $ | 981 | 19,027,130 | $ | 190 | – | $ | – | $ | 1,537,944 | $ | (74,185 | ) | 5,604,948 | $ | (29,984 | ) | $ | (6,437,290 | ) | $ | (265,636 | ) | $ | (4,555,480 | ) | |||||||||||||
| Accrual of dividends on Series B, C and D convertible preferred stock | – | – | – | – | – | – | – | – | – | – | (156 | ) | – | – | – | (4,018 | ) | – | (4,174 | ) | ||||||||||||||||||||||||||
| Merger/reorganization transaction | (425,000 | ) | (425,000 | ) | (287,500 | ) | (287,500 | ) | 11,628,674 | 116 | (10,156,798 | ) | (101 | ) | 21,835,384 | 218 | 770,438 | – | (35,708 | ) | 923 | – | – | 59,094 | ||||||||||||||||||||||
| Issuance of Class C common stock for financial assets | – | – | – | – | – | – | – | – | 281,288,158 | 2,813 | 1,396,479 | – | – | – | – | – | 1,399,292 | |||||||||||||||||||||||||||||
| Issuance of Class A common stock in exchange for remaining interest in UGC Holdings | – | – | – | – | 600,000 | 6 | – | – | – | – | (6 | ) | – | – | – | – | – | – | ||||||||||||||||||||||||||||
| Issuance of Class A common stock in connection with 401(k) plan | – | – | – | – | 88,059 | 1 | – | – | – | – | 258 | – | – | – | – | – | 259 | |||||||||||||||||||||||||||||
| Equity transactions of subsidiaries and other | – | – | – | – | – | – | – | – | – | – | (15,446 | ) | 11,580 | – | – | – | – | (3,866 | ) | |||||||||||||||||||||||||||
| Amortization of deferred compensation | – | – | – | – | – | – | – | – | – | – | – | 28,099 | – | – | – | – | 28,099 | |||||||||||||||||||||||||||||
| Purchase of treasury shares | – | – | – | – | – | – | – | – | – | – | – | – | 1,835,000 | (5,101 | ) | – | – | (5,101 | ) | |||||||||||||||||||||||||||
| Net income | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 1,259,006 | – | 1,259,006 | |||||||||||||||||||||||||||||
| Foreign currency translation adjustments | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (436,465 | ) | (436,465 | ) | |||||||||||||||||||||||||||
| Change in fair value of derivative assets | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 10,504 | 10,504 | |||||||||||||||||||||||||||||
| Change in unrealized gain on available-for-sale securites | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 432 | 432 | |||||||||||||||||||||||||||||
| Amortization of cumulative effect of change in accounting principle | – | – | – | – | – | &n | ||||||||||||||||||||||||||||||||||||||||