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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, 2003
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, Suite 1300
Denver, CO 80237
(Address of principle executive offices)
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 registrant's outstanding common stock as of November 1, 2003 consisted of:
| Class A common stock— | 105,313,702 shares | |||||
| Class B common stock— | 8,198,016 shares | |||||
| Class C common stock— | 303,123,542 shares |
1
UnitedGlobalCom, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value and number of shares)
(Unaudited)
| |
September 30, 2003 |
December 31, 2002 |
||||||
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 312,777 | $ | 410,185 | ||||
| Restricted cash | 36,897 | 48,219 | ||||||
| Short-term liquid investments | 1,767 | 45,854 | ||||||
| Subscriber receivables, net | 117,256 | 136,796 | ||||||
| Related party receivables | 4,131 | 15,402 | ||||||
| Other receivables | 48,203 | 50,759 | ||||||
| Deferred financing costs, net | 2,919 | 62,996 | ||||||
| Other current assets, net | 64,574 | 95,340 | ||||||
| Total current assets | 588,524 | 865,551 | ||||||
| Long-term assets | ||||||||
| Property, plant and equipment, net | 3,586,494 | 3,640,211 | ||||||
| Goodwill, net | 1,309,033 | 1,184,132 | ||||||
| Other intangible assets, net | 87,760 | 79,977 | ||||||
| Investments in affiliates, accounted for under the equity method, net | 136,000 | 153,853 | ||||||
| Deferred financing costs, net | 51,077 | — | ||||||
| Other assets, net | 14,215 | 7,870 | ||||||
| Total assets | $ | 5,773,103 | $ | 5,931,594 | ||||
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
| |
September 30, 2003 |
December 31, 2002 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Liabilities and Stockholders' Equity (Deficit) | ||||||||||
| Current liabilities | ||||||||||
| Not subject to compromise: | ||||||||||
| Accounts payable | $ | 188,152 | $ | 190,710 | ||||||
| Accounts payable, related party | 1,378 | 1,704 | ||||||||
| Accrued liabilities | 371,155 | 328,927 | ||||||||
| Subscriber prepayments and deposits | 149,113 | 127,553 | ||||||||
| Short-term debt | — | 205,145 | ||||||||
| Notes payable, related party | 102,728 | 102,728 | ||||||||
| Current portion of senior notes and senior discount notes | 39,136 | — | ||||||||
| Current portion of other long-term debt | 194,517 | 3,366,235 | ||||||||
| Other current liabilities | 15,258 | 16,448 | ||||||||
| Total current liabilities not subject to compromise | 1,061,437 | 4,339,450 | ||||||||
| Subject to compromise: | ||||||||||
| Accounts payable | 401 | 38,647 | ||||||||
| Accrued liabilities | — | 232,603 | ||||||||
| Short-term debt | 6,138 | — | ||||||||
| Current portion of senior notes and senior discount notes | 385,702 | 2,812,988 | ||||||||
| Total current liabilities subject to compromise | 392,241 | 3,084,238 | ||||||||
| Long-term liabilities | ||||||||||
| Not subject to compromise: | ||||||||||
| Senior notes and senior discount notes | — | 415,932 | ||||||||
| Other long-term debt | 3,475,239 | 56,739 | ||||||||
| Net negative investment in deconsolidated subsidiaries | — | 644,471 | ||||||||
| Deferred taxes | 256,674 | 184,858 | ||||||||
| Other long-term liabilities | 97,028 | 88,634 | ||||||||
| Total long-term liabilities not subject to compromise | 3,828,941 | 1,390,634 | ||||||||
Guarantees, commitments and contingencies (Note 6) |
||||||||||
Minority interests in subsidiaries |
143,897 |
1,402,146 |
||||||||
Stockholders' equity (deficit) |
||||||||||
| Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 112,855,363 and 110,392,692 shares issued, respectively | 1,129 | 1,104 | ||||||||
| Class B common stock, $0.01 par value, 1,000,000,000 shares authorized, 8,870,332 shares issued | 89 | 89 | ||||||||
| Class C common stock, $0.01 par value, 400,000,000 shares authorized, 303,123,542 shares issued and outstanding | 3,031 | 3,031 | ||||||||
| Additional paid-in capital | 4,520,532 | 3,683,644 | ||||||||
| Deferred compensation | — | (28,473 | ) | |||||||
| Class A treasury stock, at cost | (34,162 | ) | (34,162 | ) | ||||||
| Class B treasury stock, at cost | — | — | ||||||||
| Accumulated deficit | (2,992,043 | ) | (6,797,762 | ) | ||||||
| Accumulated other comprehensive income (loss) | (1,151,989 | ) | (1,112,345 | ) | ||||||
| Total stockholders' equity (deficit) | 346,587 | (4,284,874 | ) | |||||||
| Total liabilities and stockholders' equity (deficit) | $ | 5,773,103 | $ | 5,931,594 | ||||||
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
UnitedGlobalCom, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
(Unaudited)
| |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2003 |
2002 |
2003 |
2002 |
||||||||||||
| Statements of Operations | ||||||||||||||||
Revenue |
$ |
474,515 |
$ |
384,736 |
$ |
1,375,666 |
$ |
1,113,508 |
||||||||
| Operating expense (1) | (186,406 | ) | (203,520 | ) | (574,394 | ) | (584,569 | ) | ||||||||
| Selling, general and administrative expense | (131,004 | ) | (104,628 | ) | (395,051 | ) | (344,632 | ) | ||||||||
| Depreciation and amortization | (192,002 | ) | (201,173 | ) | (598,207 | ) | (538,810 | ) | ||||||||
| Impairment and restructuring | 459 | 1,390 | 1,555 | (21,505 | ) | |||||||||||
| Operating income (loss) | (34,438 | ) | (123,195 | ) | (190,431 | ) | (376,008 | ) | ||||||||
Interest income, including related party income of $36, $1,350, $965, and $4,498, respectively |
2,698 |
3,680 |
10,603 |
26,297 |
||||||||||||
| Interest expense, including related party expense of $2,072, $1,985, $6,147 and $22,734, respectively | (73,945 | ) | (157,212 | ) | (263,813 | ) | (495,707 | ) | ||||||||
| Foreign currency exchange gain (loss), net | (276,529 | ) | (62,217 | ) | 137,882 | 434,299 | ||||||||||
| Gain (loss) on sale of investments in affiliates, net | (283 | ) | 155,754 | 281,321 | 142,842 | |||||||||||
| Gain on extinguishment of debt | 2,109,596 | — | 2,183,997 | 2,208,782 | ||||||||||||
| Other expense, net | (1,107 | ) | (31,808 | ) | (15,147 | ) | (194,023 | ) | ||||||||
| Income (loss) before income taxes and other items | 1,725,992 | (214,998 | ) | 2,144,412 | 1,746,482 | |||||||||||
Reorganization expense |
(6,276 |
) |
— |
(19,996 |
) |
— |
||||||||||
| Income tax expense, net | (13,986 | ) | (16,736 | ) | (71,505 | ) | (175,911 | ) | ||||||||
| Minority interests in subsidiaries, net | 42,582 | (45,450 | ) | 43,319 | (87,862 | ) | ||||||||||
| Share in results of affiliates, net | (11,203 | ) | 1,970 | 279,832 | (75,778 | ) | ||||||||||
| Income (loss) before cumulative effect of change in accounting principle | 1,737,109 | (275,214 | ) | 2,376,062 | 1,406,931 | |||||||||||
Cumulative effect of change in accounting principle |
— |
— |
— |
(1,344,722 |
) |
|||||||||||
| Net income (loss) | $ | 1,737,109 | $ | (275,214 | ) | $ | 2,376,062 | $ | 62,209 | |||||||
Earnings per share (Note 10): |
||||||||||||||||
| Basic net income before cumulative effect of change in accounting principle | $ | 4.19 | $ | (0.67 | ) | $ | 9.17 | $ | 3.67 | |||||||
| Cumulative effect of change in accounting principle | — | — | — | (3.52 | ) | |||||||||||
| Basic net income (loss) | $ | 4.19 | $ | (0.67 | ) | $ | 9.17 | $ | 0.15 | |||||||
Diluted net income before cumulative effect of change in accounting principle |
$ |
4.18 |
$ |
(0.67 |
) |
$ |
9.17 |
$ |
3.66 |
|||||||
| Cumulative effect of change in accounting principle | — | — | — | (3.50 | ) | |||||||||||
| Diluted net income (loss) | $ | 4.18 | $ | (0.67 | ) | $ | 9.17 | $ | 0.16 | |||||||
Statements of Comprehensive Income |
||||||||||||||||
Net income (loss) |
$ |
1,737,109 |
$ |
(275,214 |
) |
$ |
2,376,062 |
$ |
62,209 |
|||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | 335,024 | (24,600 | ) | (37,852 | ) | (436,368 | ) | |||||||||
| Change in fair value of derivative assets | — | (10 | ) | 10,616 | 10,504 | |||||||||||
| Other | (18,465 | ) | (78 | ) | (12,408 | ) | 355 | |||||||||
| Comprehensive income (loss) | $ | 2,053,668 | $ | (299,902 | ) | $ | 2,336,418 | $ | (363,300 | ) | ||||||
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
UnitedGlobalCom, Inc.
Condensed Consolidated Statement of Stockholders' Equity (Deficit)
(In thousands, except number of shares)
(Unaudited)
| |
Class A Common Stock |
Class B Common Stock |
Class C Common Stock |
|
|
Class A Treasury Stock |
Class B Treasury Stock |
|
|
|
|||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
|
|
|
Accumulated Other Comprehensive Income (Loss) |
|
||||||||||||||||||||||||||||||||||||
| |
Additional Paid-In Capital |
Deferred Compensation |
Accumulated Deficit |
|
|||||||||||||||||||||||||||||||||||||
| |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Total |
||||||||||||||||||||||||||||||
| December 31, 2002 | 110,392,692 | $ | 1,104 | 8,870,332 | $ | 89 | 303,123,542 | $ | 3,031 | $ | 3,683,644 | $ | (28,473 | ) | 7,404,240 | $ | (34,162 | ) | — | $ | — | $ | (6,797,762 | ) | $ | (1,112,345 | ) | $ | (4,284,874 | ) | |||||||||||
| Issuance of Class A common stock for UPC preference shares | 2,155,905 | 22 | — | — | — | — | 6,082 | — | — | — | — | — | 1,423,102 | — | 1,429,206 | ||||||||||||||||||||||||||
| Issuance of Class A common stock in connection with stock option plans | 253,000 | 2 | — | — | — | — | 1,079 | — | — | — | — | — | — | — | 1,081 | ||||||||||||||||||||||||||
| Issuance of Class A common stock in connection with 401(k) plan | 53,766 | 1 | — | — | — | — | 218 | — | — | — | — | — | — | — | 219 | ||||||||||||||||||||||||||
| Issuance of common stock by UGC Europe for debt | — | — | — | — | — | — | 963,625 | — | — | — | — | — | — | — | 963,625 | ||||||||||||||||||||||||||
| Equity transactions of subsidiaries | — | — | — | — | — | — | (134,116 | ) | 1,896 | — | — | — | — | 6,555 | — | (125,665 | ) | ||||||||||||||||||||||||
| Amortization of deferred compensation | — | — | — | — | — | — | — | 26,577 | — | — | — | — | — | — | 26,577 | ||||||||||||||||||||||||||
| Receipt of Class A and Class B common stock in satisfaction of executive loans | — | — | — | — | — | — | — | — | 188,792 | — | 672,316 | — | — | — | — | ||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | — | — | — | 2,376,062 | — | 2,376,062 | ||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | — | — | — | — | (37,852 | ) | (37,852 | ) | ||||||||||||||||||||||||
| Change in fair value of derivative assets | — | — | — | — | — | — | — | — | — | — | — | — | — | 10,616 | 10,616 | ||||||||||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securites | — | — | — | — | — | — | — | — | — | — | — | — | — | (12,214 | ) | (12,214 | ) | ||||||||||||||||||||||||
| Amortization of cumulative effect of change in accounting principle | — | — | — | — | — | — | — | — | — | — | — | — | — | (194 | ) | (194 | ) | ||||||||||||||||||||||||
| September 30, 2003 | 112,855,363 | $ | 1,129 | 8,870,332 | $ | 89 | 303,123,542 | $ | 3,031 | $ | 4,520,532 | $ | — | 7,593,032 | $ | (34,162 | ) | 672,316 | $ | — | $ | (2,992,043 | ) | $ | (1,151,989 | ) | $ | 346,587 | |||||||||||||
Accumulated Other Comprehensive Income (Loss)
| |
September 30, 2003 |
December 31, 2002 |
||||||
|---|---|---|---|---|---|---|---|---|
| |
(In thousands) |
|||||||
| Foreign currency translation adjustments | $ | (1,156,366 | ) | $ | (1,118,514 | ) | ||
| Fair value of derivative assets | — | (10,616 | ) | |||||
| Other | 4,377 | 16,785 | ||||||
| Total | $ | (1,151,989 | ) | $ | (1,112,345 | ) | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
UnitedGlobalCom, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| |
Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|