T Liberty Global

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T Liberty Global LIBERTY GLOBAL THE COMPANY 2009 ANNUALOF REPORT CHOICE OPerating HIgHLIgHTS (1) (2) in thousands: 2007 2008 2009 Homes Passed 30,013 34,051 34,783 Two-way Homes Passed 24,388 29,015 30,176 Voice - Homes Serviceable 24,706 27,871 29,748 Internet - Homes Serviceable 25,278 29,076 30,439 Video Subscribers 14,586 15,447 15,190 Penetration (of homes passed) 49 % 45 % 44 % Voice Subscribers 3,906 4,620 5,230 Penetration (of homes serviceable) 16 % 17 % 18 % TAbLe Internet Subscribers 5,333 6,146 6,728 Penetration (of homes serviceable) 21 % 21 % 22 % OF Total RgUs 23,825 26,212 27,148 CONTeNTS Total Customer Relationships 16,010 16,748 16,642 RgUs per customer relationship 1.49 1.57 1.63 1 2009 Highlights 2 Letter to Shareholders FINANCIAL HIgHLIgHTS (2) 5 Product and Technology Strategy $ in millions: 2007 2008 2009 8 Corporate Responsibility Revenue UPC broadband Division: 10 Global Operations Western europe $ 2,745 $ 3,092 $ 2,996 Inside Back Cover Central and eastern europe 1,133 1,292 1,113 Central operations 11 1 1 9 Board of Directors, UPC broadband Division 3,888 4,395 4,117 Executive Officers & Shareholder Information Telenet (belgium) 1,291 1,509 1,686 J:COM (Japan) 2,250 2,854 3,572 VTR (Chile) 635 714 701 AUSTAR (Australia) 475 535 534 Corporate and other 501 576 549 Intersegment eliminations (87 ) (85 ) (78 ) Forward-Looking Statements Total LgI $ 8,953 $ 10,498 $ 11,080 This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expectations with respect Operating Cash Flow (OCF) to our future growth prospects. See pages I-5, I-6 and I-7 of the enclosed Annual Report on Form 10-K for a description of other forward-looking statements included in UPC broadband Division: this report and certain of the risks and uncertainties that could cause actual results to Western europe $ 1,309 $ 1,626 $ 1,622 differ materially from those expressed or implied by such statements. Central and eastern europe 568 670 566 Notes on defined terms Central operations (180 ) (172 ) (157 ) Unless otherwise indicated in this report, subscriber growth statistics exclude subscribers of acquired entities at the date of acquisition, but include the impact of UPC broadband Division 1,698 2,123 2,031 changes in subscribers from the date of acquisition. These statistics are presented on a net basis. Telenet (belgium) 597 727 833 For our definition of operating cash flow or OCF and the related reconciliation, see note 20 to our consolidated financial statements in the enclosed Annual J:COM (Japan) 912 1,191 1,546 Report on Form 10-K. Rebased revenue and OCF growth is presented to VTR (Chile) 249 296 288 show growth on a comparable basis by neutralizing the effects of acquisitions, dispositions and foreign currency exchange rate fluctuations. For purposes of AUSTAR (Australia) 146 177 185 calculating rebased revenue and OCF growth, we have adjusted our historical Corporate and other (60 ) (13 ) (6 ) 2008 revenue and OCF to (i) include the pre-acquisition revenue and OCF of Total LgI $ 3,542 $ 4,500 $ 4,878 certain entities acquired during 2008 and 2009 in the respective 2008 rebased amounts to the same extent that the revenue and OCF of such entities are included in our 2009 results, (ii) exclude the pre-disposition revenue and OCF of certain Loss from continuing operations $ (197 ) $ (619 ) $ (15 ) entities that were disposed of during 2008 and 2009 from our rebased amounts to the same extent that such entities were excluded from our results in 2009 Net earnings (loss) $ (183 ) $ (602 ) $ 14 and (iii) reflect the translation of our 2008 rebased amounts at the applicable average exchange rates that were used to translate our 2009 results. Our OCF Net loss attributable to LgI stockholders $ (423 ) $ (789 ) $ (412 ) margin is calculated by dividing OCF by total revenue for the applicable period. We define Free Cash Flow or FCF as net cash provided by operating activities of our continuing operations less capital expenditures of our continuing operations, (1) Please see page I-9 of the enclosed Annual Report on Form 10-K for definitions of subscriber terms used in the Operating Highlights section. each as reported in our consolidated statements of cash flows. For additional information concerning these definitions and calculations, please see our earnings (2) When reviewing and analyzing our operating results and statistics, it is important to keep in mind that other third party entities own significant release dated February 24, 2010. interests in VTR global Com SA. (VTR) and Austar United Communications Limited (Austar). For additional information, see note 20 to our consolidated financial statements in the enclosed Annual Report on Form 10-K. 1 REVEnUE BY REGIOn ($ in millions) Other Australia $478 $534 Chile $701 2009 AnnUAL REPORT Western Europe $4,682 Central & Eastern Europe $1,113 REVEnUE ($ in millions) Japan $3,572 CUSTOmER PRODUCT BUnDLInG Double-Play 20% OPERATInG CASH FLOW ($ in millions) Triple-Play 22% Single-Play 58% Average Products Per Customer: 1.63 HOmES PASSED (in thousands) TOTAL RGUS (in thousands) 2 LIBERTY GLOBAL TO OUR SHAREHOLDERS Dear Shareholders, In 2009 Liberty Global established itself firmly as one of the world’s most innovative and strategically adept cable operators. We made significant progress across each of our three key value drivers — generating industry-leading organic growth from our core cable operations, seizing accretive M&A opportunities, and actively managing our balance sheet and capital structure to drive equity returns. These core components of our strategy remain unchanged since the Company’s formation in 2005, and we continue to deliver strong results with this focus. On the operating front, we launched hundreds of new and innovative products in 2009 that are enriching the digital lives of our 17 million customers around the world. Despite challenges posed by the global recession, we added a record 2.8 million new subscribers to our advanced digital services. This, in turn, fueled solid rebased revenue growth of 4% to $11.1 billion. Scale and cost efficiencies helped drive even faster rebased operating cash flow (OCF) growth of 7% CEO to $4.9 billion, while free cash flow (FCF) increased 47% to D n A T $1.1 billion for the full year. n R Michael T. Fries P ESIDE n . A c m H John C AIR Malone 3 PORT E R AL U n n On the M&A front, we concluded two important transactions A early this year. In January 2010, we completed the $5.7 billion 2 0 0 9 acquisition for 100% of Unitymedia, the second largest cable operator in Germany. Unity is a perfect fit for LGI for a whole host of reasons — footprint, scale, synergies and untapped growth potential in one of Europe’s fastest growing cable markets. Then in February 2010, we completed the strategic disposal of our 38% interest in J:COM for gross proceeds of $4.0 billion — a 65% premium to the implied value of our stake based on J:COM’s stock price at the time of signing. The J:COM transaction closes the chapter on our involvement in Japan, where we helped create the country’s largest cable operator. Our decision to exit reflects our determination to pursue transactions that deliver meaningful financial returns for the benefit of shareholders. The net effect of the Unitymedia and J:COM transactions will enhance the Company’s focus on our European operations, and significantly increase our financial and strategic flexibility. Our balance sheet has never been stronger with more than $3.0 billion of cash at December 31, 2009. After extending approximately $9 billion of debt maturities last year and, taking into account the Unitymedia and J:COM transactions, 95% of our debt now matures in 2013 and beyond. We remain committed to our levered equity strategy, and expect to continue our focus on stock buybacks as the most efficient way to return capital to our shareholders. In fact, we’ve repurchased $6.3 billion of our equity since 2005 and reduced our shares outstanding by more than 43%. 4 LIBERTY GLOBAL The combination of steady organic growth, accretive M&A activity, and smart balance sheet management was recognized by the market, with our stock price increasing 38% last year. Given the positive trends we see emerging from our next generation digital video and broadband products, along with a cash-rich and prudently-managed balance sheet, we believe that we are well-positioned to drive equity returns in 2010 and beyond. Of course, we could not execute on our strategic priorities without the dedication and commitment of our 23,000 employees around the world. Liberty Global’s Board of Directors and the entire management team remain focused on driving superior shareholder returns over the long term. We appreciate your continued support. Sincerely, John C. Malone Michael T. Fries Chairman of the Board President and CEO March 10, 2010 5 PORT E R AL U n n A 2 0 0 9 PRODUCT AnD TECHnOLOGY Strategy A key goal for 2010 is extending our track record of innovation by launching new cable products that help improve and simplify the digital lives of our customers. Our operating focus remains on driving incremental penetration of our advanced services — digital video, voice, and broadband internet — which together represent more than 70% of our subscriber base. Strong demand for our core, triple-play products, along with strengthened and simplified marketing offers, led to record growth for advanced services with over 2.8 million new subscriber additions in 2009.
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