Quality. Speed. Value
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quality. value. speed. JOHN C. MALONE Chairman of the Board MICHAEL T. FRIES President and Chief Executive Officer JOHN P. COLE, JR. Founder and Retired Partner of Cole, Raywid & Braverman TABLE OF JOHN W. DICK CONTENTS Private Investor PAUL A. GOULD Managing Director, Allen & Company, LLC Letter to Shareholders 1 RICHARD R. GREEN President and Chief Executive Officer, 2 2008 Highlights Cable Television Laboratories, Inc. DAVID E. RAPLEY Quality | Value | Speed 4 Retired Executive Vice President, VECO Corp. – Alaska 8 Global Operations LARRY E. ROMRELL Retired Executive Vice President of Tele-Communications, Inc. INSIDE BACK COVER J.C. SPARKMAN Retired Chairman of the Board of Broadband Services, Inc. Board of Directors, J. DAVID WARGO Executive Officers Liberty Global’s Series A, B and C Common President of Wargo & Company, Inc. & Shareholder Information Stock trade on the NASDAQ Global Select Market under the symbols LBTYA, LBTYB, and LBTYK, respectively. CORPORATE HEADQUARTERS JOHN C. MALONE Liberty Global, Inc. Chairman of the Board Forward-Looking Statements 12300 Liberty Boulevard This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expectations with respect to our future growth MICHAEL T. FRIES Englewood, Colorado 80112 prospects. See pages I-3 and I-4 of the enclosed Annual Report on Form 10-K for a description of other forward-looking statements included in this report and certain of the risks and President and Chief Executive Officer +1.303.220.6600 uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. AMY M. BLAIR TRANSFER AGENT Notes on Defined Terms Senior Vice President, Global Human Resources Computershare Unless otherwise indicated in this report, subscriber growth statistics exclude subscribers of acquired entities at the date of acquisition, but include the impact of changes in subscribers P.O. Box 43023 from the date of acquisition. These statistics are presented on a net basis. CHARLES H.R. BRACKEN Senior Vice President, Co-Chief Financial Officer Providence, Rhode Island 02940 For our definition of operating cash flow or OCF and the related reconciliation, see note 21 to our consolidated financial statements in the enclosed Annual Report on Form 10-K. Rebased (Principal Financial Officer) 888.218.4391 OCF growth is presented to show growth on a comparable basis by neutralizing the effects of acquisitions and foreign currency exchange rate fluctuations. For purposes of calculating (Outside the U.S.) +1.781.575.3919 rebased OCF growth, we have adjusted our historical 2007 OCF to (i) include the pre-acquisition OCF of certain entities acquired during 2007 and 2008 in the respective 2007 rebased MIRANDA CURTIS INDEPENDENT CERTIFIED amounts to the same extent that the OCF of such entities are included in our 2008 results, (ii) exclude the pre-disposition OCF of certain entities that were disposed of during 2007 and President, Liberty Global Japan 2008 from our rebased amounts to the same extent that such entities were excluded from our results in 2008 and (iii) reflect the translation of our 2007 rebased amounts at the applicable PUBLIC ACCOUNTANTS average exchange rates that were used to translate our 2008 results. Our OCF margin is calculated by dividing OCF by total revenue for the applicable period. We define Free Cash Flow BERNARD G. DVORAK KPMG LLP or FCF as net cash provided by operating activities less capital expenditures, each as reported in our consolidated statements of cash flows. For additional information concerning these Senior Vice President, Co-Chief Financial Officer 707 Seventeenth Street, Suite 2700 definitions and calculations, please see our earnings release dated February 23, 2009. (Principal Accounting Officer) Denver, Colorado 80202 BOB LEIGHTON INVESTOR RELATIONS CONTACTS Senior Vice President, Programming Christopher Noyes ELIZABETH M. MARKOWSKI +1.303.220.6693 Senior Vice President, Secretary, General Counsel K.C. Dolan W. GENE MUSSELMAN +1.303.220.6686 President and Chief Operating Officer, UPC Broadband Molly Bruce BALAN NAIR +1.303.220.4202 Senior Vice President and Chief Technology Officer CORPORATE COMMUNICATIONS CONTACTS SHANE O’NEILL Hanne Wolf Senior Vice President, Chief Strategy Officer, +1.303.220.6678 and President, Chellomedia Bert Holtkamp MAURICIO RAMOS +31.20.778.9447 President, Liberty Global Latin America ANNUAL REPORT ON FORM 10-K and Chief Executive Officer, VTR Global Com S.A. Liberty Global’s Annual Report on Form 10-K as RICK WESTERMAN filed with the Securities and Exchange Commission Senior Vice President, Investor Relations is available without charge (except for exhibits). and Corporate Communications Please contact Investor Relations. DEAR SHAREHOLDERS, Liberty Global marked many achievements in 2008, despite the look to consolidate smaller cable systems in key markets, growing economic headwinds that we faced in several countries and in 2008 we were able to acquire systems in Japan, the and the decline in our stock price amidst turbulent financial Czech Republic and Austria, among other countries, that added markets. We made considerable progress on all three of our another 340,000 subscribers in total to our global footprint. core strategies to drive value creation – industry-leading organic Turning to capital structure management, our balance sheet and growth, opportunistic and accretive M&A activity, and active liquidity position remain strong as a result of minimal near-term capital structure management to enhance equity returns. Since debt amortizations, a low cost of capital, and the fact that we are our Company’s formation in 2005, these three core elements of well hedged on interest rates and foreign currencies. We entered our strategy remain unchanged, and we continue to deliver strong 2009 strongly positioned with ample liquidity, including cash and results with this focus. unused borrowing capacity of over $2.0 billion, and we remain In terms of our operating performance, we delivered record committed to driving shareholder value; in fact we have reduced growth of 2.8 million new subscribers to our advanced digital our shares outstanding by over 40% since June 2005. During products and services, led by more than 1.4 million digital cable that time, we have repurchased $6.0 billion of equity in total, additions. This result was a key factor driving revenue growth including over $2.2 billion in 2008 alone. We believe that the of 17% to $10.6 billion and operating cash flow (OCF) growth continuation of our buyback program, particularly in light of our of 27% to $4.5 billion for the full year. Leveraging our scale equity’s attractive valuation, is an important step in maximizing efficiencies drove an OCF margin increase of 330 basis points shareholder value over the long term. to a record 42.9% for the full year. Adjusting to neutralize the As we look ahead to the rest of 2009, we remain confident in our impact of acquisitions and foreign currency movements, rebased ability to deliver real value to our customers and enhance their OCF growth was 14% and consistent with our guidance to Wall digital lives. Despite challenging economic conditions that persist Street. Perhaps most importantly, we generated free cash flow of in many of our markets, we benefit greatly from the diversity of $763 million in 2008, an 82% improvement compared to the a global distribution platform that spans 15 different markets on prior year. We believe that our operating performance on nearly four continents. By leveraging that scale and the many talents of all of these key metrics was significantly better than our cable our 22,000 employees worldwide, we expect 2009 will once again peer group. be a solid growth year for Liberty Global. On the M&A front, LGI had a busy 2008 even though credit We appreciate your continued support. markets were effectively closed for most of the year, as we acquired over 1.4 million subscribers and completed over Sincerely, 20 transactions. Of particular note, our subsidiaries J:COM in Japan and Telenet in Belgium each completed important transactions. J:COM improved its market position in the Tokyo area with the acquisition of Mediatti, and Telenet completed the Interkabel acquisition, providing 100% network coverage of the Dutch-speaking Flanders region. Those two transactions John C. Malone Michael T. Fries Chairman of the Board President and alone added over one million subscribers to LGI’s roster in Chief Executive Offi cer two of our most important markets. In addition, we always April 6, 2009 1 OPERATING HIGHLIGHTS(1)(2) in thousands: 2006 2007 2008 Homes Passed 27,637 30,210 34,275 Two-way Homes Passed 21,246 24,529 29,184 Voice – Homes Serviceable 20,463 24,848 28,040 Internet – Homes Serviceable 21,283 25,420 29,245 Video Subscribers 12,943 14,741 15,608 Penetration (of homes passed) 47% 49% 46% Voice Subscribers 2,706 3,916 4,644 Penetration (of homes serviceable) 13% 16% 17% Internet Subscribers 3,784 5,378 6,201 Penetration (of homes serviceable) 18% 21% 21% Total RGUs 19,433 24,035 26,454 Total Customer Relationships 13,843 16,165 16,909 RGUs per customer relationship 1.40 1.49 1.56 FINANCIAL HIGHLIGHTS(2) $ in millions: 2006 2007 2008 Revenue UPC Broadband Division: Western Europe $ 2,378 $ 2,745 $ 3,092 Central and Eastern Europe 881 1,183 1,356 Central and corporate operations 18 11 10 UPC Broadband Division 3,277 3,939 4,458 Telenet (Belgium) 44 1,291 1,509 J:COM (Japan)