Liberty Cablevision of Puerto Rico Llc
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LIBERTY CABLEVISION OF PUERTO RICO LLC Condensed Consolidated Financial Statements September 30, 2016 LIBERTY CABLEVISION OF PUERTO RICO LLC 279 Ponce de Leon Ave. San Juan, Puerto Rico 00918-1485 LIBERTY CABLEVISION OF PUERTO RICO LLC TABLE OF CONTENTS Page Number CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 (unaudited) ... 1 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 3 2016 and 2015 (unaudited).......................................................................................................................... Condensed Consolidated Statement of Changes in Members’ Capital for the Nine Months Ended September 4 30, 2016 (unaudited).................................................................................................................................... Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 5 2015 (unaudited).......................................................................................................................................... Notes to Condensed Consolidated Financial Statements (unaudited) ............................................................ 6 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 18 OF OPERATIONS............................................................................................................................................. LIBERTY CABLEVISION OF PUERTO RICO LLC CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) September 30, December 31, 2016 2015 in millions ASSETS Current assets: Cash and cash equivalents........................................................................................................... $ 50.6 $ 65.7 Trade receivables and unbilled revenue, net............................................................................... 17.1 19.0 Prepaid expenses ......................................................................................................................... 7.5 4.6 Other current assets (note 9) ....................................................................................................... 2.1 16.3 Total current assets ................................................................................................................... 77.3 105.6 Property and equipment, net (note 6) ............................................................................................ 382.1 368.7 Goodwill........................................................................................................................................ 277.7 277.7 Cable television franchise rights ................................................................................................... 584.1 584.1 Customer relationships, net (note 6).............................................................................................. 106.2 117.3 Other assets, net (notes 4, 8 and 9)................................................................................................ 16.9 19.0 Total assets................................................................................................................................ $ 1,444.3 $ 1,472.4 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 LIBERTY CABLEVISION OF PUERTO RICO LLC CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued) (unaudited) September 30, December 31, 2016 2015 in millions LIABILITIES AND MEMBERS’ CAPITAL Current liabilities: Accounts payable (note 9)........................................................................................................... $ 18.0 $ 15.6 Accrued capital expenditures ...................................................................................................... 12.8 8.1 Deferred revenue and advance payments from subscribers........................................................ 12.1 13.2 Third-party accrued interest ........................................................................................................ 10.9 10.7 Derivative instruments (note 4)................................................................................................... 7.3 — Current portion of debt and capital lease obligations (note 7).................................................... 0.2 0.5 Other accrued and current liabilities ........................................................................................... 21.7 47.0 Total current liabilities.............................................................................................................. 83.0 95.1 Long-term debt and capital lease obligations (note 7): Third-party .................................................................................................................................. 926.7 925.0 Related-party (note 9) ................................................................................................................. — 16.0 Other long-term liabilities (notes 4 and 9) .................................................................................... 30.0 17.5 Total liabilities.......................................................................................................................... 1,039.7 1,053.6 Commitments and contingencies (notes 4, 8, and 10) Members’ capital: Members’ capital (notes 3, 8 and 9)............................................................................................ 472.6 486.8 Cayman Holding Loan Receivable (note 9)................................................................................ (68.0) (68.0) Members’ capital after deducting loan receivable from member............................................. 404.6 418.8 Total liabilities and members’ capital..................................................................................... $ 1,444.3 $ 1,472.4 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 LIBERTY CABLEVISION OF PUERTO RICO LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three months ended Nine months ended September 30, September 30, 2016 2015 2016 2015 in millions Revenue (note 11) ................................................................................................... $ 104.8 $ 104.5 $ 315.6 $ 274.1 Operating costs and expenses: Operating (other than depreciation and amortization).......................................... 42.4 45.3 130.7 120.6 Selling, general and administrative (SG&A) (including share-based compensation) (notes 9 and 10) ........................................................................ 7.2 13.2 34.2 33.7 Depreciation and amortization.............................................................................. 20.9 20.7 62.8 53.5 Impairment, restructuring and other operating items, net (note 3)....................... 0.1 0.2 1.2 7.0 70.6 79.4 228.9 214.8 Operating income ............................................................................................... 34.2 25.1 86.7 59.3 Non-operating income (expense): Interest expense: Third-party ......................................................................................................... (12.9) (13.2) (38.6) (36.7) Related-party (note 9)......................................................................................... — (0.2) (0.6) (1.2) Realized and unrealized gains (losses) on derivative instruments, net (note 4) ... 4.3 (16.3) (23.9) (19.3) Other expense, net ................................................................................................ (0.1) (0.2) (0.1) (0.2) (8.7) (29.9) (63.2) (57.4) Net earnings (loss) ........................................................................................... $ 25.5 $ (4.8) $ 23.5 $ 1.9 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 LIBERTY CABLEVISION OF PUERTO RICO LLC CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ CAPITAL (unaudited) Cayman Members’ capital Class A Class B Total Holding after deducting preferred common members’ Loan loan receivable units units capital Receivable from member in millions Balance at January 1, 2016 .......................................... $ 257.2 $ 229.6 $ 486.8 $ (68.0) $ 418.8 Net earnings............................................................... — 23.5 23.5 — 23.5 Priority Return (note 8) ............................................. 10.9 (10.9) — — — Cash and non-cash distributions to members (notes 8 and 9) .................................................................. (33.9) (3.7) (37.6) — (37.6) Other, net (note 9)...................................................... — (0.1) (0.1) — (0.1) Balance at September 30, 2016.................................... $ 234.2 $ 238.4 $ 472.6 $ (68.0) $ 404.6 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 LIBERTY CABLEVISION OF PUERTO RICO LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine months ended September 30, 2016 2015 in millions Cash flows from operating activities: Net earnings................................................................................................................................ $ 23.5 $ 1.9 Adjustments to reconcile net earnings to net cash provided by operating activities: Share-based compensation expense ......................................................................................... 2.2 0.9 Depreciation and amortization