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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, 2004
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 | 84-1602895 | |
| (State or other jurisdiction of incorporation or organization) |
(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 proceeding 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 ý No o
The registrant's outstanding common stock as of October 25, 2004 consisted of:
Class A
common stock – 387,360,695 shares
Class B common stock – 10,493,461 shares
Class C common stock – 385,828,203 shares
PART I – FINANCIAL INFORMATION
1
UnitedGlobalCom, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value and number of shares)
(Unaudited)
| |
UGC Post-Founders Transaction |
UGC Pre-Founders Transaction |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| |
September 30, 2004 |
December 31, 2003 |
||||||||
| |
(Note 2) |
|
||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 981,638 | $ | 310,361 | ||||||
| Restricted cash | 23,367 | 25,052 | ||||||||
| Short-term liquid investments | 111,536 | 2,134 | ||||||||
| Trade and other receivables, net | 205,143 | 205,232 | ||||||||
| Other current assets, net | 94,127 | 79,542 | ||||||||
| Total current assets | 1,415,811 | 622,321 | ||||||||
| Long-term assets | ||||||||||
| Property and equipment, net | 3,787,933 | 3,342,743 | ||||||||
| Goodwill | 2,064,973 | 2,519,831 | ||||||||
| Intangible assets, net | 414,418 | 252,236 | ||||||||
| Other assets, net | 440,150 | 362,540 | ||||||||
| Total assets | $ | 8,123,285 | $ | 7,099,671 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities | ||||||||||
| Not subject to compromise: | ||||||||||
| Accounts payable | $ | 236,842 | $ | 225,540 | ||||||
| Accrued liabilities | 408,885 | 405,546 | ||||||||
| Subscriber advance payments and deposits | 292,151 | 141,108 | ||||||||
| Notes payable, related party | – | 102,728 | ||||||||
| Current portion of debt | 53,034 | 310,804 | ||||||||
| Deferred income taxes | 110,583 | – | ||||||||
| Other current liabilities | 65,123 | 82,149 | ||||||||
| Total current liabilities not subject to compromise | 1,166,618 | 1,267,875 | ||||||||
| Subject to compromise: | ||||||||||
| Current portion of long-term debt | 24,627 | 317,372 | ||||||||
| Other liabilities | 4,691 | 19,544 | ||||||||
| Total current liabilities subject to compromise | 29,318 | 336,916 | ||||||||
| Long-term liabilities | ||||||||||
| Long-term portion of debt | 4,208,810 | 3,615,902 | ||||||||
| Deferred income taxes | 63,749 | 124,232 | ||||||||
| Other long-term liabilities | 319,403 | 259,493 | ||||||||
| Total long-term liabilities | 4,591,962 | 3,999,627 | ||||||||
| Commitments and contingencies (Note 9) | ||||||||||
| Minority interests in subsidiaries | 101,077 | 22,761 | ||||||||
| Stockholders' equity | ||||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized, nil shares issued and outstanding | – | – | ||||||||
| Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 400,423,083 and 287,350,970 shares issued, respectively | 4,004 | 2,873 | ||||||||
| Class B common stock, $0.01 par value, 1,000,000,000 shares authorized, 11,165,777 and 8,870,332 shares issued, respectively | 112 | 89 | ||||||||
| Class C common stock, $0.01 par value, 400,000,000 shares authorized, 385,828,203 and 303,123,542 shares issued and outstanding, respectively | 3,858 | 3,031 | ||||||||
| Additional paid-in capital | 2,599,766 | 5,852,896 | ||||||||
| Treasury stock, at cost | (75,844 | ) | (70,495 | ) | ||||||
| Accumulated deficit | (314,746 | ) | (3,372,737 | ) | ||||||
| Accumulated other comprehensive income (loss) | 17,160 | (943,165 | ) | |||||||
| Total stockholders' equity | 2,234,310 | 1,472,492 | ||||||||
| Total liabilities and stockholders' equity | $ | 8,123,285 | $ | 7,099,671 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
UnitedGlobalCom, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share data)
(Unaudited)
| |
UGC Post-Founders Transaction |
UGC Pre-Founders Transaction |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Three Months Ended September 30, 2004 |
Nine Months Ended September 30, 2004 |
Three Months Ended September 30, 2003 |
Nine Months Ended September 30, 2003 |
||||||||||||
| |
(Note 2) |
|
|
|||||||||||||
| Statements of Operations | ||||||||||||||||
| Revenue | $ | 658,463 | $ | 1,750,877 | $ | 474,515 | $ | 1,375,666 | ||||||||
| Operating expenses | (262,737 | ) | (682,518 | ) | (186,406 | ) | (574,394 | ) | ||||||||
| Selling, general and administrative expenses | (154,023 | ) | (427,844 | ) | (116,743 | ) | (358,404 | ) | ||||||||
| Depreciation and amortization (operating expenses) | (235,186 | ) | (667,298 | ) | (192,002 | ) | (598,207 | ) | ||||||||
| Impairment of long-lived assets (operating expenses) | 25 | (16,598 | ) | 441 | 441 | |||||||||||
| Restructuring charges (operating expenses) | (1,824 | ) | (10,749 | ) | 18 | (6,886 | ) | |||||||||
| Stock-based compensation (SG&A expenses) | (12,178 | ) | (63,894 | ) | (14,261 | ) | (28,647 | ) | ||||||||
| Operating income (loss) | (7,460 | ) | (118,024 | ) | (34,438 | ) | (190,431 | ) | ||||||||
Interest income |
5,380 |
16,903 |
2,698 |
10,603 |
||||||||||||
| Interest expense | (58,996 | ) | (204,709 | ) | (73,945 | ) | (263,813 | ) | ||||||||
| Foreign currency exchange gains (losses), net | 21,771 | (7,061 | ) | (269,598 | ) | 175,890 | ||||||||||
| Losses on derivative instruments | (16,838 | ) | (14,512 | ) | (103 | ) | (11,497 | ) | ||||||||
| (Losses) gains on sale of investments in affiliates and other assets, net | (1,174 | ) | (1,574 | ) | (283 | ) | 281,321 | |||||||||
| Gain on extinguishment of debt | – | 35,787 | 2,109,596 | 2,183,997 | ||||||||||||
| Other income (expense), net | 302 | 830 | (7,935 | ) | (41,658 | ) | ||||||||||
| Income (loss) before income taxes and other items | (57,015 | ) | (292,360 | ) | 1,725,992 | 2,144,412 | ||||||||||
Reorganization expense, net |
(1,410 |
) |
(7,837 |
) |
(6,276 |
) |
(19,996 |
) |
||||||||
| Income tax expense, net | (19,174 | ) | (23,708 | ) | (13,986 | ) | (71,505 | ) | ||||||||
| Minority interests in subsidiaries, net | 2,116 | 2,616 | 42,582 | 43,319 | ||||||||||||
| Share in results of affiliates, net | 5,273 | 6,543 | (11,203 | ) | 279,832 | |||||||||||
| Net income (loss) | $ | (70,210 | ) | $ | (314,746 | ) | $ | 1,737,109 | $ | 2,376,062 | ||||||
Earnings per share (Note 14): |
||||||||||||||||
| Basic earnings (loss) per share | $ | (0.09 | ) | $ | (0.41 | ) | $ | 3.80 | $ | 8.31 | ||||||
| Diluted earnings (loss) per share | $ | (0.09 | ) | $ | (0.41 | ) | $ | 3.79 | $ | 8.31 | ||||||
Statements of Comprehensive Income |
||||||||||||||||
| Net income (loss) | $ | (70,210 | ) | $ | (314,746 | ) | $ | 1,737,109 | $ | 2,376,062 | ||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | 75,157 | 14,674 | 335,024 | (37,852 | ) | |||||||||||
| Change in fair value of derivative assets | – | – | – | 10,616 | ||||||||||||
| Change in unrealized (loss) gain on available-for-sale securities | 13,045 | 2,486 | (18,465 | ) | (12,408 | ) | ||||||||||
| Comprehensive income (loss) | $ | 17,992 | $ | (297,586 | ) | $ | 2,053,668 | $ | 2,336,418 | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
UnitedGlobalCom, Inc.
Condensed Consolidated Statement of Stockholders' Equity
(In thousands, except number of shares)
(Unaudited)
| |
Class A Common Stock |
Class B Common Stock |
Class C Common Stock |
|
|
|
|
|
|
||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
|
Treasury Stock |
|
Accumulated Other Comprehensive Income (Loss) |
|
||||||||||||||||||||||||||||
| |
Additional Paid-In Capital |
Accumulated Deficit |
|
||||||||||||||||||||||||||||||
| |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Total |
||||||||||||||||||||||||
| December 31, 2003 (UGC Pre-Founders Transaction) | 287,350,970 | $ | 2,873 | 8,870,332 | $ | 89 | 303,123,542 | $ | 3,031 | $ | 5,852,896 | 13,045,959 | $ | (70,495 | ) | $ | (3,372,737 | ) | $ | (943,165 | ) | $ | 1,472,492 | ||||||||||
January 1, 2004 (UGC Post-Founders Transaction)(Note 2) |
287,350,970 |
$ |
2,873 |
8,870,332 |
$ |
89 |
303,123,542 |
$ |
3,031 |
$ |
1,439,479 |
13,045,959 |
$ |
(70,495 |
) |
$ |
– |
$ |
– |
$ |
1,374,977 |
||||||||||||
Issuance of additional Class A common stock in connection with the UGC Europe exchange offer |
2,596,270 |
26 |
– |
– |
– |
– |
19,706 |
– |
– |
– |
– |
19,732 |
|||||||||||||||||||||
| Issuance of Class A common stock upon exercise of LMC's preemptive right | 20,706,894 | 207 | – | – | – | – | 54,454 | – | – | – | – | 54,661 | |||||||||||||||||||||
| Issuance of common stock in connection with rights offering | 82,950,715 | 830 | 2,295,445 | 23 | 84,874,594 | 849 | 1,018,109 | – | – | – | – | 1,019,811 | |||||||||||||||||||||
| Issuance of Class A common stock in connection with subsidiary reorganization | 2,011,813 | 20 | – | – | – | – | 18,368 | – | – | – | – | 18,388 | |||||||||||||||||||||
| Issuance of Class A common stock for acquisition of a minority interest in subsidiary | 1,800,000 | 18 | – | – | – | – | 16,434 | – | – | – | – | 16,452 | |||||||||||||||||||||
| Share exchange by LMC | 2,169,933 | 22 | – | – | (2,169,933 | ) | (22 | ) | – | – | – | – | – | – | |||||||||||||||||||
| Issuance of Class A common stock in connection with stock option plans | 750,222 | 8 | – | – | – | – | 3,538 | – | – | – | – | 3,546 | |||||||||||||||||||||
| Issuance of Class A common stock in connection with 401(k) plan | 86,266 | – | – | – | – | – | 661 | – | – | – | – | 661 | |||||||||||||||||||||
| Stock-based compensation | – | – | – | – | – | – | 39,973 | – | – | – | – | 39,973 | |||||||||||||||||||||
| Equity transactions of subsidiaries and other | – | – | – | – | – | – | (10,956 | ) | 13,626 | – | – | – | (10,956 | ) | |||||||||||||||||||
| Purchase of treasury shares | – | – | – | – | – | – | – | 787,391 | (5,349 | ) | – | – | (5,349 | ) | |||||||||||||||||||
| Net income (loss) | – | – | – | – | – | – | – | – | – | (314,746 | ) | – | (314,746 | ) | |||||||||||||||||||
| Unrealized loss on available-for-sale securities | – | – | – | – | – | – | – | – | – | – | 2,486 | 2,486 | |||||||||||||||||||||
| Foreign currency translation adjustments | – | – | – | – | – | – | – | – | – | – | 14,674 | 14,674 | |||||||||||||||||||||
| September 30, 2004 | 400,423,083 | $ | 4,004 | 11,165,777 | $ | 112 | 385,828,203 | $ | 3,858 | $ | 2,599,766 | 13,846,976 | $ | (75,844 | ) | $ | (314,746 | ) | $ | 17,160 | $ | 2,234,310 | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
UnitedGlobalCom, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| |
UGC Post-Founders Transaction |
UGC Pre-Founders Transaction |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| |
Nine Months Ended September 30, 2004 |
Nine Months Ended September 30, 2003 |
|||||||
| |
(Note 2) |
|
|||||||
| Cash Flows from Operating Activities | |||||||||
| Net income (loss) | $ | (314,746 | ) | $ | 2,376,062 | ||||
| Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
| Stock-based compensation | 39,973 | 28,647 | |||||||
| Depreciation and amortization | 667,298 | 598,207 | |||||||
| Impairment of long-lived assets and restructuring charges | 27,347 | 6,445 | |||||||
| Accretion of interest on senior notes and amortization of deferred financing costs | 13,561 | 47,607 | |||||||
| Unrealized foreign exchange losses (gains), net | 6,184 | (114,016 | ) | ||||||
| Losses (gains) on sale of investments in affiliates and other assets, net | 1,574 | (281,321 | ) | ||||||
| Losses on derivative instruments | 14,512 | 11,450 | |||||||
| Gain on extinguishment of debt | (35,787 | ) | (2,183,997 | ) | |||||
| Deferred income tax provision | 6,467 | 70,407 | |||||||
| Minority interests in subsidiaries, net | (2,616 | ) | (43,319 | ) | |||||
| Share in results of affiliates, net | (6,543 | ) | (279,832 | ) | |||||
| Change in assets and liabilities: | |||||||||
| Change in receivables and other assets | (14,830 | ) | 69,461 | ||||||
| Change in accounts payable, accrued liabilities and other | 70,953 | (32,360 | ) | ||||||