Liberty .(LBTYA) - 2019 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents Liberty Global's unaudited condensed consolidated financial information ITEM 1. FINANCIAL STATEMENTS This section presents Liberty Global's unaudited condensed consolidated financial statements and detailed notes for 2019 and 2018 periods Condensed Consolidated Balance Sheets Total assets and liabilities increased from December 2018 to June 2019, while total equity decreased Balance Sheet Summary | Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:------------------------|:----------------------------|:--------------------------------| | Total Assets | $53,987.0 | $53,153.6 | | Total Liabilities | $50,316.3 | $49,005.3 | | Total Equity | $3,670.7 | $4,148.3 | Condensed Consolidated Statements of Operations Net earnings significantly decreased for the three months but improved for the six months ended June 30, 2019 Statements of Operations Summary | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:------------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Revenue | $2,850.4 | $3,015.6 | $5,718.4 | $6,079.1 | | Operating income | $148.7 | $264.1 | $254.2 | $381.7 | | Earnings (loss) from continuing operations | ($339.6) | $669.0 | ($646.5) | ($698.2) | | Earnings from discontinued operations, net of taxes | $315.5 | $281.5 | $638.1 | $470.1 | | Gain on disposal of discontinued operations, net of taxes | $106.6 | — | $106.6 | — | | Net earnings (loss) | $82.5 | $950.5 | $98.2 | ($228.1) | | Net earnings (loss) attributable to Liberty Global shareholders | $53.0 | $912.6 | $60.0 | ($273.9) | | Basic and diluted EPS from continuing operations | ($0.50) | $0.80 | ($0.93) | ($0.93) | Condensed Consolidated Statements of Comprehensive Earnings (Loss) Comprehensive earnings improved for the three months and comprehensive loss narrowed for the six months ended June 30, 2019 Statements of Comprehensive Earnings (Loss) Summary | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:------------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Net earnings (loss) | $82.5 | $950.5 | $98.2 | ($228.1) | | Other comprehensive loss, net of taxes | ($6.3) | ($1,064.0) | ($141.3) | ($471.8) | | Comprehensive earnings (loss) | $76.2 | ($113.5) | ($43.1) | ($699.9) | | Comprehensive earnings (loss) attributable to Liberty Global shareholders | $46.5 | ($149.2) | ($81.7) | ($743.5) | Condensed Consolidated Statements of Equity Total equity attributable to shareholders decreased due to share repurchases and comprehensive losses Statements of Equity Summary | Metric | January 1, 2019 (as adjusted) (in millions) | March 31, 2019 (in millions) | June 30, 2019 (in millions) | |:------------------------------------------------|:--------------------------------------------|:-----------------------------|:----------------------------| | Total Liberty Global shareholders | $4,682.6 | $4,360.1 | $4,133.5 | | Net earnings | $7.0 | $53.0 | | | Other comprehensive loss, net of taxes | ($135.2) | ($6.5) | | | Repurchase and cancellation of ordinary shares | ($214.1) | ($288.4) | | | Share-based compensation | $55.6 | $70.0 | | Condensed Consolidated Statements of Cash Flows Operating cash flow decreased, while cash used in investing and financing activities significantly decreased Statements of Cash Flows Summary | Metric | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:------------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Net cash provided by operating activities | $1,628.5 | $2,128.1 | | Net cash used by investing activities | ($682.7) | ($893.3) | | Net cash used by financing activities | ($1,595.4) | ($3,029.8) | | Net decrease in cash and cash equivalents and restricted cash | ($204.5) | ($803.7) | | Cash and cash equivalents and restricted cash, end of period | $1,293.8 | $879.3 | - Repayments and repurchases of debt and finance lease obligations were ($3,838.8) million in 2019, compared to ($3,828.8) million in 2018[18] - Borrowings of debt increased to $2,800.7 million in 2019 from $2,146.5 million in 2018[18] - Repurchase of Liberty Global ordinary shares decreased significantly to ($502.5) million in 2019 from ($1,276.2) million in 2018[18] Notes to Condensed Consolidated Financial Statements Detailed notes provide explanations and disclosures for accounting policies, acquisitions, debt, equity, and segment reporting (1) Basis of Presentation Liberty Global provides communication services in Europe, with continuing operations in key regions and several discontinued operations - Liberty Global is an international provider of video, broadband internet, fixed-line telephony, and mobile communications services to residential and business customers in Europe[19] - Continuing operations include Virgin Media (U.K./Ireland), Telenet (Belgium), UPC Holding (Switzerland/Poland/Slovakia), and a 50% noncontrolling interest in VodafoneZiggo JV (Netherlands)[20] - Operations in Austria, Germany, Romania, Hungary, Czech Republic, and UPC DTH are presented as discontinued operations[21] (2) Accounting Changes and Recent Accounting Pronouncements The company adopted ASU 2016-02 (Leases) in 2019, recognizing ROU assets and lease liabilities, and is evaluating other pronouncements - Adopted ASU 2016-02 (Leases) on January 1, 2019[27] Impact of ASU 2016-02 Adoption (January 1, 2019) | Impact of ASU 2016-02 Adoption (January 1, 2019) | Amount (in millions) | |:-------------------------------------------------|:---------------------| | ROU assets (operating leases) | $545.1 | | Lease liabilities (operating leases) | $558.1 | | Decrease to accumulated deficit | $1.2 | - Evaluating the effect of ASU 2018-15 (Cloud Computing Arrangements) and ASU 2019-02 (Costs of Films and License Agreements) on consolidated financial statements[30][31] (3) Revenue Recognition and Related Costs Revenue recognition involves managing contract balances, with deferred revenue decreasing and contract costs amortized Contract Balance Metrics | Contract Balance Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:------------------------|:----------------------------|:--------------------------------| | Trade receivables, net | $1,298.4 | $1,342.1 | | Contract assets | $42.6 | $44.3 | | Deferred revenue | $822.6 | $877.9 | - Deferred revenue decreased by $55.3 million for the six months ended June 30, 2019, primarily due to $791.7 million of revenue recognized from the December 31, 2018 balance[35] Contract Costs Metrics | Contract Costs Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:----------------------|:----------------------------|:--------------------------------| | Aggregate assets | $72.7 | $73.0 | | Amortization (6 months ended June 30, 2019) | $48.7 | $51.3 | (4) Acquisitions and Dispositions The company completed several acquisitions and dispositions, including De Vijver Media and UPC DTH, with the Vodafone Disposal Group sale finalized - Acquired remaining 50% of De Vijver Media for €52.5 million ($58.9 million) on June 3, 2019, recognizing a $25.7 million gain[38] - Completed sale of UPC DTH on May 2, 2019, for €130.5 million ($145.8 million), recognizing a $106.6 million gain[46][47] - Completed sale of Vodafone Disposal Group (Germany, Romania, Hungary, Czech Republic) to Vodafone on July 31, 2019, for net cash proceeds of €10.1 billion ($11.3 billion)[44] - Pending sale of UPC Switzerland to Sunrise for a total enterprise value of $6.3 billion, subject to regulatory and shareholder approval[40][42] (5) Investments Total investments decreased, with equity method investments, primarily VodafoneZiggo JV, contributing to net losses from affiliates Investment Summary | Investment Type | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:----------------|:----------------------------|:--------------------------------| | Equity (a) | $3,875.0 | $3,947.0 | | Fair value | $1,070.0 | $1,174.8 | | Total | $4,945.0 | $5,121.8 | Share of Results of Affiliates, Net | Share of Results of Affiliates, Net | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | VodafoneZiggo JV | ($40.0) | ($63.2) | ($102.3) | ($90.0) | | Other | ($29.3) | ($19.1) | ($37.9) | ($28.8) | | Total | ($69.3) | ($82.3) | ($140.2) | ($118.8) | - The VodafoneZiggo JV is experiencing significant competition, particularly in mobile operations, which could lead to future impairment charges[70] (6) Derivative Instruments Derivative instruments manage interest rate and foreign currency risks, with total assets and liabilities increasing and net gains reported Derivative Instrument Balances | Derivative Instrument Type | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:---------------------------|:----------------------------|:--------------------------------| | Total Derivative Assets | $2,780.5 | $2,496.7 | | Total Derivative Liabilities | $1,842.8 | $1,370.7 | Realized & Unrealized Gains on Derivative Instruments, Net | Realized & Unrealized Gains on Derivative Instruments, Net | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:-----------------------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Cross-currency and interest rate derivative contracts | $69.1 | $870.1 | ($18.2) | $508.2 | | Equity-related derivative instruments | $95.0 | ($202.4) | $109.8 | ($57.2) | | Foreign currency forward and option contracts | ($11.6) | $8.3 | ($22.2) | $13.9 | | Total | $152.9 | $675.5 | $70.1 | $464.2 | - Net cash received related to derivative instruments was $258.6 million for the six months ended June 30, 2019, compared to $256.3 million in the prior-year period[78] (7) Fair Value Measurements Fair value measurements for assets and liabilities are categorized by input levels, incorporating credit risk adjustments - Fair value measurements are categorized into Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[95] Fair Value Measurement (June 30, 2019) | Fair Value Measurement (June 30, 2019) | Total (in millions) | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | |:---------------------------------------|:--------------------|:----------------------|:----------------------|:----------------------| | Total Assets | $3,850.5 | $624.1 | $1,924.5 | $1,301.9 | | Total Liabilities | $2,068.4 | — | $2,015.2 | $53.2 | - A Monte Carlo based approach is used to incorporate credit risk valuation adjustments in fair value measurements[96] (8) Long-lived Assets Net property and equipment decreased, goodwill increased due to an acquisition, and intangible assets decreased from amortization Long-lived Asset Metrics | Long-lived Asset Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:------------------------|:----------------------------|:--------------------------------| | Property and equipment, net | $13,622.9 | $13,878.9 | | Goodwill | $13,731.8 | $13,715.8 | | Intangible assets subject to amortization, net | $819.3 | $1,031.2 | - Goodwill increased by $48.8 million due to the De Vijver Media acquisition and decreased by $32.8 million due to foreign currency translation adjustments[106] - Amortization of intangible assets was $48.7 million for the six months ended June 30, 2019[36] (9) Debt Total debt and finance lease obligations were $29.9 billion with a 4.54% weighted average interest rate, following recent financing activities Debt Metrics | Debt Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | |:------------------------------------------------|:----------------------------|:--------------------------------| | Total debt before deferred financing costs, discounts and premiums | $29,402.0 | $29,315.3 | | Weighted average interest rate (a) | 4.54% | | | Total debt and finance lease obligations | $29,916.1 | $29,805.2 | | Current maturities of debt and finance lease obligations | $3,680.5 | $3,615.2 | - Virgin Media issued $825.0 million and £300.0 million in senior secured notes in May 2019, using proceeds to redeem existing notes and recognizing a $48.0 million loss on debt modification and extinguishment[120] - Telenet prepaid €106.0 million ($120.4 million) of its term loan in July 2019, funded by existing cash and a revolving credit facility draw-down[122] (10) Leases Following ASU 2016-02 adoption, ROU assets and lease liabilities were recognized, with total lease expense of $135.9 million Lease Metrics (June 30, 2019) | Lease Metric (June 30, 2019) | Amount (in millions) | |:-----------------------------|:---------------------| | Total ROU assets | $1,068.0 | | Total lease liabilities | $1,173.8 | | Weighted average remaining lease term (operating) | 7.9 years | | Weighted average remaining lease term (finance) | 23.4 years | | Weighted average discount rate (operating) | 4.0% | | Weighted average discount rate (finance) | 6.1% | Lease Expense (6 Months Ended June 30, 2019) | Lease Expense (6 Months Ended June 30, 2019) | Amount (in millions) | |:---------------------------------------------|:---------------------| | Total finance lease expense | $62.3 | | Operating lease expense | $67.3 | | Short-term lease expense | $4.0 | | Variable lease expense | $2.3 | | Total lease expense | $135.9 | - Cash outflows from operating and finance leases totaled $121.0 million for the six months ended June 30, 2019[136] (11) Income Taxes Income tax expense significantly decreased, influenced by permanent differences and valuation allowances, with substantial unrecognized tax benefits Income Tax Metrics | Income Tax Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Total income tax benefit (expense) | ($26.8) | $92.8 | ($54.6) | ($617.2) | | Computed "expected" tax benefit (expense) (a) | $59.5 | ($109.5) | $112.5 | $15.4 | - Unrecognized tax benefits totaled $873.1 million at June 30, 2019, with $701.0 million having a favorable impact on the effective income tax rate if recognized[143] - Potential reductions to unrecognized tax benefits of up to $280.0 million are reasonably possible within the next 12 months, with approximately $110.0 million positively impacting the effective tax rate[144] (12) Equity The company repurchased $502.5 million in shares and plans new tender offers for up to $2.5 billion Share Repurchase (6 Months Ended June 30, 2019) | Share Repurchase (6 Months Ended June 30, 2019) | Class A Shares | Class C Shares | Aggregate (in millions) | |:------------------------------------------------|:---------------|:---------------|:------------------------| | Number of shares repurchased | 346,300 | 19,975,282 | | | Aggregate purchase price | | | $502.5 | - Remaining authorized amount for share repurchases was $66.4 million at June 30, 2019[147] - Intention to commence modified Dutch auction cash tender offers for up to $2.5 billion of Class A and Class C ordinary shares, expected around August 12, 2019[148] (13) Share-based Compensation Share-based compensation expense significantly increased due to performance-based incentive awards, including new CEO and PSU awards Share-based Compensation Expense | Share-based Compensation Expense | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | |:---------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------|:-------------------------------------------| | Performance-based incentive awards | $38.0 | $8.0 | $67.9 | $16.7 | | Non-performance based incentive awards | $29.0 | $24.3 | $51.0 | $46.3 | | Other | $12.6 | $13.4 | $22.5 | $20.5 | | Total Liberty Global | $79.6 | $45.7 | $141.4 | $83.5 | | Total | $87.0 | $45.5 | $154.3 | $88.2 | - The 2019 CEO Performance Award includes 670,000 RSAs and 1,330,000 PSUs (Class B ordinary shares), vesting on December 31, 2019, and May 15, 2020/2021, respectively, based on performance conditions[154] - The 2019 PSUs are based on achieving a specified compound annual growth rate (CAGR) for Adjusted OIBDA over a two-year period ending December 31, 2020, with vesting in April and October 2021[155] (14) Restructuring Liability Restructuring liability increased to $46.9 million, with charges primarily for employee severance and termination costs Restructuring Liability Metrics | Restructuring Liability Metric | January 1, 2019 (as adjusted) (in millions) | June 30, 2019 (in millions) | |:-------------------------------|:--------------------------------------------|:----------------------------| | Total restructuring liability | $38.7 | $46.9 | | Current portion | | $35.9 | | Noncurrent portion | | $11.0 | - Restructuring charges for the six months ended June 30, 2019, were $55.5 million, including $52.1 million for employee severance and termination costs[157][158] - Cash paid for restructuring activities was $46.3 million during the six months ended June 30, 2019[157] (15) Earnings or Loss per Share The company reported basic and diluted losses from continuing operations, with potentially dilutive instruments excluded due to anti-dilutive effect EPS Metrics | EPS Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | |:------------------------------------------------|:-----------------------------|:-----------------------------|:-----------------------------|:-----------------------------| | Net earnings (loss) from continuing operations attributable to Liberty Global shareholders | ($369.1) (in millions) | $632.9 (in millions) | ($684.7) (in millions) | ($740.4) (in millions) | | Basic and diluted EPS from continuing operations attributable to Liberty Global shareholders | ($0.50) | $0.80 | ($0.93) | ($0.93) | - Weighted average ordinary shares outstanding for basic and diluted EPS were 735.4 million and 738.7 million for the three and six months ended June 30, 2019, respectively[161] - Potentially dilutive instruments (options, SARs, RSUs, RSAs, PSUs) totaling 82.7 million shares for the three months and 10.8 million PSUs for the six months ended June 30, 2019, were excluded from diluted EPS due to anti-dilutive effect[161] (16) Commitments and Contingencies Significant off-balance sheet commitments total $5.9 billion, with ongoing legal and regulatory proceedings whose outcomes are uncertain Commitment Types (June 30, 2019) | Commitment Type (June 30, 2019) | Total (in millions) | |:--------------------------------|:--------------------| | Programming commitments | $2,828.9 | | Network and connectivity commitments | $2,053.1 | | Purchase commitments | $1,042.1 | | Other commitments | $38.9 | | Total | $5,963.0 | - Programming and copyright costs aggregated $847.0 million for the six months ended June 30, 2019, and are expected to rise due to content expansion and rate increases[164] - The Interkabel Acquisition litigation in Belgium, where Proximus is seeking €1.4 billion ($1.6 billion) in damages, is currently under appeal to the Belgian Supreme Court[171][172] - Virgin Media's VAT application is challenged by U.K. tax authorities, with a maximum exposure of £47 million ($60 million) and an appeal pending for a £63.7 million ($83.1 million) provision recorded in 2018[176][177] (17) Segment Reporting Reportable segments include U.K./Ireland, Belgium, Switzerland, CEE, and VodafoneZiggo JV, with Adjusted OIBDA as key performance measure - Reportable segments: U.K./Ireland, Belgium, Switzerland, Central and Eastern Europe (Poland and Slovakia), and nonconsolidated VodafoneZiggo JV[185][186] Segment Performance (6 Months Ended June 30, 2019) | Segment (6 Months Ended June 30, 2019) | Revenue (in millions) | Adjusted OIBDA (in millions) | |:---------------------------------------|:----------------------|:-----------------------------| | U.K./Ireland | $3,305.3 | $1,411.5 | | Belgium | $1,425.1 | $688.4 | | Switzerland | $631.0 | $332.8 | | Central and Eastern Europe | $238.2 | $115.1 | | Central and Corporate | $120.9 | ($175.2) | | Intersegment eliminations | ($2.1) | $1.4 | | Total Consolidated | $5,718.4 | $2,374.0 | | VodafoneZiggo JV | $2,178.4 | $981.4 | - Adjusted OIBDA is defined as operating income before depreciation and amortization, share-based compensation, significant litigation provisions, and impairment, restructuring, and other operating items[183] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes Liberty Global's financial condition and operating results, covering forward-looking statements, segment performance, and liquidity Forward-looking Statements The report contains forward-looking statements subject to various risks and uncertainties, cautioning against undue reliance - Statements in this report are forward-looking and involve risks and uncertainties that could cause actual results to differ materially[203] - Key risk factors include economic conditions, competitive environment, currency and interest rate fluctuations, regulatory changes, and the ability to manage technological changes and close transactions[203][205] - The broadband distribution and mobile service industries are rapidly changing, adding significant risk to forward-looking statements[206] Overview Liberty Global provides communication services in Europe, expanding its network amidst significant competition and regulatory challenges - Continuing operations serve 25,414,100 homes passed and 25,259,500 revenue generating units (RGUs) at June 30, 2019[210] - Network extension programs connected approximately 296,000 additional residential and commercial premises in the first six months of 2019[211] - Significant competition, macroeconomic factors, and regulatory developments (including Brexit uncertainty) are adversely impacting revenue, RGUs, and ARPU[212][213] Material Changes in Results of Operations Consolidated revenue and Adjusted OIBDA declined due to foreign currency and organic factors, with volatile non-operating items impacting net earnings - Consolidated revenue decreased $165.2 million (5.5%) and $360.7 million (5.9%) for the three and six months ended June 30, 2019, respectively, compared to 2018[259] - Organic consolidated revenue decreased $38.3 million (1.3%) and $53.6 million (0.9%) for the three and six months ended June 30, 2019, respectively[259] - Net earnings (loss) from continuing operations were ($339.6) million and ($646.5) million for the three and six months ended June 30, 2019, respectively[323][325] Discussion and Analysis of our Reportable Segments Reportable segments experienced revenue and Adjusted OIBDA declines due to foreign exchange and competitive pressures - Significant competition in all markets adversely impacts the ability to increase or maintain RGUs and ARPU[222] Segment Performance (3 Months Ended June 30, 2019) | Segment (3 Months Ended June 30, 2019) | Revenue (in millions) | Organic Change (%) | Adjusted OIBDA (in millions) | Organic Change (%) | |:---------------------------------------|:----------------------|:-------------------|:-----------------------------|:-------------------| | U.K./Ireland | $1,644.0 | 0.4% | $703.2 | (2.5)% | | Belgium | $713.2 | (2.1)% | $349.4 | (2.6)% | | Switzerland | $315.0 | (3.6)% | $169.7 | (8.9)% | | Central and Eastern Europe | $119.1 | 2.9% | $57.9 | (0.5)% | | Total Consolidated | $2,850.4 | (1.3)% | $1,190.7 | (4.0)% | Segment Performance (6 Months Ended June 30, 2019) | Segment (6 Months Ended June 30, 2019) | Revenue (in millions) | Organic Change (%) | Adjusted OIBDA (in millions) | Organic Change (%) | |:---------------------------------------|:----------------------|:-------------------|:-----------------------------|:-------------------| | U.K./Ireland | $3,305.3 | 0.1% | $1,411.5 | (1.6)% | | Belgium | $1,425.1 | (1.4)% | $688.4 | (0.1)% | | Switzerland | $631.0 | (3.7)% | $332.8 | (8.2)% | | Central and Eastern Europe | $238.2 | 2.6% | $115.1 | 0.7% | | Total Consolidated | $5,718.4 | (0.9)% | $2,374.0 | (2.1)% | Revenue of our Consolidated Reportable Segments Consolidated segment revenue declined due to foreign exchange, with mixed organic performance across regions Revenue Change (3 Months Ended June 30, 2019) | Segment (3 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:---------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | U.K./Ireland | ($90.9) | (5.2)% | $6.4 | 0.4% | | Belgium | ($40.7) | (5.4)% | ($16.6) | (2.1)% | | Switzerland | ($17.2) | (5.2)% | ($12.0) | (3.6)% | | Central and Eastern Europe | ($4.2) | (3.4)% | $3.6 | 2.9% | | Total | ($165.2) | (5.5)% | ($38.3) | (1.3)% | Revenue Change (6 Months Ended June 30, 2019) | Segment (6 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:---------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | U.K./Ireland | ($207.8) | (5.9)% | $5.0 | 0.1% | | Belgium | ($88.4) | (5.8)% | ($21.2) | (1.4)% | | Switzerland | ($46.1) | (6.8)% | ($25.1) | (3.7)% | | Central and Eastern Europe | ($14.6) | (5.8)% | $6.5 | 2.6% | | Total | ($360.7) | (5.9)% | ($53.6) | (0.9)% | - U.K./Ireland's organic revenue increase was driven by residential cable subscription revenue (due to RGU increases) and residential mobile subscription revenue (due to mobile subscriber increases), partially offset by decreases in residential mobile non-subscription revenue (mobile handset sales) and B2B non-subscription revenue (data services)[228][229][230] Programming and Other Direct Costs of Services, Other Operating Expenses and SG&A Expenses of our Consolidated Reportable Segments Refer to the consolidated operating results section for detailed analysis of programming, other operating, and SG&A expenses - For detailed information on changes in programming and other direct costs of services, other operating expenses, and SG&A expenses, refer to the consolidated operating results section[247] Adjusted OIBDA of our Consolidated Reportable Segments Consolidated Adjusted OIBDA decreased both reported and organically, with most segments experiencing declines Adjusted OIBDA Change (3 Months Ended June 30, 2019) | Segment (3 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:---------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | U.K./Ireland | ($60.4) | (7.9)% | ($18.9) | (2.5)% | | Belgium | ($34.3) | (8.9)% | ($9.7) | (2.6)% | | Switzerland | ($19.3) | (10.2)% | ($16.8) | (8.9)% | | Central and Eastern Europe | ($4.1) | (6.6)% | ($0.3) | (0.5)% | | Total | ($112.8) | (8.7)% | ($52.1) | (4.0)% | Adjusted OIBDA Change (6 Months Ended June 30, 2019) | Segment (6 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:---------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | U.K./Ireland | ($114.7) | (7.5)% | ($24.2) | (1.6)% | | Belgium | ($52.9) | (7.1)% | ($0.8) | (0.1)% | | Switzerland | ($42.7) | (11.4)% | ($30.8) | (8.2)% | | Central and Eastern Europe | ($9.2) | (7.4)% | $0.9 | 0.7% | | Total | ($191.2) | (7.5)% | ($54.1) | (2.1)% | Adjusted OIBDA Margin Adjusted OIBDA margins decreased across all consolidated reportable segments for both three and six-month periods Adjusted OIBDA Margin by Segment | Segment | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | |:-----------------|:-----------------------------|:-----------------------------|:-----------------------------|:-----------------------------| | U.K./Ireland | 42.8% | 44.0% | 42.7% | 43.5% | | Belgium | 49.0% | 50.9% | 48.3% | 49.0% | | Switzerland | 53.9% | 56.9% | 52.7% | 55.5% | | Central and Eastern Europe | 48.6% | 50.3% | 48.3% | 49.2% | Discussion and Analysis of our Consolidated Operating Results Consolidated revenue declined, programming costs increased, other operating and SG&A expenses decreased, and share-based compensation rose significantly Consolidated Revenue Change (3 Months Ended June 30, 2019) | Consolidated Revenue (3 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:----------------------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | Total residential revenue | ($147.0) | (6.0)% | ($22.9) | (0.9)% | | Total B2B revenue | ($29.4) | (5.8)% | ($12.1) | (2.4)% | | Other revenue | $11.2 | 14.1% | ($3.3) | (3.3)% | | Total | ($165.2) | (5.5)% | ($38.3) | (1.3)% | Consolidated Revenue Change (6 Months Ended June 30, 2019) | Consolidated Revenue (6 Months Ended June 30, 2019) | Reported Change ($M) | Reported Change (%) | Organic Change ($M) | Organic Change (%) | |:----------------------------------------------------|:---------------------|:--------------------|:--------------------|:-------------------| | Total residential revenue | ($359.3) | (7.3)% | ($68.7) | (1.4)% | | Total B2B revenue | ($31.2) | (3.1)% | $5.3 | 0.5% | | Other revenue | $29.8 | 21.2% | $9.8 | 5.7% | | Total | ($360.7) | (5.9)% | ($53.6) | (0.9)% | - Share-based compensation expense increased significantly by $40.5 million (89.0%) for the three months and $65.2 million (74.8%) for the six months ended June 30, 2019[281][282] Revenue Consolidated revenue decreased organically, with residential cable and mobile subscription declines offset by B2B subscription growth Residential Cable Subscription Revenue (Organic Change) | Residential Cable Subscription Revenue (Organic Change) | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:--------------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Video | ($5.7) | ($0.8) | ($10.1) | ($0.7) | | Broadband internet | $27.5 | 3.4% | $47.1 | 2.8% | | Fixed-line telephony | ($26.5) | (6.5)% | ($53.7) | (6.5)% | | Total | ($4.7) | (0.2)% | ($16.7) | (0.4)% | - Residential mobile subscription revenue decreased organically by $5.5 million (2.2%) and $4.6 million (0.9%) for the three and six months ended June 30, 2019, respectively[262] - B2B subscription revenue increased organically by $13.1 million (11.8%) and $27.8 million (12.7%) for the three and six months ended June 30, 2019, respectively, driven by SOHO revenue growth[264] Programming and other direct costs of services Programming and other direct costs increased organically due to higher content costs, partially offset by lower mobile handset costs Programming and Other Direct Costs of Services | Programming and Other Direct Costs of Services | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-----------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total Reported | $786.3 | $803.5 | $1,586.7 | $1,650.6 | | Organic Change ($M) | $12.7 | 1.6% | $17.7 | 1.1% | - Programming and copyright costs increased by $17.5 million (4.3%) and $35.0 million (4.1%) for the three and six months, respectively, due to higher costs for premium/basic content[273] - Mobile handset and other device costs increased by $5.3 million (6.1%) for the three months but decreased by ($11.7) million (6.1%) for the six months, influenced by sales volumes and average cost per handset[273] Other operating expenses Other operating expenses showed mixed organic changes, driven by network infrastructure charges and personnel cost adjustments Other Operating Expenses (Excl. Share-based Comp.) | Other Operating Expenses (Excl. Share-based Comp.) | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:---------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total Reported | $416.8 | $425.3 | $835.3 | $886.3 | | Organic Change ($M) | $10.4 | 2.4% | ($8.5) | (0.9)% | - Network infrastructure charges in U.K./Ireland increased by $11.7 million and $18.2 million for the three and six months, respectively[278] - Personnel costs decreased by $4.0 million (3.0%) and $15.0 million (5.4%) for the three and six months, respectively, due to lower staffing levels[278] SG&A expenses SG&A expenses decreased organically due to lower sales and marketing costs, partially offset by increased personnel costs SG&A Expenses (Excl. Share-based Comp.) | SG&A Expenses (Excl. Share-based Comp.) | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:----------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total Reported | $456.6 | $483.3 | $922.4 | $977.0 | | Organic Change ($M) | ($9.3) | (1.9)% | ($8.7) | (0.9)% | - Personnel costs increased by $19.2 million (9.5%) and $24.4 million (5.8%) for the three and six months, respectively, due to higher average cost per employee[286] - External sales and marketing costs decreased by $11.3 million (11.2%) and $21.1 million (10.2%) for the three and six months, respectively, due to lower advertising campaigns[286] Share-based compensation expense Share-based compensation expense significantly increased, primarily driven by performance-based incentive awards Share-based Compensation Expense | Share-based Compensation Expense | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:---------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total Liberty Global | $79.6 | $45.7 | $141.4 | $83.5 | | Total | $87.0 | $45.5 | $154.3 | $88.2 | - Performance-based incentive awards contributed $38.0 million and $67.9 million to the expense for the three and six months ended June 30, 2019, respectively[288] Depreciation and amortization expense Depreciation and amortization expense decreased, influenced by FX, property additions, and fully depreciated assets Depreciation and Amortization Expense | Depreciation and Amortization Expense | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:--------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | $921.8 | $964.0 | $1,861.4 | $2,004.7 | - Excluding FX, depreciation and amortization expense increased $10.4 million (1.1%) for the three months and decreased ($22.1) million (1.1%) for the six months[292] - Changes are primarily due to increases from property and equipment additions and decreases from fully depreciated assets[292] Impairment, restructuring and other operating items, net Net impairment, restructuring, and other operating items included severance, network asset impairment, and acquisition/disposition costs Impairment, Restructuring and Other Operating Items, Net | Impairment, Restructuring and Other Operating Items, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:---------------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | $33.2 | $29.9 | $104.1 | $90.6 | - 2019 periods include restructuring charges of $18.0 million (3-month) and $55.5 million (6-month), mainly for employee severance[294] - Six-month 2019 period includes $22.6 million impairment charges for network assets and $18.1 million in direct acquisition/disposition costs[294] Interest expense Interest expense decreased, but organically increased due to higher weighted average interest rates, partially offset by lower debt balances Interest Expense | Interest Expense | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-----------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($363.6) | ($380.4) | ($730.9) | ($755.7) | - Excluding FX, interest expense increased $2.4 million (0.6%) for the three months and $20.0 million (2.6%) for the six months[297] - Increases are attributable to higher weighted average interest rates, partially offset by lower average outstanding debt balances[297] Realized and unrealized gains on derivative instruments, net Net realized and unrealized gains on derivative instruments significantly decreased, primarily due to lower gains on cross-currency and interest rate contracts Realized and Unrealized Gains on Derivative Instruments, Net | Realized and Unrealized Gains on Derivative Instruments, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-----------------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | $152.9 | $675.5 | $70.1 | $464.2 | - 2019 results for cross-currency and interest rate derivative contracts were primarily a net gain of $69.1 million (3-month) and a net loss of ($18.2) million (6-month), including net losses from credit risk valuation adjustments[301] - Equity-related derivative instruments generated gains of $95.0 million (3-month) and $109.8 million (6-month) in 2019[301] Foreign currency transaction gains (losses), net Net foreign currency transaction results shifted from gains to losses for three months, and from losses to gains for six months Foreign Currency Transaction Gains (Losses), Net | Foreign Currency Transaction Gains (Losses), Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($27.0) | $51.5 | $111.6 | ($50.2) | - Primary drivers include intercompany payables/receivables and U.S. dollar-denominated debt issued by euro and British pound sterling functional currency entities[305] Realized and unrealized gains (losses) due to changes in fair values of certain investments and debt, net Net realized and unrealized losses on investments and debt were reported, contrasting with prior-year gains, driven by specific investment losses Realized and Unrealized Gains (Losses) on Investments and Debt, Net | Realized and Unrealized Gains (Losses) on Investments and Debt, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:--------------------------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Investments | ($128.3) | $54.2 | ($124.2) | ($24.8) | | Debt | ($10.4) | $7.3 | ($22.7) | $29.1 | | Total | ($138.7) | $61.5 | ($146.9) | $4.3 | - Significant losses were recorded on ITV ($111.8 million for 3-month, $87.8 million for 6-month), Casa ($5.5 million for 3-month, $18.4 million for 6-month), and Lionsgate ($17.2 million for 3-month, $17.8 million for 6-month) investments in 2019[307] Losses on debt modification and extinguishment, net Net losses on debt modification and extinguishment were incurred due to redemption premiums and write-offs from financing transactions Losses on Debt Modification and Extinguishment, Net | Losses on Debt Modification and Extinguishment, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:----------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($48.3) | ($20.1) | ($48.8) | ($22.7) | - The 2019 six-month loss includes $43.7 million in redemption premiums and $4.3 million write-off of unamortized deferred financing costs and discounts[310] Share of results of affiliates, net Net losses from affiliates were primarily driven by the VodafoneZiggo JV's performance, impacted by significant mobile competition Share of Results of Affiliates, Net | Share of Results of Affiliates, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | VodafoneZiggo JV | ($40.0) | ($63.2) | ($102.3) | ($90.0) | | Other | ($29.3) | ($19.1) | ($37.9) | ($28.8) | | Total | ($69.3) | ($82.3) | ($140.2) | ($118.8) | VodafoneZiggo JV Summarized Results | VodafoneZiggo JV Summarized Results | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Revenue | $1,084.5 | $1,133.3 | $2,178.4 | $2,329.9 | | Net loss | ($104.0) | ($137.1) | ($254.3) | ($213.3) | - VodafoneZiggo JV faces significant competition, particularly in mobile operations, which could lead to future impairment charges[314] Other income, net Other income, net, increased, primarily due to a gain from the De Vijver Media Acquisition Other Income, Net | Other Income, Net | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | $32.5 | $6.4 | $39.0 | $16.2 | - The 2019 amounts include a $25.7 million gain associated with the De Vijver Media Acquisition[316] Income tax expense Income tax expense significantly decreased, influenced by permanent differences, valuation allowances, and foreign currency exchange results Income Tax Expense | Income Tax Expense | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($26.8) | $92.8 | ($54.6) | ($617.2) | - The 2019 six-month expense differs from the expected benefit of $112.5 million (U.K. statutory rate of 19.0%) due to permanent differences in investment treatment and interest, offset by valuation allowance decreases and foreign currency exchange results[321] Earnings (loss) from continuing operations Losses from continuing operations were reported, influenced by operating income, non-operating items, and income tax expense Earnings (Loss) from Continuing Operations | Earnings (Loss) from Continuing Operations | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:-------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($339.6) | $669.0 | ($646.5) | ($698.2) | - Gains or losses from derivative instruments, foreign currency exchange rates, and asset dispositions are highly volatile and not a reliable source of income[326] - The company expects to report significant interest expense and relies on increasing Adjusted OIBDA to offset expenses and achieve earnings[327] Earnings from discontinued operations, net of taxes Earnings from discontinued operations were reported, including a significant gain from the sale of UPC DTH Earnings from Discontinued Operations, Net of Taxes | Earnings from Discontinued Operations, Net of Taxes | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:----------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | $315.5 | $281.5 | $638.1 | $470.1 | - Includes a $106.6 million gain on the sale of UPC DTH during the second quarter of 2019[328] Net earnings attributable to noncontrolling interests Net earnings attributable to noncontrolling interests decreased due to lower operating results from Telenet and the UPC Austria sale Net Earnings Attributable to Noncontrolling Interests | Net Earnings Attributable to Noncontrolling Interests | 3 Months Ended June 30, 2019 ($M) | 3 Months Ended June 30, 2018 ($M) | 6 Months Ended June 30, 2019 ($M) | 6 Months Ended June 30, 2018 ($M) | |:------------------------------------------------------|:----------------------------------|:----------------------------------|:----------------------------------|:----------------------------------| | Total | ($29.5) | ($37.9) | ($38.2) | ($45.8) | - Decreases are primarily attributable to declines in Telenet's results and the impact of the UPC Austria sale[329] Material Changes in Financial Condition Financial condition is dependent on subsidiary capital, with a debt-to-Adjusted OIBDA ratio of 5.4x and decreased cash flows - Liberty Global is a holding company dependent on subsidiary capital resources, with significant operating subsidiaries separately financed within borrowing groups (Virgin Media, UPC Holding, Telenet)[330] - Consolidated debt to annualized Adjusted OIBDA ratio was 5.4x at June 30, 2019, with a target range of four to five times[344] - Total debt and finance lease obligations aggregated $30.0 billion at June 30, 2019, with $21.8 billion not due until 2025 or thereafter[346] Sources and Uses of Cash Consolidated cash totaled $1.27 billion, with corporate liquidity for G&A and debt, and borrowing group liquidity for capex and debt service Cash and Cash Equivalents (June 30, 2019) | Cash and Cash Equivalents (June 30, 2019) | Amount (in millions) | |:------------------------------------------|:---------------------| | Liberty Global and unrestricted subsidiaries | $1,018.5 | | Borrowing groups | $250.5 | | Total consolidated | $1,269.0 | - Corporate liquidity sources include cash, interest/dividend income, VodafoneZiggo JV Receivable payments, and cash from transitional services[335] - Corporate liquidity requirements include G&A expenses, interest/principal payments on ITV Collar Loan and Lionsgate Loan, and potential share repurchases[339] Cash and cash equivalents Consolidated cash and cash equivalents totaled $1.27 billion, primarily held by Liberty Global and its unrestricted subsidiaries Cash Holder (June 30, 2019) | Cash Holder (June 30, 2019) | Amount (in millions) | |:----------------------------|:---------------------| | Liberty Global | $6.4 | | Unrestricted subsidiaries | $1,012.1 | | Telenet | $158.4 | | UPC Holding | $50.4 | | Virgin Media | $41.7 | | Total | $1,269.0 | Liquidity of Liberty Global and its unrestricted subsidiaries Corporate liquidity of $1.02 billion is used for G&A, debt payments, and share repurchases, with no anticipated adverse tax impact - Available corporate liquidity was $1,018.5 million at June 30, 2019[334] - Corporate liquidity requirements include G&A expenses, interest/principal payments on ITV Collar Loan and Lionsgate Loan, and potential share repurchases[339] - Tax considerations are not anticipated to adversely impact corporate liquidity over the next 12 months[337] Liquidity of borrowing groups Borrowing groups held $250.5 million in cash, using operational cash and debt availability for capital expenditures and debt service - Borrowing groups held $250.5 million in cash and cash equivalents at June 30, 2019[331][342] - Primary liquidity sources are cash from operations and borrowing availability under debt instruments[342] - All borrowing groups were in compliance with debt covenants at June 30, 2019, and no material adverse impact on liquidity is anticipated from non-compliance in the next 12 months[345] Capitalization The company's debt-to-Adjusted OIBDA ratio was 5.4x, with $30.0 billion in debt, and plans to refinance maturing obligations - Target consolidated debt to Adjusted OIBDA ratio is between four and five times[344] Leverage Ratios (June 30, 2019) | Leverage Ratio (June 30, 2019) | Value | |:-------------------------------|:------| | Consolidated debt to annualized Adjusted OIBDA | 5.4x | | Consolidated net debt to annualized Adjusted OIBDA | 5.2x | - Total outstanding consolidated debt and finance lease obligations were $30.0 billion at June 30, 2019, with $21.8 billion due in 2025 or thereafter[346] Condensed Consolidated Statements of Cash Flows Operating cash flow decreased, while cash used in investing and financing activities also decreased due to lower capex and share repurchases Cash Flow Activity (6 Months Ended June 30) | Cash Flow Activity (6 Months Ended June 30) | 2019 ($M) | 2018 ($M) | Change ($M) | |:--------------------------------------------|:----------|:----------|:------------| | Net cash provided by operating activities | $1,628.5 | $2,128.1 | ($499.6) | | Net cash used by investing activities | ($682.7) | ($893.3) | $210.6 | | Net cash used by financing activities | ($1,595.4) | ($3,029.8) | $1,434.4 | | Net decrease in cash and cash equivalents | ($654.6) | ($1,804.3) | $1,149.7 | - Decrease in operating cash flow due to lower cash dividends, higher tax/interest payments, and lower derivative cash receipts[350] - Investing cash flow decrease driven by $161.9 million lower capital expenditures and $145.8 million net cash proceeds from UPC DTH sale[351] Summary Net cash provided by operating activities was $1.63 billion, with net cash used in investing and financing activities Cash Flow Activity Summary (6 Months Ended June 30) | Cash Flow Activity (6 Months Ended June 30) | 2019 ($M) | 2018 ($M) | Change ($M) | |:--------------------------------------------|:----------|:----------|:------------| | Net cash provided by operating activities | $1,628.5 | $2,128.1 | ($499.6) | | Net cash used by investing activities | ($682.7) | ($893.3) | $210.6 | | Net cash used by financing activities | ($1,595.4) | ($3,029.8) | $1,434.4 | | Net decrease in cash and cash equivalents | ($654.6) | ($1,804.3) | $1,149.7 | Operating Activities Net cash from operating activities decreased due to lower dividends, higher tax/interest payments, and reduced derivative cash receipts - Net cash provided by operating activities decreased by $499.6 million to $1,628.5 million for the six months ended June 30, 2019[350] - Decrease attributed to lower cash dividends, higher tax and interest payments, and lower cash receipts from derivative instruments[350] Investing Activities Net cash used in investing activities decreased due to lower capital expenditures and proceeds from the UPC DTH sale - Net cash used by investing activities decreased by $210.6 million to ($682.7) million for the six months ended June 30, 2019[351] - Capital expenditures decreased by $161.9 million to $632.9 million, and net cash proceeds from UPC DTH sale were $145.8 million[351] Capital Expenditures, Net (6 Months Ended June 30) | Capital Expenditures, Net (6 Months Ended June 30) | 2019 ($M) | 2018 ($M) | |:---------------------------------------------------|:----------|:----------| | Property and equipment additions | $1,381.3 | $1,846.4 | | Assets acquired under vendor financing | ($926.3) | ($1,186.7) | | Assets acquired under finance leases | ($32.6) | ($46.5) | | Capital expenditures, net | $632.9 | $794.8 | Financing Activities Net cash used in financing activities significantly decreased due to lower share repurchases and higher net debt borrowings - Net cash used by financing activities decreased by $1,434.4 million to ($1,595.4) million for the six months ended June 30, 2019[350][356] - Decrease driven by $773.7 million lower share repurchases and $644.2 million higher net debt borrowings[356] Adjusted Free Cash Flow Adjusted free cash flow significantly improved to ($72.5) million, reflecting adjustments for various cash flow items Adjusted Free Cash Flow (6 Months Ended June 30) | Adjusted Free Cash Flow (6 Months Ended June 30) | 2019 ($M) | 2018 ($M) | |:-------------------------------------------------|:----------|:----------| | Net cash provided by operating activities | $1,628.5 | $2,128.1 | | Cash payments for direct acquisition/disposition costs | $18.0 | $4.8 | | Expenses financed by an intermediary | $1,08