UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2015
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                     to                    
Commission file number 001-35961
Liberty Global plc
(Exact name of Registrant as specified in its charter)
England and Wales
 
98-1112770
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
38 Hans Crescent, London, England

 
SW1X 0LZ
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
+44.20.7190.6449 or 303.220.6600
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 preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes   þ          No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   þ         No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer   þ Accelerated Filer ¨   
Non-Accelerated Filer (Do not check if a smaller reporting company)  ¨   Smaller Reporting Company   ¨
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.    Yes   ¨         No   þ

The number of outstanding ordinary shares of Liberty Global plc as of April 30, 2015 was: 252,066,702 Class A ordinary shares;
10,472,517 Class B ordinary shares; and 619,261,384 Class C ordinary shares.

 


LIBERTY GLOBAL PLC
TABLE OF CONTENTS
 
 
 
Page
Number
 
PART I — FINANCIAL INFORMATION
 
ITEM 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
 
 
 
ITEM 2.
ITEM 3.
ITEM 4.
 
PART II — OTHER INFORMATION
 
ITEM 2.
ITEM 6.



LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 
 
March 31,
2015
 
December 31,
2014
 
in millions
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
630.4

 
$
1,158.5

Trade receivables, net
1,307.8

 
1,499.5

Derivative instruments (note 4)
230.9

 
446.6

Deferred income taxes
304.4

 
290.3

Prepaid expenses
224.8

 
189.7

Other current assets
263.2

 
335.9

Total current assets
2,961.5

 
3,920.5

Investments (including $1,804.4 million and $1,662.7 million, respectively, measured at fair value)
2,032.9

 
1,808.2

Property and equipment, net (note 6)
21,821.9

 
23,840.6

Goodwill (note 6)
26,930.1

 
29,001.6

Intangible assets subject to amortization, net (note 6)
7,917.5

 
9,189.8

Other assets, net (note 4)
6,016.9

 
5,081.2

Total assets
$
67,680.8

 
$
72,841.9

 




























The accompanying notes are an integral part of these condensed consolidated financial statements.

1

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
(unaudited)
 
 
March 31,
2015
 
December 31,
2014
 
in millions
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,072.4

 
$
1,039.0

Deferred revenue and advance payments from subscribers and others
1,479.9

 
1,452.2

Current portion of debt and capital lease obligations (note 7)
1,292.8

 
1,550.9

Accrued interest
578.6

 
690.6

Derivative instruments (note 4)
390.8

 
1,043.7

Other accrued and current liabilities (note 11)
3,028.4

 
3,413.9

Total current liabilities
7,842.9

 
9,190.3

Long-term debt and capital lease obligations (note 7)
42,790.5

 
44,608.1

Other long-term liabilities (notes 4 and 11)
4,671.1

 
4,927.5

Total liabilities
55,304.5

 
58,725.9

Commitments and contingencies (notes 3, 4, 7, 8, 13 and 15)

 

Equity (note 9):
 
 
 
Liberty Global shareholders:
 
 
 
Class A ordinary shares, $0.01 nominal value. Issued and outstanding 252,025,447 and 251,167,686 shares, respectively
2.5

 
2.5

Class B ordinary shares, $0.01 nominal value. Issued and outstanding 10,472,517 and 10,139,184 shares, respectively
0.1

 
0.1

Class C ordinary shares, $0.01 nominal value. Issued and outstanding 622,180,578 and 630,353,372 shares, respectively
6.2

 
6.3

Additional paid-in capital
16,540.7

 
17,070.8

Accumulated deficit
(4,545.1
)
 
(4,007.6
)
Accumulated other comprehensive earnings, net of taxes
954.0

 
1,646.6

Treasury shares, at cost
(3.8
)
 
(4.2
)
Total Liberty Global shareholders
12,954.6

 
14,714.5

Noncontrolling interests
(578.3
)
 
(598.5
)
Total equity
12,376.3

 
14,116.0

Total liabilities and equity
$
67,680.8

 
$
72,841.9










The accompanying notes are an integral part of these condensed consolidated financial statements.

2

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions, except share and per share amounts
 
 
 
 
Revenue (note 14)
$
4,516.9

 
$
4,533.7

Operating costs and expenses:
 
 
 
Operating (other than depreciation and amortization) (including share-based compensation) (note 10)
1,685.9

 
1,698.8

Selling, general and administrative ( SG&A ) (including share-based compensation) (note 10)
805.1

 
762.5

Depreciation and amortization
1,451.4

 
1,377.1

Impairment, restructuring and other operating items, net (note 11)
17.0

 
113.6

 
3,959.4

 
3,952.0

Operating income
557.5

 
581.7

Non-operating income (expense):
 
 
 
Interest expense
(615.9
)
 
(653.5
)
Realized and unrealized gains (losses)  on derivative instruments, net (note 4)
618.5

 
(376.6
)
Foreign currency transaction losses , net
(1,035.6
)
 
(20.8
)
Realized and unrealized gains (losses) due to changes in fair values of certain investments, net (note 5)
151.4

 
(60.2
)
Losses on debt modification and extinguishment, net (note 7)
(274.5
)
 
(20.9
)
Other income (expense), net
(1.0
)
 
13.3

 
(1,157.1
)
 
(1,118.7
)
Loss  from continuing operations before income taxes
(599.6
)
 
(537.0
)
Income tax benefit   (note 8)
77.9

 
117.0

Loss from continuing operations
(521.7
)
 
(420.0
)
Discontinued operation (note 1):
 
 
 
Earnings from discontinued operation, net of taxes
—

 
0.8

Gain on disposal of discontinued operation, net of taxes
—

 
339.9

 
—


340.7

Net loss
(521.7
)
 
(79.3
)
Net loss (earnings)   attributable to noncontrolling interests
(15.8
)
 
0.5

Net loss attributable to Liberty Global shareholders
$
(537.5
)
 
$
(78.8
)
 
 
 
 
Basic and diluted earnings (loss)   attributable to Liberty Global shareholders per share (note 12):
 
 
 
Continuing operations
$
(0.61
)
 
$
(0.53
)
Discontinued operation
—

 
0.43

 
$
(0.61
)
 
$
(0.10
)
 
 
 
 
Weighted average ordinary shares outstanding – basic and diluted
887,264,545

 
787,737,909


The accompanying notes are an integral part of these condensed consolidated financial statements.

3

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(unaudited)
 
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
 
 
 
 
Net loss
$
(521.7
)
 
$
(79.3
)
Other comprehensive earnings   (loss) , net of taxes:
 
 
 
Foreign currency translation adjustments
(691.1
)
 
58.1

Reclassification adjustments included in net loss
0.1

 
64.1

Other
(1.5
)
 
—

Other comprehensive earnings   (loss)
(692.5
)
 
122.2

Comprehensive earnings   (loss)
(1,214.2
)
 
42.9

Comprehensive loss   (earnings)  attributable to noncontrolling interests
(15.9
)
 
0.5

Comprehensive earnings ( loss)   attributable to Liberty Global shareholders
$
(1,230.1
)
 
$
43.4


































The accompanying notes are an integral part of these condensed consolidated financial statements.

4

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(unaudited)
 
 
Liberty Global shareholders
 
Non-controlling
interests
 
Total
equity
 
Ordinary shares
 
Additional
paid-in
capital
 
Accumulated
deficit
 
Accumulated
other
comprehensive
earnings,
net of taxes
 
Treasury shares, at cost
 
Total Liberty Global
shareholders
 
 
Class A
 
Class B
 
Class C
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2015
$
2.5

 
$
0.1

 
$
6.3

 
$
17,070.8

 
$
(4,007.6
)
 
$
1,646.6

 
$
(4.2
)
 
$
14,714.5

 
$
(598.5
)
 
$
14,116.0

Net loss
—

 
—

 
—

 
—

 
(537.5
)
 
—

 
—

 
(537.5
)
 
15.8

 
(521.7
)
Other comprehensive loss, net of taxes
—

 
—

 
—

 
—

 
—

 
(692.6
)
 
—

 
(692.6
)
 
0.1

 
(692.5
)
Repurchase and cancellation of Liberty Global ordinary shares
—

 
—

 
(0.1
)
 
(478.0
)
 
—

 
—

 
—

 
(478.1
)
 
—

 
(478.1
)
Liberty Global call option contracts
—

 
—

 
—

 
(71.6
)
 
—

 
—

 
—


(71.6
)
 
—

 
(71.6
)
Share-based compensation (note 10)
—

 
—

 
—

 
57.0

 
—

 
—

 
—

 
57.0

 
—

 
57.0

Adjustments due to changes in subsidiaries’ equity and other, net
—

 
—

 
—

 
(37.5
)
 
—

 
—

 
0.4

 
(37.1
)
 
4.3

 
(32.8
)
Balance at March 31, 2015
$
2.5

 
$
0.1

 
$
6.2

 
$
16,540.7

 
$
(4,545.1
)
 
$
954.0

 
$
(3.8
)
 
$
12,954.6

 
$
(578.3
)
 
$
12,376.3












The accompanying notes are an integral part of these condensed consolidated financial statements.

5

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
Cash flows from operating activities:
 
 
 
Net loss
$
(521.7
)
 
$
(79.3
)
Earnings from discontinued operation
—

 
(340.7
)
Loss from continuing operations
(521.7
)
 
(420.0
)
Adjustments to reconcile loss   from continuing operations to net cash provided by operating activities:
 
 
 
Share-based compensation expense
71.4

 
55.1

Depreciation and amortization
1,451.4

 
1,377.1

Impairment, restructuring and other operating items, net
17.0

 
113.6

Amortization of deferred financing costs and non-cash interest accretion
18.5

 
22.0

Realized and unrealized losses (gains) on derivative instruments, net
(618.5
)
 
376.6

Foreign currency transaction losses , net
1,035.6

 
20.8

Realized and unrealized losses (gains)   due to changes in fair values of certain investments, net
(151.4
)
 
60.2

Losses on debt modification and extinguishment, net
274.5

 
20.9

Deferred income tax benefit
(187.2
)
 
(184.2
)
Excess tax benefit from share-based compensation
(20.0
)
 
—

Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions
4.3

 
(121.7
)
Net cash used by operating activities of discontinued operation
—

 
(9.6
)
Net cash provided by operating activities
1,373.9

 
1,310.8

Cash flows from investing activities:
 
 
 
Capital expenditures
(661.2
)
 
(735.0
)
Investments in and loans to affiliates and others
(122.7
)
 
(9.1
)
Proceeds received upon disposition of discontinued operation, net of disposal costs
—

 
993.0

Other investing activities, net
8.9

 
(17.2
)
Net cash used by investing activities of discontinued operation
—

 
(3.8
)
Net cash provided (used) by investing activities
$
(775.0
)
 
$
227.9

 













The accompanying notes are an integral part of these condensed consolidated financial statements.

6

LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(unaudited)
 
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
Cash flows from financing activities:
 
 
 
Borrowings of debt
$
6,695.2

 
$
1,547.8

Repayments and repurchases of debt and capital lease obligations
(6,543.0
)
 
(2,051.6
)
Net cash paid related to derivative instruments
(486.5
)
 
(98.2
)
Repurchase of Liberty Global shares
(425.9
)
 
(376.8
)
Payment of financing costs and debt premiums
(269.8
)
 
(39.1
)
Net cash paid associated with call option contracts on Liberty Global shares
(122.9
)
 
(156.0
)
Change in cash collateral
61.8

 
4.4

Other financing activities, net
(19.5
)
 
7.2

Net cash used by financing activities of discontinued operation
—

 
(1.2
)
Net cash used  by financing activities
(1,110.6
)
 
(1,163.5
)
 
 
 
 
Effect of exchange rate changes on cash – continuing operations
(16.4
)
 
15.0

 


 


Net increase (decrease) in cash and cash equivalents:
 
 
 
Continuing operations
(528.1
)
 
404.8

Discontinued operation
—

 
(14.6
)
Net increase (decrease) in cash and cash equivalents
(528.1
)
 
390.2

Cash and cash equivalents:
 
 
 
Beginning of period
1,158.5

 
2,701.9

End of period
$
630.4

 
$
3,092.1

 
 
 
 
Cash paid for interest – continuing operations
$
672.4

 
$
631.1

Net cash paid for taxes:
 
 
 
Continuing operations
$
123.0

 
$
32.5

Discontinued operation
—

 
0.9

Total
$
123.0

 
$
33.4





The accompanying notes are an integral part of these condensed consolidated financial statements.

7

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements
March 31, 2015
(unaudited)



( 1 )    Basis of Presentation

Liberty Global plc ( Liberty Global ) is a public limited company organized under the laws of England and Wales. In these notes, the terms “we,” “our,” “our company” and “us” may refer, as the context requires, to Liberty Global or collectively to Liberty Global and its subsidiaries.

We are an international provider of video, broadband internet, fixed-line telephony and mobile services, with consolidated operations at March 31, 2015 in 14 countries. Through Unitymedia GmbH ( Unitymedia ), formerly known as Unitymedia KabelBW GmbH, and Ziggo Group Holding B.V. ( Ziggo Group Holding ), each a wholly-owned subsidiary, and Telenet Group Holding NV ( Telenet ), a 56.8% -owned subsidiary, we provide video, broadband internet, fixed-line telephony and mobile services in Germany, the Netherlands and Belgium, respectively. In addition, through our wholly-owned subsidiary Virgin Media Inc. ( Virgin Media ), we provide (i) video, broadband internet and fixed-line telephony services in the United Kingdom ( U.K. ) and Ireland and (ii) mobile services in the U.K. We also provide (a) video, broadband internet and fixed-line telephony services in eight other European countries and (b) mobile services in four other European countries. The operations of Virgin Media , Unitymedia , Ziggo Group Holding , Telenet and our other operations in Europe are collectively referred to herein as the “ European Operations Division .” In Chile, we provide video, broadband internet, fixed-line telephony and mobile services through VTR GlobalCom SpA ( VTR ). Our consolidated operations also include the broadband communications operations of Liberty Cablevision of Puerto Rico LLC ( Liberty Puerto Rico ), an entity in which we hold a 60.0% ownership interest.

On January 31, 2014, we completed the sale of substantially all of the assets (the Chellomedia Disposal Group ) of Chellomedia B.V. ( Chellomedia ). Chellomedia held certain of our programming interests in Europe and Latin America. We have accounted for the sale of the Chellomedia Disposal Group as a discontinued operation in our condensed consolidated financial statements.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ( GAAP ) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our 2014 consolidated financial statements and notes thereto included in our 2014 Annual Report on Form 10-K.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances for uncollectible accounts, programming and copyright costs, deferred income taxes and related valuation allowances, loss contingencies, fair value measurements, impairment assessments, capitalization of internal costs associated with construction and installation activities, useful lives of long-lived assets, share-based compensation and actuarial liabilities associated with certain benefit plans. Actual results could differ from those estimates.

Unless otherwise indicated, ownership percentages and convenience translations into United States ( U.S. ) dollars are calculated as of March 31, 2015 .

Certain prior period amounts have been reclassified to conform to the current period presentation.

( 2 )    Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the FASB ) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ( ASU 2014-09 ), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace existing revenue recognition guidance in GAAP when it becomes effective, currently scheduled for January 1, 2017, although an extension to January 1, 2018 has been proposed by the FASB . Early application is not permitted. This new standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the effect that ASU 2014-09 will have on

8

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

( 3 )    Acquisitions

Pending 2015 Acquisitions

On December 9, 2014, one of our subsidiaries, together with investment funds affiliated with Searchlight Capital Partners, L.P. (collectively, Searchlight ), entered into an agreement to acquire 100% of the parent of Puerto Rico Cable Acquisition Company Inc., dba Choice Cable TV ( Choice ), the second largest cable and broadband services provider in Puerto Rico (the Choice Acquisition ). The transaction values Choice at an enterprise value, before transaction costs, of approximately $272.5 million . This purchase price is expected to be funded through (i) $257.5 million of committed facilities under Liberty Puerto Rico ’s existing bank facility and (ii) equity contributions, related-party loans and/or other existing sources of liquidity. The Choice Acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to close in the second quarter of 2015. Upon completion of the Choice Acquisition , Choice ’s operations will be combined with those of Liberty Puerto Rico , and the combined business will be 60% -owned by our company and 40% -owned by Searchlight .
For information regarding a purchase agreement that Telenet entered into subsequent to March 31, 2015, see note 15 .
2014 Acquisition of Ziggo

On November 11, 2014, pursuant to an Agreement and Plan of Merger with respect to an offer to acquire all of the shares of Ziggo Holding B.V. ( Ziggo ) that we did not already own, we gained control of Ziggo through the acquisition of 136,603,794 additional Ziggo shares, which increased our ownership interest in Ziggo to 88.9% (the Ziggo Acquisition ). From November 12, 2014 through November 19, 2014, we acquired 18,998,057 additional Ziggo shares, further increasing our ownership interest in Ziggo to 98.4% (the Ziggo NCI Acquisition ). For accounting purposes, (i) the Ziggo Acquisition was treated as the acquisition of Ziggo by Liberty Global and (ii) the Ziggo NCI Acquisition was treated as the acquisition of a noncontrolling interest. Ziggo is a provider of video, broadband internet, fixed-line telephony and mobile services in the Netherlands.

In December 2014, we initiated a statutory squeeze-out procedure in accordance with the Dutch Civil Code (the Statutory Squeeze-out ) in order to acquire the remaining 3,162,605 Ziggo shares not tendered through November 19, 2014. Under the Statutory Squeeze-out , Ziggo shareholders other than Liberty Global will receive cash consideration of €39.78 ( $42.68 ) per share, which amount was approved in April 2015 by the Enterprise Court in the Netherlands. The Statutory Squeeze-out is expected to be completed during the second quarter of 2015.

We received regulatory clearance from the European Commission for the Ziggo Acquisition on October 10, 2014. The clearance was conditioned upon our commitment to divest our Film1 channel to a third party and to carry Film1 on our network in the Netherlands for a period of three years. On March 27, 2015, we agreed to sell our Film1 channel to Sony Pictures Television Networks, which sale is subject to customary closing conditions, including regulatory approval. Under the terms of the agreement, all five Film1 channels will continue to be carried on our networks for a period of at least three years .


9

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Pro Forma Information

The following unaudited pro forma condensed consolidated operating results for the three months ended March 31, 2014 give effect to the acquisition of 100% of Ziggo as if it had been completed as of January 1, 2014 . These pro forma amounts are not necessarily indicative of the operating results that would have occurred if this transaction had occurred on such date. The pro forma adjustments are based on certain assumptions that we believe are reasonable.
 
Three months ended March 31, 2014
 
in millions, except per share amount
Revenue:
 
Continuing operations
$
5,069.3

Discontinued operation
26.6

Total
$
5,095.9

 
 
Net loss  attributable to Liberty Global shareholders
$
(264.7
)
Basic and diluted loss attributable to Liberty Global shareholders per share
$
(0.29
)

( 4 )     Derivative Instruments

In general, we seek to enter into derivative instruments to protect against (i) increases in the interest rates on our variable-rate debt and (ii) foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity. In this regard, through our subsidiaries, we have entered into various derivative instruments to manage interest rate exposure and foreign currency exposure with respect to the U.S. dollar ( $ ), the euro ( € ), the British pound sterling ( £ ), the Swiss franc ( CHF ), the Chilean peso ( CLP ), the Czech koruna ( CZK ), the Hungarian forint ( HUF ), the Polish zloty ( PLN ) and the Romanian lei ( RON ). We generally do not apply hedge accounting to our derivative instruments. Accordingly, changes in the fair values of most of our derivative instruments are recorded in realized and unrealized gains or losses on derivative instruments, net, in our condensed consolidated statements of operations.


10

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



The following table provides details of the fair values of our derivative instrument assets and liabilities:
 
March 31, 2015
 
December 31, 2014
 
Current
 
Long-term (a)
 
Total
 
Current
 
Long-term (a)
 
Total
 
in millions
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts (b)
$
224.5

 
$
2,014.6

 
$
2,239.1

 
$
443.6

 
$
913.7

 
$
1,357.3

Equity-related derivative instruments (c)
—

 
389.0

 
389.0

 
—

 
400.2

 
400.2

Foreign currency forward contracts
5.3

 
—

 
5.3

 
2.5

 
—

 
2.5

Other
1.1

 
1.3

 
2.4

 
0.5

 
0.9

 
1.4

Total
$
230.9


$
2,404.9


$
2,635.8


$
446.6


$
1,314.8


$
1,761.4

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts (b)
$
362.3

 
$
1,550.8

 
$
1,913.1

 
$
1,027.4

 
$
1,443.9

 
$
2,471.3

Equity-related derivative instruments (c)
13.6

 
178.5

 
192.1

 
15.3

 
73.1

 
88.4

Foreign currency forward contracts
14.7

 
—

 
14.7

 
0.8

 
—

 
0.8

Other
0.2

 
0.1

 
0.3

 
0.2

 
0.1

 
0.3

Total
$
390.8


$
1,729.4


$
2,120.2


$
1,043.7


$
1,517.1


$
2,560.8

_______________ 

(a)
Our long-term derivative assets and liabilities are included in other assets, net, and other long-term liabilities, respectively, in our condensed consolidated balance sheets.

(b)
We consider credit risk in our fair value assessments. As of March 31, 2015 and December 31, 2014 , (i) the fair values of our cross-currency and interest rate derivative contracts that represented assets have been reduced by credit risk valuation adjustments aggregating $78.1 million and $30.9 million , respectively, and (ii) the fair values of our cross-currency and interest rate derivative contracts that represented liabilities have been reduced by credit risk valuation adjustments aggregating $90.5 million and $64.6 million , respectively. The adjustments to our derivative assets relate to the credit risk associated with counterparty nonperformance and the adjustments to our derivative liabilities relate to credit risk associated with our own nonperformance. In all cases, the adjustments take into account offsetting liability or asset positions within a given contract. Our determination of credit risk valuation adjustments generally is based on our and our counterparties’ credit risks, as observed in the credit default swap market and market quotations for certain of our subsidiaries’ debt instruments, as applicable. The changes in the credit risk valuation adjustments associated with our cross-currency and interest rate derivative contracts resulted in net losses of $16.9 million and $29.5 million during the three months ended March 31, 2015 and 2014 , respectively. These amounts are included in realized and unrealized gains (losses) on derivative instruments, net, in our condensed consolidated statements of operations. For further information regarding our fair value measurements, see note 5 .

(c)
Our equity-related derivative instruments include the fair value of (i) the share collar (the ITV Collar ) with respect to the ITV plc ( ITV ) shares held by our company at March 31, 2015 , (ii) the share collar (the Sumitomo Collar ) with respect to the shares of Sumitomo Corporation held by our company and (iii) Virgin Media ’s conversion hedges (the Virgin Media Capped Calls ) with respect to Virgin Media ’s 6.50% convertible senior notes. The fair values of our equity collars do not include credit risk valuation adjustments as we assume that any losses incurred by our company in the event of nonperformance by the respective counterparty would be, subject to relevant insolvency laws, fully offset against amounts we owe to such counterparty pursuant to the related secured borrowing arrangements.


11

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows:
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
Cross-currency and interest rate derivative contracts
$
740.5


$
(420.2
)
Equity-related derivative instruments:





ITV Collar
(105.4
)
 
—

Sumitomo Collar
(10.1
)
 
8.5

Virgin Media Capped Calls
0.6


0.2

Ziggo Collar
—

 
15.4

Total equity-related derivative instruments
(114.9
)

24.1

Foreign currency forward contracts
(8.1
)

20.0

Other
1.0


(0.5
)
Total
$
618.5


$
(376.6
)
 
The net cash received or paid related to our derivative instruments is classified as an operating, investing or financing activity in our condensed consolidated statements of cash flows based on the objective of the derivative instrument and the classification of the applicable underlying cash flows. For derivative contracts that are terminated prior to maturity, the cash paid or received upon termination that relates to future periods is classified as a financing activity. The classification of these cash inflows (outflows) is as follows:
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
Operating activities
$
(137.8
)
 
$
(210.8
)
Investing activities
2.6

 
—

Financing activities
(486.5
)
 
(98.2
)
Total
$
(621.7
)
 
$
(309.0
)

Counterparty Credit Risk

We are exposed to the risk that the counterparties to the derivative instruments of our subsidiary borrowing groups will default on their obligations to us. We manage these credit risks through the evaluation and monitoring of the creditworthiness of, and concentration of risk with, the respective counterparties. In this regard, credit risk associated with our derivative instruments is spread across a relatively broad counterparty base of banks and financial institutions. Collateral is generally not posted by either party under the derivative instruments of our subsidiary borrowing groups. At March 31, 2015 , our exposure to counterparty credit risk included derivative assets with an aggregate fair value of $2,197.7 million .

Details of our Derivative Instruments

In the following tables, we present the details of the various categories of our subsidiaries’ derivative instruments. For each subsidiary, the notional amount of multiple derivative instruments that mature within the same calendar month are shown in the aggregate and interest rates are presented on a weighted average basis. In addition, for derivative instruments that were in effect as of March 31, 2015 , we present a single date that represents the applicable final maturity date. For derivative instruments that become effective subsequent to March 31, 2015 , we present a range of dates that represents the period covered by the applicable derivative instruments.
  

12

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Cross-currency and Interest Rate Derivative Contracts

Cross-currency Swaps:

The terms of our outstanding cross-currency swap contracts at March 31, 2015 are as follows:
Subsidiary /
F inal maturity date
 
Notional
amount
due from
counterparty
 
Notional
amount
due to
counterparty
 
Interest rate
due from
counterparty
 
Interest rate
due to
counterparty
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Virgin Media Investment Holdings Limited ( VMIH ), a subsidiary of Virgin Media:
 
 
 
 
 
 
 
 
 
January 2023
 
$
400.0

 
€
339.6

 
5.75%
 
4.33%
February 2022
 
$
1,400.0

 
£
873.6

 
5.01%
 
5.49%
October 2020
 
$
1,370.4

 
£
881.6

 
6 mo. LIBOR + 2.75%
 
6 mo. GBP LIBOR + 3.10%
June 2020
 
$
984.6

 
£
640.1

 
6 mo. LIBOR + 2.75%
 
6 mo. GBP LIBOR + 3.18%
January 2021
 
$
500.0

 
£
308.9

 
5.25%
 
6 mo. GBP LIBOR + 2.06%
January 2023
 
$
500.0

 
£
325.1

 
5.25%
 
5.26%
October 2022
 
$
450.0

 
£
272.0

 
6.00%
 
6.43%
January 2022
 
$
425.0

 
£
255.8

 
5.50%
 
5.82%
April 2019
 
$
191.5

 
£
122.3

 
5.38%
 
5.49%
November 2016 (a)
 
$
55.0

 
£
27.7

 
6.50%
 
7.03%
October 2019
 
$
50.0

 
£
30.3

 
8.38%
 
8.98%
October 2019 - October 2022
 
$
50.0

 
£
30.7

 
6.00%
 
5.75%
UPC Broadband Holding BV ( UPC Broadband Holding ), a subsidiary of UPC Holding BV ( UPC Holding ):
 
 
 
 
 
 
 
 
 
July 2016 (a)
 
$
575.0

 
€
434.1

 
6 mo. LIBOR + 2.40%
 
3.78%
July 2016 - July 2018
 
$
575.0

 
€
434.1

 
6 mo. LIBOR + 2.40%
 
6.68%
July 2021
 
$
440.0

 
€
337.2

 
6 mo. LIBOR + 2.50%
 
6 mo. EURIBOR + 2.87%
January 2020
 
$
327.5

 
€
249.5

 
6 mo. LIBOR + 4.92%
 
7.52%
October 2020
 
$
300.0

 
€
219.1

 
6 mo. LIBOR + 3.00%
 
6 mo. EURIBOR + 3.04%
January 2017 - July 2021
 
$
262.1

 
€
194.1

 
6 mo. LIBOR + 2.50%
 
6 mo. EURIBOR + 2.51%
July 2018
 
$
250.0

 
€
188.7

 
6 mo. LIBOR + 1.75%
 
5.91%
November 2019
 
$
250.0

 
€
181.5

 
7.25%
 
7.74%
November 2021
 
$
250.0

 
€
181.4

 
7.25%
 
7.50%
January 2020
 
$
197.5

 
€
150.5

 
6 mo. LIBOR + 4.92%
 
6 mo. EURIBOR + 4.91%
December 2016
 
$
340.0

 
CHF
370.9

 
6 mo. LIBOR + 3.50%
 
6 mo. CHF LIBOR + 4.01%
January 2017 - July 2021
 
$
300.0

 
CHF
278.3

 
6 mo. LIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.46%
November 2019
 
$
250.0

 
CHF
226.8

 
7.25%
 
6 mo. CHF LIBOR + 5.01%
July 2016 (a)
 
$
225.0

 
CHF
206.3

 
6 mo. LIBOR + 4.81%
 
1.00%

13

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Subsidiary /
F inal maturity date
 
Notional
amount
due from
counterparty
 
Notional
amount
due to
counterparty
 
Interest rate
due from
counterparty
 
Interest rate
due to
counterparty
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
July 2016 - January 2020
 
$
225.0

 
CHF
206.3

 
6 mo. LIBOR + 4.81%
 
5.44%
July 2021
 
$
200.0

 
CHF
186.0

 
6 mo. LIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.55%
July 2016 (a)
 
$
201.5

 
RON
489.3

 
6 mo. LIBOR + 3.50%
 
1.40%
July 2016 - July 2020
 
$
201.5

 
RON
489.3

 
6 mo. LIBOR + 3.50%
 
11.34%
January 2021
 
€
720.8

 
CHF
877.0

 
6 mo. EURIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.62%
January 2017 - September 2022
 
€
383.8

 
CHF
477.0

 
6 mo. EURIBOR + 2.00%
 
6 mo. CHF LIBOR + 2.22%
January 2017
 
€
360.4

 
CHF
589.0

 
6 mo. EURIBOR + 3.75%
 
6 mo. CHF LIBOR + 3.94%
April 2018
 
€
285.1

 
CHF
346.7

 
10.51%
 
9.87%
January 2020
 
€
175.0

 
CHF
258.6

 
7.63%
 
6.76%
July 2021
 
€
161.4

 
CHF
187.1

 
6 mo. EURIBOR + 2.35%
 
6 mo. CHF LIBOR + 2.76%
July 2020
 
€
107.4

 
CHF
129.0

 
6 mo. EURIBOR + 3.00%
 
6 mo. CHF LIBOR + 3.28%
January 2017
 
€
75.0

 
CHF
110.9

 
7.63%
 
6.98%
December 2015
 
€
69.1

 
CLP
53,000.0

 
3.50%
 
5.75%
January 2020
 
€
318.9

 
CZK
8,818.7

 
5.58%
 
5.44%
January 2017
 
€
60.0

 
CZK
1,703.1

 
5.50%
 
6.99%
July 2017
 
€
39.6

 
CZK
1,000.0

 
3.00%
 
3.75%
July 2016 (a)
 
€
260.0

 
HUF
75,570.0

 
5.50%
 
5.00%
July 2016 - January 2017
 
€
260.0

 
HUF
75,570.0

 
5.50%
 
10.56%
December 2016
 
€
150.0

 
HUF
43,367.5

 
5.50%
 
2.00%
July 2018
 
€
78.0

 
HUF
19,500.0

 
5.50%
 
9.15%
January 2017
 
€
245.0

 
PLN
1,000.6

 
5.50%
 
9.03%
September 2016
 
€
200.0

 
PLN
892.7

 
6.00%
 
3.91%
January 2020
 
€
144.6

 
PLN
605.0

 
5.50%
 
7.98%
July 2017
 
€
82.0

 
PLN
318.0

 
3.00%
 
5.60%
December 2015
 
CLP 53,000.0

 
€
69.1

 
5.75%
 
3.50%
Amsterdamse Beheer-en Consultingmaatschappij BV ( ABC B.V. ), a subsidiary of Ziggo Group Holding:
 
 
 
 
 
 
 
 
 
January 2022
 
$
2,350.0

 
€
1,727.0

 
6 mo. LIBOR + 2.75%
 
4.56%
January 2023
 
$
400.0

 
€
339.0

 
5.88%
 
4.58%
Unitymedia Hessen GmbH & Co. KG ( Unitymedia Hessen ), a subsidiary of Unitymedia:
 


 



 

 

January 2023
 
$
1,652.9

 
€
1,252.5

 
5.67%
 
4.50%
January 2021
 
$
797.1

 
€
546.5

 
5.50%
 
5.60%
VTR:
 
 
 
 
 
 
 
 
 
January 2022
 
$
1,400.0

 
CLP
760,340.0

 
6.88%
 
10.94%

14

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



_______________ 

(a)
Unlike the other cross-currency swaps presented in this table, the identified cross-currency swaps do not involve the exchange of notional amounts at the inception and maturity of the instruments. Accordingly, the only cash flows associated with these instruments are interest payments and receipts.

Interest Rate Swaps:

The terms of our outstanding interest rate swap contracts at March 31, 2015 are as follows:
Subsidiary / Final maturity date
 
Notional amount
 
Interest rate due from
counterparty
 
Interest rate due to
counterparty
 
 
in millions
 
 
 
 
VMIH:
 
 
 
 
 
 
 
October 2018
 
£
2,155.0

 
6 mo. GBP LIBOR
 
1.52%
January 2021
 
£
650.0

 
5.50%
 
6 mo. GBP LIBOR + 1.84%
January 2021
 
£
650.0

 
6 mo. GBP LIBOR + 1.84%
 
3.87%
December 2015
 
£
600.0

 
6 mo. GBP LIBOR
 
2.90%
April 2018
 
£
300.0

 
6 mo. GBP LIBOR
 
1.37%
UPC Broadband Holding:
 
 
 
 
 
 
 
July 2020
 
$
1,000.0

 
6.63%
 
6 mo. LIBOR + 3.03%
January 2022
 
$
750.0

 
6.88%
 
6 mo. LIBOR + 4.89%
July 2020
 
€
750.0

 
6.38%
 
6 mo. EURIBOR + 3.16%
July 2016
 
€
631.3

 
6 mo. EURIBOR
 
0.20%
July 2016 - January 2021
 
€
250.0

 
6 mo. EURIBOR
 
2.52%
July 2016 - January 2023
 
€
210.0

 
6 mo. EURIBOR
 
2.88%
July 2016 - July 2020
 
€
171.3

 
6 mo. EURIBOR
 
3.95%
November 2021
 
€
107.0

 
6 mo. EURIBOR
 
2.89%
July 2016
 
CHF
900.0

 
6 mo. CHF LIBOR
 
0.05%
January 2022
 
CHF
711.5

 
6 mo. CHF LIBOR
 
1.89%
July 2016 - January 2021
 
CHF
500.0

 
6 mo. CHF LIBOR
 
1.65%
July 2016 - January 2018
 
CHF
400.0

 
6 mo. CHF LIBOR
 
2.51%
December 2016
 
CHF
370.9

 
6 mo. CHF LIBOR
 
3.82%
November 2019
 
CHF
226.8

 
6 mo. CHF LIBOR + 5.01%
 
6.88%
ABC B.V.:
 
 
 
 
 
 
 
January 2022
 
€
1,566.0

 
6 mo. EURIBOR
 
1.66%
January 2016
 
€
689.0

 
1 mo. EURIBOR + 3.75%
 
6 mo. EURIBOR + 3.59%
January 2021
 
€
500.0

 
6 mo. EURIBOR
 
2.60%
July 2016
 
€
290.0

 
6 mo. EURIBOR
 
0.20%
July 2016 - January 2023
 
€
290.0

 
6 mo. EURIBOR
 
2.84%
March 2021
 
€
175.0

 
6 mo. EURIBOR
 
2.32%
July 2016
 
€
171.3

 
6 mo. EURIBOR
 
0.20%
July 2016 - January 2022
 
€
171.3

 
6 mo. EURIBOR
 
3.44%
Telenet International Finance S.a.r.l ( Telenet International ), a subsidiary of Telenet:
 
 
 
 
 
 
 
June 2023
 
€
500.0

 
3 mo. EURIBOR
 
1.45%

15

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Subsidiary / Final maturity date
 
Notional amount
 
Interest rate due from
counterparty
 
Interest rate due to
counterparty
 
 
in millions
 
 
 
 
July 2017 - June 2022
 
€
420.0

 
3 mo. EURIBOR
 
2.08%
June 2021
 
€
400.0

 
3 mo. EURIBOR
 
0.41%
July 2017 - June 2023
 
€
382.0

 
3 mo. EURIBOR
 
1.89%
July 2017
 
€
150.0

 
3 mo. EURIBOR
 
3.55%
August 2015 - June 2022
 
€
55.0

 
3 mo. EURIBOR
 
1.81%
June 2015
 
€
50.0

 
3 mo. EURIBOR
 
3.55%

Interest Rate Caps

Our purchased and sold interest rate cap contracts with respect to EURIBOR at March 31, 2015 are detailed below:
Subsidiary / Final maturity date
 
Notional  amount
 
EURIBOR cap rate
 
 
in millions
 
 
Interest rate caps purchased (a):
 
 
 
 
Liberty Global Europe Financing BV ( LGE Financing ), the immediate parent of UPC Holding:
 
 
 
January 2020
€
735.0

 
7.00%
Telenet International:
 
 
 
June 2015 - June 2017
€
50.0

 
4.50%
Telenet NV, a subsidiary of Telenet:
 
 
 
December 2017
€
0.6

 
6.50%
December 2017
€
0.6

 
5.50%
 
 
 
 
 
Interest rate cap sold (b):
 
 
 
 
UPC Broadband Holding:
 
 
 
January 2020
€
735.0

 
7.00%
 _______________

(a)
Our purchased interest rate caps entitle us to receive payments from the counterparty when EURIBOR exceeds the EURIBOR cap rate.

(b)
Our sold interest rate cap requires that we make payments to the counterparty when EURIBOR exceeds the EURIBOR cap rate.


16

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Interest Rate Collars

Our interest rate collar contracts establish floor and cap rates with respect to EURIBOR on the indicated notional amounts at March 31, 2015 , as detailed below:
Subsidiary / Final maturity date
 
Notional
amount
 
EURIBOR floor rate (a)
 
EURIBOR cap rate (b)
 
 
in millions
 
 
 
 
UPC Broadband Holding:
 
 
 
 
 
 
January 2020
€
1,135.0

 
1.00%
 
3.54%
Telenet International:
 
 
 
 
 
 
July 2017
€
650.0

 
2.00%
 
4.00%
 _______________

(a)
We make payments to the counterparty when EURIBOR is less than the EURIBOR floor rate.

(b)
We receive payments from the counterparty when EURIBOR is greater than the EURIBOR cap rate.

Foreign Currency Forwards

The following table summarizes our outstanding foreign currency forward contracts at March 31, 2015 :
Subsidiary
 
Currency
purchased
forward
 
Currency
sold
forward
 
Maturity dates
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
LGE Financing
$
674.9

 
€
629.0

 
April 2015
LGE Financing
€
255.0

 
$
277.2

 
April 2015
LGE Financing
€
45.4

 
£
33.0

 
April 2015
UPC Broadband Holding
$
22.2

 
CZK
540.0

 
April 2015 - March 2016
UPC Broadband Holding
€
97.5

 
CHF
109.5

 
April 2015 - March 2016
UPC Broadband Holding
€
19.5

 
CZK
540.0

 
April 2015 - March 2016
UPC Broadband Holding
€
19.3

 
HUF
6,000.0

 
April 2015 - March 2016
UPC Broadband Holding
€
42.6

 
PLN
180.0

 
April 2015 - December 2015
UPC Broadband Holding
€
39.2

 
RON
175.2

 
April 2015 - March 2016
UPC Broadband Holding
£
3.6

 
€
4.8

 
April 2015 - March 2016
UPC Broadband Holding
CZK
249.0

 
€
9.0

 
April 2015
UPC Broadband Holding
HUF
1,950.0

 
€
6.5

 
April 2015
UPC Broadband Holding
PLN
79.5

 
€
19.4

 
April 2015
Telenet NV
$
49.4

 
€
43.7

 
April 2015 - March 2016
VTR
$
62.7

 
CLP
38,702.9

 
April 2015 - December 2015


17

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 5 )     Fair Value Measurements

We use the fair value method to account for (i) certain of our investments and (ii) our derivative instruments. The reported fair values of these investments and derivative instruments as of March 31, 2015 likely will not represent the value that will be paid or received upon the ultimate settlement or disposition of these assets and liabilities. In the case of the investments that we account for using the fair value method, the values we realize upon disposition will be dependent upon, among other factors, market conditions and the forecasted financial performance of the investees at the time of any such disposition. With respect to our derivative instruments, we expect that the values realized generally will be based on market conditions at the time of settlement, which may occur at the maturity of the derivative instrument or at the time of the repayment or refinancing of the underlying debt instrument.

GAAP provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. We record transfers of assets or liabilities in or out of Levels 1, 2 or 3 at the beginning of the quarter during which the transfer occurred. During the three months ended March 31, 2015 , no such transfers were made.

All of our Level 2 inputs (interest rate futures, swap rates and certain of the inputs for our weighted average cost of capital calculations) and certain of our Level 3 inputs (forecasted volatilities and credit spreads) are obtained from pricing services. These inputs, or interpolations or extrapolations thereof, are used in our internal models to calculate, among other items, yield curves, forward interest and currency rates and weighted average cost of capital rates. In the normal course of business, we receive market value assessments from the counterparties to our derivative contracts. Although we compare these assessments to our internal valuations and investigate unexpected differences, we do not otherwise rely on counterparty quotes to determine the fair values of our derivative instruments. The midpoints of applicable bid and ask ranges generally are used as inputs for our internal valuations.

For our investments in ITV and Sumitomo , the recurring fair value measurements are based on the quoted closing price of the respective shares at each reporting date. Accordingly, the valuations of these investments fall under Level 1 of the fair value hierarchy. Our other investments that we account for at fair value are privately-held companies, and therefore, quoted market prices are unavailable. The valuation technique we use for such investments is a combination of an income approach (discounted cash flow model based on forecasts) and a market approach (market multiples of similar businesses). With the exception of certain inputs for our weighted average cost of capital calculations that are derived from pricing services, the inputs used to value these investments are based on unobservable inputs derived from our assumptions. Therefore, the valuation of our privately-held investments falls under Level 3 of the fair value hierarchy. Any reasonably foreseeable changes in assumed levels of unobservable inputs for the valuations of our Level 3 investments would not be expected to have a material impact on our financial position or results of operations.

The recurring fair value measurement of our equity-related derivatives are based on binomial option pricing models, which require the input of observable and unobservable variables such as exchange traded equity prices, risk-free interest rates, dividend yields and forecasted volatilities of the underlying equity securities. The valuations of our equity-related derivatives are based on a combination of Level 1 inputs (exchange traded equity prices), Level 2 inputs (interest rate futures and swap rates) and Level 3 inputs (forecasted volatilities). As changes in volatilities could have a significant impact on the overall valuations, we have determined that these valuations fall under Level 3 of the fair value hierarchy. For the March 31, 2015 valuation of the ITV Collar , we used estimated volatilities ranging from 24.4% to 30.1% . At March 31, 2015 , the valuations of the Sumitomo Collar and the Virgin Media Capped Calls were not significantly impacted by forecasted volatilities.

As further described in note 4 , we have entered into various derivative instruments to manage our interest rate and foreign currency exchange risk. The recurring fair value measurements of these derivative instruments are determined using discounted cash flow models. Most of the inputs to these discounted cash flow models consist of, or are derived from, observable Level 2 data for substantially the full term of these derivative instruments. This observable data includes most interest rate futures and swap rates, which are retrieved or derived from available market data. Although we may extrapolate or interpolate this data, we do not otherwise alter this data in performing our valuations. We incorporate a credit risk valuation adjustment in our fair value measurements to estimate the impact of both our own nonperformance risk and the nonperformance risk of our counterparties. Our and our counterparties’ credit spreads represent our most significant Level 3 inputs, and these inputs are used to derive the credit risk valuation adjustments with respect to our various interest rate and foreign currency derivative valuations. As we would

18

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



not expect changes in our or our counterparties’ credit spreads to have a significant impact on the valuations of these derivative instruments, we have determined that these valuations fall under Level 2 of the fair value hierarchy. Our credit risk valuation adjustments with respect to our cross-currency and interest rate swaps are quantified and further explained in note 4 .

Fair value measurements are also used in connection with nonrecurring valuations performed in connection with impairment assessments and acquisition accounting. These nonrecurring valuations include the valuation of reporting units, customer relationship intangible assets, property and equipment and the implied value of goodwill. The valuation of private reporting units is based at least in part on discounted cash flow analyses. With the exception of certain inputs for our weighted average cost of capital and discount rate calculations that are derived from pricing services, the inputs used in our discounted cash flow analyses, such as forecasts of future cash flows, are based on our assumptions. The valuation of customer relationships is primarily based on an excess earnings methodology, which is a form of a discounted cash flow analysis. The excess earnings methodology requires us to estimate the specific cash flows expected from the customer relationship, considering such factors as estimated customer life, the revenue expected to be generated over the life of the customer, contributory asset charges, and other factors. Tangible assets are typically valued using a replacement or reproduction cost approach, considering factors such as current prices of the same or similar equipment, the age of the equipment and economic obsolescence. The implied value of goodwill is determined by allocating the fair value of a reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination, with the residual amount allocated to goodwill. All of our nonrecurring valuations use significant unobservable inputs and therefore fall under Level 3 of the fair value hierarchy. During the three months ended March 31, 2015 and 2014, we did not perform significant nonrecurring fair value measurements.

A summary of our assets and liabilities that are measured at fair value on a recurring basis is as follows:
 
 
 
Fair value measurements at  March 31, 2015 using:
Description
March 31,
2015
 
Quoted prices
in active
markets for
identical assets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
in millions
Assets:
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts
$
2,239.1

 
$
—

 
$
2,239.1

 
$
—

Equity-related derivative instruments
389.0

 
—

 
—

 
389.0

Foreign currency forward contracts
5.3

 
—

 
5.3

 
—

Other
2.4

 
—

 
2.4

 
—

Total derivative instruments
2,635.8

 
—

 
2,246.8

 
389.0

Investments
1,804.4

 
1,464.6

 
—

 
339.8

Total assets
$
4,440.2

 
$
1,464.6

 
$
2,246.8

 
$
728.8

 
 
 
 
 
 
 
 
Liabilities - derivative instruments:
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts
$
1,913.1

 
$
—

 
$
1,913.1

 
$
—

Equity-related derivative instruments
192.1

 
—

 
—

 
192.1

Foreign currency forward contracts
14.7

 
—

 
14.7

 
—

Other
0.3

 
—

 
0.3

 
—

Total liabilities
$
2,120.2

 
$
—

 
$
1,928.1

 
$
192.1


19

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



 
 
 
Fair value measurements at 
December 31, 2014 using:
Description
December 31, 2014
 
Quoted prices
in active
markets for
identical assets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
in millions
Assets:
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts
$
1,357.3

 
$
—

 
$
1,357.3

 
$
—

Equity-related derivative instruments
400.2

 
—

 
—

 
400.2

Foreign currency forward contracts
2.5

 
—

 
2.5

 
—

Other
1.4

 
—

 
1.4

 
—

Total derivative instruments
1,761.4

 
—

 
1,361.2

 
400.2

Investments
1,662.7

 
1,344.3

 
—

 
318.4

Total assets
$
3,424.1

 
$
1,344.3

 
$
1,361.2

 
$
718.6

Liabilities - derivative instruments:
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts
$
2,471.3

 
$
—

 
$
2,471.3

 
$
—

Equity-related derivative instruments
88.4

 
—

 
—

 
88.4

Foreign currency forward contracts
0.8

 
—

 
0.8

 
—

Other
0.3

 
—

 
0.3

 
—

Total liabilities
$
2,560.8

 
$
—

 
$
2,472.4

 
$
88.4


A reconciliation of the beginning and ending balances of our assets and liabilities measured at fair value on a recurring basis using significant unobservable, or Level 3, inputs is as follows:
 
Investments
 
Equity-related
derivative
instruments
 
Total
 
in millions
 
 
 
 
 
 
Balance of net assets at January 1, 2015
$
318.4

 
$
311.8

 
$
630.2

Gains (losses) included in net loss (a):
 
 
 
 


Realized and unrealized   losses on derivative instruments, net
—

 
(114.9
)
 
(114.9
)
Realized and unrealized   gains due to changes in fair values of certain investments, net
31.1

 
—

 
31.1

Foreign currency translation adjustments, investments and other, net
(9.7
)
 
—

 
(9.7
)
Balance of net assets at March 31, 2015
$
339.8

 
$
196.9

 
$
536.7

 
_______________

(a)
Most of these net gains (losses) relate to assets and liabilities that we continue to carry on our condensed consolidated balance sheet as of March 31, 2015 .


20

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 6 )     Long-lived Assets

Property and Equipment, Net
        
The details of our property and equipment and the related accumulated depreciation are set forth below:
 
March 31,
2015
 
December 31,
2014
 
in millions
 
 
 
 
Distribution systems
$
24,366.0

 
$
26,012.5

Customer premises equipment
5,977.1

 
6,213.9

Support equipment, buildings and land
4,126.0

 
4,298.4

 
34,469.1

 
36,524.8

Accumulated depreciation
(12,647.2
)
 
(12,684.2
)
Total property and equipment, net
$
21,821.9

 
$
23,840.6


During the three months ended March 31, 2015 and 2014 , we recorded non-cash increases related to vendor financing arrangements of $295.0 million and $170.5 million , respectively, which exclude related value-added taxes ( VAT ) of $35.0 million and $16.3 million , respectively, that were also financed by our vendors under these arrangements. In addition, during the three months ended March 31, 2015 and 2014 , we recorded non-cash increases to our property and equipment related to assets acquired under capital leases of $62.0 million and $49.0 million , respectively.

Goodwill

Changes in the carrying amount of our goodwill during the three months ended March 31, 2015 are set forth below:
 
January 1, 2015
 
Acquisitions
and related
adjustments
 
Foreign
currency
translation
adjustments
 
March 31,
2015
 
in millions
European Operations Division:
 
 
 
 
 
 
 
U.K./Ireland
$
9,245.1

 
$
0.4

 
$
(451.8
)
 
$
8,793.7

The Netherlands
8,605.0

 
132.5

 
(994.2
)
 
7,743.3

Germany
3,456.9

 
—

 
(392.0
)
 
3,064.9

Belgium
1,978.9

 
—

 
(224.4
)
 
1,754.5

Switzerland/Austria
3,591.9

 
—

 
(21.4
)
 
3,570.5

Total Western Europe
26,877.8

 
132.9

 
(2,083.8
)
 
24,926.9

Central and Eastern Europe
1,302.1

 
0.6

 
(108.3
)
 
1,194.4

Total European Operations Division
28,179.9

 
133.5

 
(2,192.1
)
 
26,121.3

Chile
440.3

 
—

 
(12.9
)
 
427.4

Corporate and other
381.4

 
—

 
—

 
381.4

Total
$
29,001.6


$
133.5


$
(2,205.0
)

$
26,930.1



21

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Intangible Assets Subject to Amortization, Net

The details of our intangible assets subject to amortization are set forth below: 
 
 
March 31, 2015
 
December 31, 2014
 
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
 
$
10,962.6

 
$
(3,130.9
)
 
$
7,831.7

 
$
12,142.5

 
$
(3,056.3
)
 
$
9,086.2

Other
 
198.9

 
(113.1
)
 
85.8

 
235.4

 
(131.8
)
 
103.6

Total
 
$
11,161.5

 
$
(3,244.0
)
 
$
7,917.5

 
$
12,377.9

 
$
(3,188.1
)
 
$
9,189.8




22

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 7 )     Debt and Capital Lease Obligations

The U.S. dollar equivalents of the components of our consolidated debt and capital lease obligations are as follows:
 
March 31, 2015
 
 
 
Carrying value (d)
Weighted
average
interest
rate (a)
 
Unused borrowing capacity (b)
 
Estimated fair value (c)
Borrowing currency
 
U.S. $
equivalent
 
March 31, 2015
 
December 31, 2014
 
March 31, 2015
 
December 31, 2014
 
 
 
in millions
Debt:
 
 
 
VM Notes
5.63
%
 
—

 
$
—

 
$
10,602.7

 
$
8,461.0

 
$
10,117.2

 
$
8,060.7

VM Credit Facility
3.77
%
 
£
660.0

 
979.7

 
3,768.1

 
4,734.9

 
3,752.0

 
4,804.0

VM Convertible Notes
6.50
%
 
—

 
—

 
182.3

 
178.7

 
56.6

 
56.8

Ziggo Credit Facilities
3.64
%
 
€
650.0

 
697.3

 
5,249.0

 
4,663.0

 
5,180.4

 
4,710.8

Ziggo SPE Notes
4.48
%
 
—

 
—

 
1,747.3

 
—

 
1,687.4

 
—

Ziggo Notes
6.82
%
 
—

 
—

 
985.7

 
1,082.3

 
953.1

 
1,077.0

Unitymedia Notes
5.04
%
 
—

 
—

 
7,628.8

 
7,869.3

 
7,250.8

 
7,400.9

Unitymedia Revolving Credit Facilities
—

 
€
500.0

 
536.4

 
—

 
319.4

 
—

 
338.8

UPCB SPE Notes
6.85
%
 
—

 
—

 
2,872.2

 
4,279.0

 
2,703.8

 
4,009.4

UPC Broadband Holding Bank Facility
3.25
%
 
€
846.2

 
907.8

 
1,509.5

 
3,156.4

 
1,516.7

 
3,179.2

UPC Holding Senior Notes
6.59
%
 
—

 
—

 
1,619.8

 
2,603.6

 
1,481.5

 
2,391.6

Telenet SPE Notes
5.91
%
 
—

 
—

 
2,171.3

 
2,450.4

 
2,038.3

 
2,299.0

Telenet Credit Facility
3.44
%
 
€
322.9

 
346.4

 
1,461.5

 
1,633.4

 
1,452.9

 
1,638.6

VTR Finance Senior Secured Notes
6.88
%
 
—

 
—

 
1,459.5

 
1,439.4

 
1,400.0

 
1,400.0

Sumitomo Collar Loan
1.88
%
 
—

 
—

 
817.3

 
818.0

 
786.9

 
787.7

Liberty Puerto Rico Bank Facility
5.20
%
 
$
40.0

 
40.0

 
666.7

 
666.2

 
672.0

 
672.0

ITV Collar Loan
1.73
%
 
—

 
—

 
649.1

 
678.2

 
638.1

 
667.0

Vendor financing (e)
3.37
%
 
—

 
—

 
832.3

 
946.4

 
832.3

 
946.4

Other
9.29
%
 
(f)
 
195.2

 
155.6

 
171.5

 
155.6

 
171.5

Total debt
4.94
%
 
 
 
$
3,702.8

 
$
44,378.7

 
$
46,151.1

 
42,675.6

 
44,611.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital lease obligations:
 
 
 
 
 
 
 
 
 
 
 
 
Unitymedia
 
712.5

 
810.1

Telenet
 
367.9

 
413.4

Virgin Media
 
231.3

 
255.3

Other subsidiaries
 
96.0

 
68.8

Total capital lease obligations
 
1,407.7

 
1,547.6

Total debt and capital lease obligations
 
44,083.3

 
46,159.0

Current maturities
 
(1,292.8
)
 
(1,550.9
)
Long-term debt and capital lease obligations
 
$
42,790.5

 
$
44,608.1


23

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



_______________ 

(a)
Represents the weighted average interest rate in effect at March 31, 2015 for all borrowings outstanding pursuant to each debt instrument, including any applicable margin. The interest rates presented represent stated rates and do not include the impact of derivative instruments, deferred financing costs, original issue premiums or discounts or commitment fees, all of which affect our overall cost of borrowing. Including the effects of derivative instruments, original issue premiums or discounts and commitment fees, but excluding the impact of financing costs, our weighted average interest rate on our aggregate variable- and fixed-rate indebtedness was 5.4% at March 31, 2015 . For information regarding our derivative instruments, see note 4 .

(b)
Unused borrowing capacity represents the maximum availability under the applicable facility at March 31, 2015 without regard to covenant compliance calculations or other conditions precedent to borrowing. At March 31, 2015 , based on the applicable leverage and other financial covenants, the full amount of unused borrowing capacity was available to be borrowed under each of the respective subsidiary facilities, except that our aggregate availability under Unitymedia ’s (i) €420.0 million ( $450.6 million ) senior secured revolving credit facility (the UM Senior Secured Facility ) and (ii) €80.0 million ( $85.8 million ) super senior secured revolving credit facility (together with the UM Senior Secured Facility , the Unitymedia Revolving Credit Facilities ) was limited to €439.1 million ( $471.1 million ). When the relevant March 31, 2015 compliance reporting requirements have been completed, and assuming no changes from March 31, 2015 borrowing levels, we anticipate that our availability under the Unitymedia Revolving Credit Facilities will be limited to €481.9 million ( $517.0 million ) and our availability under the UPC Broadband Holding Bank Facility will be limited to €769.9 million ( $826.0 million ). In addition to these limitations, the debt instruments of our subsidiaries contain restricted payment tests that limit the amount that can be loaned or distributed to other Liberty Global subsidiaries and ultimately to Liberty Global . At March 31, 2015 , these restrictions did not impact our ability to access the liquidity of our subsidiaries to satisfy our corporate liquidity needs beyond what is described above, except that the availability to be loaned or distributed by Unitymedia was limited to €21.6 million ( $23.2 million ). When the relevant March 31, 2015 compliance reporting requirements have been completed and assuming no changes from March 31, 2015 borrowing levels, we anticipate that the availability to be loaned or distributed by Unitymedia will be limited to €64.4 million ( $69.1 million ) and the availability to be loaned or distributed by Ziggo will be limited to €425.3 million ( $456.3 million ). For information regarding certain transactions completed subsequent to March 31, 2015 that could have an impact on unused borrowing capacity, see note 15 .

(c)
The estimated fair values of our debt instruments are determined using the average of applicable bid and ask prices (mostly Level 1 of the fair value hierarchy) or, when quoted market prices are unavailable or not considered indicative of fair value, discounted cash flow models (mostly Level 2 of the fair value hierarchy). The discount rates used in the cash flow models are based on the market interest rates and estimated credit spreads of the applicable entity, to the extent available, and other relevant factors. For additional information regarding fair value hierarchies, see note 5 .

(d)
Amounts include the impact of premiums and discounts, where applicable.

(e)
Represents amounts owed pursuant to interest-bearing vendor financing arrangements that are used to finance certain of our property and equipment additions. These obligations are generally due within one year . At March 31, 2015 and December 31, 2014 , the amounts owed pursuant to these arrangements include $90.9 million and $101.7 million , respectively, of VAT that was paid on our behalf by the vendor. Repayments of vendor financing obligations are included in repayments and repurchases of debt and capital lease obligations in our condensed consolidated statements of cash flows.

(f)
Unused borrowing capacity relates to the senior secured revolving credit facility of entities within VTR , which includes a $160.0 million U.S. dollar facility (the VTR Dollar Credit Facility ) and a CLP 22.0 billion ( $35.2 million ) Chilean peso facility (the VTR CLP Credit Facility ), each of which were undrawn at March 31, 2015 . The VTR Dollar Credit Facility and the VTR CLP Credit Facility have fees on unused commitments of 1.1% and 1.34% per year, respectively.


24

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



VM Notes

On March 30, 2015, Virgin Media Secured Finance PLC ( Virgin Media Secured Finance ), a wholly-owned subsidiary of Virgin Media , issued (i) $500.0 million principal amount of 5.25% senior secured notes due January 15, 2026 (the Original 2026 VM Senior Secured Notes ) and (ii) £525.0 million ( $779.3 million ) principal amount of 4.875% senior secured notes due January 15, 2027 (the 2027 VM Senior Secured Notes ). The net proceeds from the Original 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes were used to (a) redeem 10% of the principal amount of each of the following series of notes issued by Virgin Media Secured Finance : (1) the £1,100.0 million ( $1,632.8 million ) principal amount of 6.0% senior secured notes due April 15, 2021 (the April 2021 VM Sterling Senior Secured Notes ), (2) the $1.0 billion principal amount of 5.375% senior secured notes due April 15, 2021 (the April 2021 VM Dollar Senior Secured Notes and, together with the April 2021 VM Sterling Senior Secured Notes , the April 2021 VM Senior Secured Notes ) and (3) the £430.0 million ( $638.3 million ) principal amount of 5.5% senior secured notes due January 15, 2025 (the 2025 VM Sterling Senior Secured Notes ), each at a redemption price equal to 103% of the applicable redeemed principal amount in accordance with the indentures governing each of the notes, and (b) prepay in full the existing £375.0 million ( $556.6 million ) outstanding principal amount of term loan A ( VM Facility A ) and $400.0 million of the existing $2,755.0 million outstanding principal amount of term loan B ( VM Facility B ), each under the VM Credit Facility (as described below). In connection with these transactions, we recognized a loss on debt modification and extinguishment, net, of $30.1 million . This loss includes (I) the write-off of $17.9 million of deferred financing costs, (II) the payment of $10.7 million of redemption premium and (III) the write-off of $1.5 million of unamortized discount.

On April 30, 2015, Virgin Media Secured Finance issued $500.0 million principal amount of 5.250% senior secured notes due January 15, 2026 (the Additional 2026 VM Senior Secured Notes and, together with the Original 2026 VM Senior Secured Notes , the 2026 VM Senior Secured Notes ). The Additional 2026 VM Senior Secured Notes were issued at 101% of par. The net proceeds from the Additional 2026 VM Senior Secured Notes were used to prepay $500.0 million of the outstanding principal amount of VM Facility B under the VM Credit Facility .

The 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes are senior obligations of Virgin Media Secured Finance that rank equally with all of the existing and future senior debt of Virgin Media Secured Finance and are senior to all existing and future subordinated debt of Virgin Media Secured Finance . The 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes are guaranteed on a senior basis by Virgin Media and certain subsidiaries of Virgin Media (the VM Senior Secured Guarantors ) and are secured by liens on substantially all of the assets of Virgin Media Secured Finance and the VM Senior Secured Guarantors (except for Virgin Media ).

The 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes contain certain customary incurrence-based covenants. For example, the ability to raise certain additional debt and make certain distributions or loans to other subsidiaries of Liberty Global is subject to a consolidated net leverage ratio test, as specified in the indenture. In addition, the 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes provide that any failure to pay principal prior to expiration of any applicable grace period, or any acceleration with respect to other indebtedness of £75.0 million ( $111.3 million ) or more in the aggregate of VMIH or the restricted subsidiaries (as specified in the indenture) is an event of default under the 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes .

Subject to the circumstances described below, the 2026 VM Senior Secured Notes are non-callable until January 15, 2020 and the 2027 VM Senior Secured Notes are non-callable until January 15, 2021 (the Call Date s ). At any time prior to the applicable Call Date , Virgin Media Secured Finance may redeem some or all of the 2026 VM Senior Secured Notes or the 2027 VM Senior Secured Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to the applicable Call Date using the discount rate (as specified in the indenture) as of the redemption date plus 50 basis points.


25

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Virgin Media Secured Finance may redeem some or all of the 2026 VM Senior Secured Notes or the 2027 VM Senior Secured Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and additional amounts (as specified in the indenture), if any, to the applicable redemption date, if redeemed during the 12-month period commencing on January 15 of the years set forth below:
 
 
Redemption price
Year
 
2026 VM Senior Secured Notes
 
2027 VM Senior Secured Notes
 
 
 
 
 
2020
102.625%
 
N.A.
2021
101.313%
 
102.438%
2022
100.656%
 
101.219%
2023
100.000%
 
100.609%
2024 and thereafter
100.000%
 
100.000%

Prior to the applicable Call Date , during each 12-month period commencing on the date on which the 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes were issued, respectively, Virgin Media Secured Finance may redeem up to 10% of the principal amount of the 2026 VM Senior Secured Notes and the 2027 VM Senior Secured Notes , respectively, at a redemption price equal to 103% of the principal amount thereof plus accrued and unpaid interest up to (but excluding) the redemption date.

If VMIH or the restricted subsidiaries (as specified in the indenture) sell certain assets or if Virgin Media Communications Limited or certain of its subsidiaries experience specific changes in control, Virgin Media Secured Finance must offer to repurchase the relevant notes at a redemption price of 101% .

VM Credit Facility

The VM Credit Facility , as amended, is the senior secured credit facility of VMIH , together with certain other subsidiaries of Virgin Media . The details of our borrowings under the VM Credit Facility as of March 31, 2015 are summarized in the following table:
Facility
 
Maturity
 
Interest rate
 
Facility amount
(in borrowing
currency)
 
Unused
borrowing
capacity
 
Carrying
value (a)
 
 
 
 
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
B
June 7, 2020
 
LIBOR + 2.75% (b)
 
$
2,355.0

 
$
—

 
$
2,346.0

D
June 30, 2022
 
LIBOR + 3.25% (b)
 
£
100.0

 
—

 
148.1

E
June 30, 2023
 
LIBOR + 3.50% (b)
 
£
849.4

 
—

 
1,257.9

Revolving facility (c)
June 7, 2019
 
LIBOR + 3.25%
 
£
660.0

 
979.7

 
—

Total
 
$
979.7

 
$
3,752.0

 _______________

(a)
The carrying values of VM Facilities B, D and E include the impact of discounts.

(b)
VM Facilities B, D and E each have a LIBOR floor of 0.75% .

(c)
The revolving facility has a fee on unused commitments of 1.3% per year.


26

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Ziggo Credit Facilities

The details of our borrowings under Ziggo Group Holding ’s credit facilities (the Ziggo Credit Facilities ) as of March 31, 2015 are summarized in the following table:
Facility
 
Maturity
 
Interest rate
 
Facility amount
(in borrowing
currency)
 
Unused
borrowing
capacity
 
Carrying
value (a)
 
 
 
 
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
Ziggo Dollar Facility
January 15, 2022
 
LIBOR + 2.75% (c)
 
$
2,350.0

 
$
—

 
$
2,316.4

Ziggo Euro Facility
January 15, 2022
 
EURIBOR + 3.00% (b)
 
€
2,000.0

 
—

 
2,124.6

Senior Secured Proceeds Loan
January 15, 2025
 
3.750%
 
€
800.0

 
—

 
858.2

Euro Senior Proceeds Loan
January 15, 2025
 
4.625%
 
€
400.0

 
—

 
429.1

Dollar Senior Proceeds Loan
January 15, 2025
 
5.875%
 
$
400.0

 
—

 
400.0

New Ziggo Credit Facility
March 31, 2021
 
EURIBOR + 3.75%
 
€
689.2

 
—

 
739.4

Ziggo Revolving Facilities
June 30, 2020
 
(d)
 
€
650.0

 
697.3

 
—

Elimination of the Proceeds Loans in consolidation (e)
 
—

 
(1,687.3
)
Total
 
$
697.3

 
$
5,180.4

_______________
 
(a)
The carrying values of the Ziggo Euro Facility and the Ziggo Dollar Facility include the impact of discounts.

(b)
The Ziggo Euro Facility has a EURIBOR floor of 0.75% .

(c)
The Ziggo Dollar Facility has a LIBOR floor of 0.75% .

(d)
The Ziggo Revolving Facilities include (i) a €600.0 million ( $643.7 million ) facility that bears interest at EURIBOR plus a margin of 2.75% and has a fee on unused commitments of 1.1% per year and (ii) a €50.0 million ( $53.6 million ) facility that bears interest at EURIBOR plus a margin of 2.00% and has a fee on unused commitments of 0.8% per year.

(e)
Amounts relate to certain senior and senior secured notes (the Ziggo SPE Notes ) issued by special purpose financing entities (the Ziggo SPE s ) that are consolidated by Ziggo Group Holding and Liberty Global . The proceeds from the Ziggo SPE Notes were used to fund the Senior Secured Proceeds Loan , the Euro Senior Proceeds Loan and the Dollar Senior Proceeds Loan (together the Proceeds Loans ), with certain subsidiaries of Ziggo Group Holding as the borrowers. Accordingly, the amounts outstanding under the Proceeds Loans are eliminated in our condensed consolidated financial statements.


27

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Unitymedia Notes

On March 11, 2015, Unitymedia Hessen and Unitymedia NRW GmbH (each, a subsidiary of Unitymedia and, together, the UM Senior Secured Note Issuer s ) issued €500.0 million ( $536.4 million ) principal amount of 3.5% senior secured notes due January 15, 2027 (the 2015 UM Senior Secured Notes ). The net proceeds from the 2015 UM Senior Secured Notes were used to (i) redeem 10% of the principal amount of each of the following series of notes issued by the UM Senior Secured Note Issuer s: (a) the €650.0 million ( $697.4 million ) principal amount of 5.5% senior secured notes due September 15, 2022 (the September 2012 UM Senior Secured Notes ), (b) the €500.0 million ( $536.4 million ) principal amount of 5.75% senior secured notes due January 15, 2023 (the December 2012 UM Euro Senior Secured Notes ), (c) the €500.0 million ( $536.4 million ) principal amount of 5.125% senior secured notes due January 21, 2023 (the January 2013 UM Senior Secured Notes ) and (d) the €350.0 million ( $375.5 million ) principal amount of 5.625% senior secured notes due April 15, 2023 (the April 2013 UM Senior Secured Notes ), each at a redemption price equal to 103% of the applicable redeemed principal amount in accordance with the indentures governing each of the notes and (ii) prepay the outstanding balance under the UM Senior Secured Facility . In connection with these transactions, we recognized a loss on debt modification and extinguishment, net, of $8.1 million . This loss includes (1) the payment of $6.4 million of redemption premium and (2) the write-off of $1.7 million of deferred financing costs.

On March 16, 2015, Unitymedia issued €700.0 million ( $751.0 million ) principal amount of 3.75% senior notes due January 15, 2027 (the 2015 UM Senior Notes ). The net proceeds from the 2015 UM Senior Notes were used to fully redeem the €618.0 million ( $663.0 million ) principal amount of 9.5% senior notes issued by Unitymedia (the UM Senior Exchange Notes ). In connection with this transaction, we recognized a loss on debt modification and extinguishment, net, of $91.2 million , including (i) the payment of $89.8 million of redemption premium and (ii) the write-off of $1.4 million of unamortized discount.

The 2015 UM Senior Secured Notes are (i) senior obligations of the UM Senior Secured Note Issuer s that rank equally with all of the existing and future senior debt of each UM Senior Secured Note Issuer and are senior to all existing and future subordinated debt of each of the UM Senior Secured Note Issuer s, (ii) are guaranteed on a senior basis by Unitymedia and certain of its subsidiaries and (iii) are secured by a first-ranking pledge over the shares of the UM Senior Secured Note Issuer s and certain other share and/or asset security of Unitymedia and certain of its subsidiaries.

The 2015 UM Senior Notes are senior obligations of Unitymedia that rank equally with all of the existing and future senior debt of Unitymedia and are senior to all existing and future subordinated debt of Unitymedia . The 2015 UM Senior Notes are guaranteed on a senior subordinated basis by various subsidiaries of Unitymedia and are secured by a first-ranking pledge over the shares of Unitymedia and junior-priority share pledges and other asset security of certain subsidiaries of Unitymedia .

We refer to the 2015 UM Senior Secured Notes and the 2015 UM Senior Notes as the “ 2015 UM Notes ”.

The 2015 UM Notes contain certain customary incurrence-based covenants. For example, the ability to raise certain additional debt and make certain distributions or loans to other subsidiaries of Liberty Global is subject to a consolidated net leverage ratio test, as specified in the applicable indenture. The 2015 UM Notes provide that any failure to pay principal prior to expiration of any applicable grace period, or any acceleration with respect to other indebtedness of €75.0 million ( $80.5 million ) or more in the aggregate of Unitymedia or a UM Senior Secured Note Issuer or any of the restricted subsidiaries (as specified in the applicable indenture) is an event of default under the 2015 UM Notes .

Subject to the circumstances described below, the 2015 UM Notes are non-callable until January 15, 2021. At any time prior to January 15, 2021, the UM Senior Secured Note Issuer s or Unitymedia may redeem some or all of the 2015 UM Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to the redemption date using the discount rate (as specified in the applicable indenture) as of the redemption date plus 50 basis points.


28

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



The UM Senior Secured Note Issuer s or Unitymedia (as applicable) may redeem some or all of the 2015 UM Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and additional amounts (as specified in the applicable indenture), if any, to the redemption date, if redeemed during the 12-month period commencing on January 15 of the years set forth below: 
Year
 
Redemption price
 
 
2015 UM Senior Secured Notes
 
2015 UM Senior Notes
2021
101.750%
 
101.875%
2022
100.875%
 
100.938%
2023
100.438%
 
100.469%
2024 and thereafter
100.000%
 
100.000%

If Unitymedia or certain of its subsidiaries sell certain assets or experience specific changes in control, Unitymedia must offer to repurchase the 2015 UM Notes at a redemption price of 101% .

Prior to January 15, 2021, during each 12-month period commencing on the date on which the 2015 UM Senior Secured Notes were issued, the UM Senior Secured Note Issuer s may redeem up to 10% of the principal amount of the 2015 UM Senior Secured Notes at a redemption price equal to 103% of the principal amount thereof plus accrued and unpaid interest up to (but excluding) the redemption date.

UPC Broadband Holding Bank Facility

The UPC Broadband Holding Bank Facility , as amended, is the senior secured credit facility of UPC Broadband Holding . The details of our borrowings under the UPC Broadband Holding Bank Facility as of March 31, 2015 are summarized in the following table:
Facility
 
Maturity
 
Interest rate
 
Facility amount
(in borrowing
currency) (a)
 
Unused
borrowing
capacity (b)
 
Carrying
value (c)
 
 
 
 
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
Y (d)
July 1, 2020
 
6.375%
 
€
190.0

 
$
—

 
$
203.8

Z (d)
July 1, 2020
 
6.625%
 
$
1,000.0

 
—

 
1,000.0

AC (d)
November 15, 2021
 
7.250%
 
$
750.0

 
—

 
750.0

AD (d)
January 15, 2022
 
6.875%
 
$
750.0

 
—

 
750.0

AH
June 30, 2021
 
LIBOR + 2.50% (e)
 
$
1,305.0

 
—

 
1,302.1

AI
April 30, 2019
 
EURIBOR + 3.25%
 
€
1,046.2

 
907.8

 
214.6

Elimination of Facilities Y, Z, AC and AD in consolidation (d)
 
—

 
(2,703.8
)
Total
 
$
907.8

 
$
1,516.7

_______________

(a)
Except as described in (d) below, amounts represent total third-party facility amounts at March 31, 2015 without giving effect to the impact of discounts.

(b)
When the relevant March 31, 2015 compliance reporting requirements have been completed and assuming no changes from the March 31, 2015 borrowing levels, we anticipate that our availability under the UPC Broadband Holding Bank Facility will be limited to €769.9 million ( $826.0 million ). Facility AI has a fee on unused commitments of 1.3% per year.

(c)
The carrying value of Facility AH includes the impact of a discount.


29

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



(d)
Amounts relate to certain senior secured notes (the UPCB SPE Notes ) issued by special purpose financing entities (the UPCB SPE s ) that are consolidated by UPC Holding and Liberty Global . The proceeds from the UPCB SPE Notes were used to fund additional Facilities Y, Z, AC and AD, with our wholly-owned subsidiary UPC Financing Partnership ( UPC Financing ) as the borrower. Accordingly, the amounts outstanding under Facilities Y, Z, AC and AD are eliminated in our condensed consolidated financial statements.

(e)
Facility AH has a LIBOR floor of 0.75% .

Refinancing Transactions. During the first quarter of 2015, (i) a controlling interest in UPC Broadband Ireland Ltd. and its subsidiaries was transferred from a subsidiary of UPC Holding to a subsidiary of Virgin Media (the UPC Ireland Transfer ) and UPC Nederland B.V. ( UPC Nederland ) and its subsidiaries were transferred from a subsidiary of UPC Holding to a subsidiary of Ziggo Group Holding and (ii) UPC Holding used the cash consideration received for such transfers to prepay (a) in full the €500.0 million ( $536.4 million ) outstanding principal amount of Facility V under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium to UPCB Finance I Limited ( UPCB Finance I ) and, in turn UPCB Finance I used such proceeds to fully redeem its €500.0 million ( $536.4 million ) aggregate principal amount of 7.625% senior secured notes (the UPCB Finance I Notes ), (b) €560.0 million ( $600.8 million ) of the outstanding principal amount of Facility Y under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium to UPCB Finance II Limited ( UPCB Finance II ) and, in turn UPCB Finance II used such proceeds to redeem €560.0 million ( $600.8 million ) of its €750.0 million ( $804.6 million ) aggregate principal amount of 6.375% senior secured notes (the UPCB Finance II Notes ) and (c) the remaining €870.2 million ( $933.6 million ) outstanding principal amount of Facility AG under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest. In connection with these transactions, we recognized a loss on debt modification and extinguishment, net, of $74.7 million . This loss includes (1) the payment of $53.5 million of redemption premium, (2) the write-off of $16.5 million of deferred financing costs and (3) the write-off of $4.7 million of unamortized discount.

For information regarding certain financing transactions completed subsequent to March 31, 2015 that impact the UPC Broadband Holding Bank Facility , see note 15 .

UPC Holding Senior Notes

The details of the UPC Holding Senior Notes as of March 31, 2015 are summarized in the following table: 
 
 
 
 
Outstanding principal
amount
 
 
 
 
UPC Holding Senior Notes
 
Maturity
 
Borrowing
currency
 
U.S. $
equivalent
 
Estimated
fair value
 
Carrying
value (a)
 
 
 
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
UPC Holding 6.375% Senior Notes
September 15, 2022
 
€
600.0

 
$
643.7

 
$
693.6

 
$
639.0

UPC Holding 6.75% Euro Senior Notes
March 15, 2023
 
€
450.0

 
482.8

 
528.9

 
482.8

UPC Holding 6.75% CHF Senior Notes
March 15, 2023
 
CHF
350.0

 
359.7

 
397.3

 
359.7

Total
$
1,486.2

 
$
1,619.8

 
$
1,481.5

_______________

(a)
The carrying value of the UPC Holding 6.375% Senior Notes includes the impact of a discount.

Refinancing Transaction. During the first quarter of 2015, in connection with the UPC Ireland Transfer , UPC Holding used proceeds received to redeem in full the €640.0 million ( $686.6 million ) principal amount of 8.375% senior notes due August 15, 2020 (the UPC Holding 8.375% Senior Notes ). In connection with this transaction, we recognized a loss on debt modification and extinguishment, net, of $69.3 million , including (i) the payment of $59.2 million of redemption premium and (ii) the write-off of $10.1 million of deferred financing costs.


30

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



UPCB SPE Notes

The details of the UPCB SPE Notes as of March 31, 2015 are summarized in the following table:
 
 
 
 
 
 
Outstanding principal
amount
 
 
 
 
UPCB SPEs
 
Maturity
 
Interest rate
 
Borrowing
currency
 
U.S. $
equivalent
 
Estimated
fair value
 
Carrying
value
 
 
 
 
 
 
in millions
UPCB Finance II Notes
July 1, 2020
 
6.375%
 
€
190.0

 
$
203.8

 
$
212.5

 
$
203.8

UPCB Finance III Notes
July 1, 2020
 
6.625%
 
$
1,000.0

 
1,000.0

 
1,042.5

 
1,000.0

UPCB Finance V Notes
November 15, 2021
 
7.250%
 
$
750.0

 
750.0

 
810.0

 
750.0

UPCB Finance VI Notes
January 15, 2022
 
6.875%
 
$
750.0

 
750.0

 
807.2

 
750.0

Total
 
$
2,703.8

 
$
2,872.2

 
$
2,703.8


For information regarding certain financing transactions completed subsequent to March 31, 2015 that impact the UPCB SPE Notes , see note 15 .

Maturities of Debt and Capital Lease Obligations

Maturities of our debt and capital lease obligations as of March 31, 2015 are presented below for the named entity and its subsidiaries, unless otherwise noted. Amounts presented below represent U.S. dollar equivalents based on March 31, 2015 exchange rates:

Debt:
 
Virgin Media
 
Ziggo Group Holding (a)
 
Unitymedia
 
UPC
Holding (b)
 
Telenet (c)
 
Other
 
Total
 
in millions
Year ending December 31:
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 (remainder of year)
$
268.1

 
$
—

 
$
110.0

 
$
572.1

 
$
7.9

 
$
26.2

 
$
984.3

2016
11.9

 
3.6

 
14.4

 
83.0

 
7.9

 
362.2

 
483.0

2017
—

 
—

 
—

 
—

 
7.9

 
879.6

 
887.5

2018
—

 
—

 
—

 
—

 
7.9

 
236.1

 
244.0

2019
—

 
—

 
—

 
—

 
18.1

 
—

 
18.1

2020
2,355.0

 
76.9

 
—

 
1,203.8

 
548.4

 
—

 
4,184.1

Thereafter
11,496.2

 
7,719.6

 
7,250.8

 
4,291.3

 
3,036.0

 
2,075.0

 
35,868.9

Total debt maturities
14,131.2

 
7,800.1

 
7,375.2

 
6,150.2

 
3,634.1

 
3,579.1

 
42,669.9

Unamortized premium (discount)
19.9

 
24.4

 
—

 
(7.6
)
 
(2.9
)
 
(28.1
)
 
5.7

Total debt
$
14,151.1

 
$
7,824.5

 
$
7,375.2

 
$
6,142.6

 
$
3,631.2

 
$
3,551.0

 
$
42,675.6

Current portion (d)
$
281.9

 
$
3.6

 
$
124.4

 
$
655.2

 
$
7.9

 
$
39.8

 
$
1,112.8

Noncurrent portion
$
13,869.2

 
$
7,820.9

 
$
7,250.8

 
$
5,487.4

 
$
3,623.3

 
$
3,511.2

 
$
41,562.8

_______________

(a)
Amounts include the Ziggo SPE Notes issued by the Ziggo SPE s. As described above, the Ziggo SPE s are consolidated by Ziggo Group Holding .

(b)
Amounts include the UPCB SPE Notes issued by the UPCB SPE s. As described above, the UPCB SPE s are consolidated by UPC Holding .


31

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



(c)
Amounts include certain senior secured notes issued by special purpose financing entities that are consolidated by Telenet .

(d)
The outstanding principal amounts of our subsidiaries’ revolving credit facilities are included in our current debt maturities.

Capital lease obligations:
 
Unitymedia
 
Telenet
 
Virgin Media
 
Other
 
Total
 
in millions
Year ending December 31:
 
 
 
 
 
 
 
 
 
2015 (remainder of year)
$
59.0

 
$
48.1

 
$
88.2

 
$
19.7

 
$
215.0

2016
78.7

 
57.9

 
71.2

 
21.4

 
229.2

2017
78.7

 
56.2

 
33.4

 
16.4

 
184.7

2018
78.7

 
54.2

 
10.2

 
9.8

 
152.9

2019
78.7

 
44.9

 
5.2

 
6.5

 
135.3

2020
78.7

 
42.4

 
4.2

 
5.6

 
130.9

Thereafter
777.5

 
191.9

 
207.5

 
43.5

 
1,220.4

Total principal and interest payments
1,230.0

 
495.6

 
419.9

 
122.9

 
2,268.4

Amounts representing interest
(517.5
)
 
(127.7
)
 
(188.6
)
 
(26.9
)
 
(860.7
)
Present value of net minimum lease payments
$
712.5

 
$
367.9

 
$
231.3

 
$
96.0

 
$
1,407.7

Current portion
$
24.6

 
$
36.9

 
$
99.3

 
$
19.2

 
$
180.0

Noncurrent portion
$
687.9

 
$
331.0

 
$
132.0

 
$
76.8

 
$
1,227.7


Non-cash Refinancing Transactions

During the three months ended March 31, 2015 and 2014 , certain of our refinancing transactions included non-cash borrowings and repayments of debt aggregating $1,484.3 million and $1,375.5 million , respectively.


32

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 8 )     Income Taxes

Income tax benefit attributable to our loss from continuing operations before income taxes differs from the amounts computed using the applicable income tax rate as a result of the following factors:
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
 
 
 
 
Computed “expected” tax benefit (a)
$
121.4

 
$
115.5

Change in valuation allowances (b):
 
 
 
Decrease
(226.0
)
 
(55.2
)
Increase
1.0

 
4.9

International rate differences (b) (c):
 
 
 
Increase
91.3

 
57.4

Decrease
(12.4
)
 
(6.2
)
Non-deductible or non-taxable foreign currency exchange results (b):
 
 
 
Increase
69.5

 
2.1

Decrease
(8.7
)
 
(7.4
)
Tax effect of intercompany financing
38.2

 
40.5

Non-deductible or non-taxable interest and other expenses (b):
 
 
 
Decrease
(33.7
)
 
(31.0
)
Increase
11.2

 
15.0

Basis and other differences in the treatment of items associated with investments in subsidiaries and affiliates (b):
 
 
 
Increase
14.5

 
0.5

Decrease
(1.0
)
 
(49.6
)
Recognition of previously unrecognized tax benefits
8.9

 
28.8

Other, net
3.7

 
1.7

Total income tax benefit
$
77.9

 
$
117.0

_______________

(a)
The statutory or “expected” tax rates are the U.K. rates of 20.25% and 21.5% for the three months ended March 31, 2015 and 2014, respectively. A further decline to 20.0% occurred in April 2015. The estimated impact of this decline was reflected in our deferred tax balances in the third quarter of 2013, the quarter in which the scheduled tax rate changes in the U.K. were enacted.

(b)
Country jurisdictions giving rise to increases are grouped together and shown separately from country jurisdictions giving rise to decreases.

(c)
Amounts reflect adjustments (either an increase or a decrease) to “expected” tax benefit for statutory rates in jurisdictions in which we operate outside of the U.K.

As of March 31, 2015 , our unrecognized tax benefits of $484.3 million included $266.1 million of tax benefits that would have a favorable impact on our effective income tax rate if ultimately recognized, after considering amounts that we would expect to be offset by valuation allowances.

We are currently undergoing income tax audits in Chile, Germany, the Netherlands, Slovakia, Switzerland and the U.S. In the U.S. , the consolidated income tax returns of Liberty Global, Inc. ( LGI ) for 2009 through 2015 are under examination and the Internal Revenue Service ( IRS ) notified us of proposed adjustments to (i) the 2013 taxable income of LGI during the second

33

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



quarter of 2015 and (ii) the 2010 and 2009 taxable income of LGI during the fourth quarter of 2013. We have entered into the appeals process with the IRS with respect to the proposed adjustments to LGI’s 2010 and 2009 taxable income. While we believe that the resolution of these proposed adjustments to LGI’s 2013, 2010 and 2009 taxable income will not have a material impact on our consolidated financial position, results of operations or cash flows, no assurance can be given that this will be the case given the amounts involved and the complex nature of the related issues. During the next 12 months, it is reasonably possible that the resolution of ongoing examinations by tax authorities as well as expiration of statutes of limitation could result in significant reductions to our unrecognized tax benefits related to tax positions taken as of March 31, 2015 . The amount of any such reductions could range up to $250 million . Other than the potential impacts of these ongoing examinations and the expected expiration of certain statutes of limitation, we do not expect any material changes to our unrecognized tax benefits during the next 12 months. No assurance can be given as to the nature or impact of any changes in our unrecognized tax positions during the next 12 months.

( 9 )     Equity

Share Repurchases

During the three months ended March 31, 2015 , we purchased a total of 9,781,810 Liberty Global Class C ordinary shares at a weighted average price of $48.87 per share, for an aggregate purchase price of $478.1 million , including direct acquisition costs and the effects of derivative instruments. At March 31, 2015 , the remaining amount authorized for share repurchases was $3,458.1 million .

( 10 )     Share-based Compensation

Our share-based compensation expense is based on the share-based incentive awards held by our and our subsidiaries’ employees, including share-based incentive awards related to Liberty Global shares and the shares of certain of our subsidiaries. The following table summarizes our share-based compensation expense: 
 
Three months ended March 31,
 
2015
 
2014
 
in millions
Liberty Global shares:
 
 
 
Performance-based incentive awards (a)
$
42.1

 
$
20.6

Other share-based incentive awards
25.4

 
30.2

Total Liberty Global shares
67.5

 
50.8

Telenet share-based incentive awards
3.2

 
2.9

Other
0.7

 
1.4

Total
$
71.4

 
$
55.1

Included in:
 
 
 
Operating expense
$
0.7

 
$
1.3

SG&A expense
70.7

 
53.8

Total
$
71.4

 
$
55.1

_______________

(a)
Includes share-based compensation expense related to (i) Liberty Global performance-based restricted share units ( PSU s ), (ii) a challenge performance award plan for certain executive officers and key employees (the Challenge Performance Awards ) and (iii) for the 2015 period, the Performance Grant Units ( PGUs ). The Challenge Performance Awards include performance-based share appreciation rights ( PSAR s ) and PSU s.
 
 

34

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 11 ) Restructuring Liability

A summary of the changes in our restructuring liability during the three months ended March 31, 2015 is set forth in the table below:
 
 
Employee
severance
and
termination
 
Office
closures
 
Contract termination and other
 
Total
 
 
in millions
 
 
 
 
 
 
 
 
 
Restructuring liability as of January 1, 2015
 
$
27.6

 
$
12.5

 
$
116.0

 
$
156.1

Restructuring charges
 
13.4

 
(0.8
)
 
3.0

 
15.6

Cash paid
 
(12.1
)
 
(1.1
)
 
(7.4
)
 
(20.6
)
Foreign currency translation adjustments and other
 
(1.1
)
 
1.5

 
(9.5
)
 
(9.1
)
Restructuring liability as of March 31, 2015
 
$
27.8

 
$
12.1

 
$
102.1

 
$
142.0

 
 
 
 
 
 
 
 
 
Current portion
 
$
27.7

 
$
3.4

 
$
17.6

 
$
48.7

Noncurrent portion
 
0.1

 
8.7

 
84.5

 
93.3

Total
 
$
27.8

 
$
12.1

 
$
102.1

 
$
142.0


Our restructuring charges during the three months ended March 31, 2015 include employee severance and termination costs related to certain reorganization and integration activities of $8.1 million in our Switzerland/Austria segment and $2.4 million and $1.6 million in Puerto Rico and the Netherlands , respectively. We expect to record further restructuring charges during the remainder of 2015 in connection with the continued integration of Ziggo with UPC Nederland and the European Operations Division .

( 12 )     Earnings or Loss per Ordinary Share

Basic earnings or loss per share attributable to Liberty Global shareholders is computed by dividing net earnings or loss attributable to Liberty Global shareholders by the weighted average number of ordinary shares outstanding for the period. Diluted earnings or loss per share attributable to Liberty Global shareholders presents the dilutive effect, if any, on a per share basis of potential ordinary shares (e.g., options, share appreciation rights ( SAR s ), PSAR s, restricted share units ( RSU s ) and convertible securities) as if they had been exercised, vested or converted at the beginning of the periods presented.

The details of our loss attributable to Liberty Global shareholders are set forth below:
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
Amounts attributable to Liberty Global shareholders:
 
 
 
Loss from continuing operations
$
(537.5
)
 
$
(419.5
)
Earnings from discontinued operation
—

 
340.7

Net loss attributable to Liberty Global shareholders
$
(537.5
)
 
$
(78.8
)

We reported losses from continuing operations attributable to Liberty Global shareholders for the three months ended March 31, 2015 and 2014 . Therefore, the potentially dilutive effect at March 31, 2015 and 2014 of (i) the aggregate number of shares issuable pursuant to outstanding options, SAR s, PSAR s and RSU s of approximately 36.1 million and 37.9 million , respectively, (ii) the number of shares issuable pursuant to PSU s and PGUs of approximately 4.7 million and 3.3 million , respectively, and (iii) the aggregate number of shares issuable pursuant to obligations that may be settled in cash or shares of approximately 2.6 million and 2.6 million , respectively, were not included in the computation of diluted loss per share attributable to Liberty Global shareholders

35

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



because their inclusion would have been anti-dilutive to the computation or, in the case of certain PSU s, because such awards had not yet met the applicable performance criteria.

( 13 )     Commitments and Contingencies

Commitments

In the normal course of business, we have entered into agreements that commit our company to make cash payments in future periods with respect to programming contracts, network and connectivity commitments, purchases of customer premises and other equipment, non-cancelable operating leases and other items. The U.S. dollar equivalents of such commitments as of March 31, 2015 are presented below:
 
Payments due during:
 
 
 
Remainder
of 2015
 
 
 
 
 
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Programming commitments
$
626.2

 
$
772.8

 
$
613.8

 
$
530.0

 
$
231.6

 
$
1.6

 
$
0.3

 
$
2,776.3

Network and connectivity commitments
265.3

 
249.1

 
228.0

 
120.2

 
84.9

 
60.5

 
873.2

 
1,881.2

Purchase commitments
800.8

 
116.8

 
56.8

 
11.3

 
3.9

 
—

 
—

 
989.6

Operating leases
128.7

 
138.9

 
116.1

 
97.7

 
76.4

 
45.2

 
245.6

 
848.6

Other commitments
272.2

 
180.0

 
138.9

 
82.9

 
42.5

 
21.5

 
26.6

 
764.6

Total (a)
$
2,093.2


$
1,457.6


$
1,153.6


$
842.1


$
439.3


$
128.8


$
1,145.7


$
7,260.3

_______________

(a)
The commitments reflected in this table do not reflect any liabilities that are included in our March 31, 2015 condensed consolidated balance sheet. 

Programming commitments consist of obligations associated with certain of our programming, studio output and sports rights contracts that are enforceable and legally binding on us in that we have agreed to pay minimum fees without regard to (i) the actual number of subscribers to the programming services, (ii) whether we terminate service to a portion of our subscribers or dispose of a portion of our distribution systems or (iii) whether we discontinue our premium sports services. In addition, programming commitments do not include increases in future periods associated with contractual inflation or other price adjustments that are not fixed. Accordingly, the amounts reflected in the above table with respect to these contracts are significantly less than the amounts we expect to pay in these periods under these contracts. Payments to programming vendors have in the past represented, and are expected to continue to represent in the future, a significant portion of our operating costs. In this regard, during the three months ended March 31, 2015 and 2014 , the third-party programming and copyright costs incurred by our broadband communications and direct-to-home ( DTH ) operations aggregated $557.5 million and $517.0 million , respectively.

Network and connectivity commitments include (i) Telenet ’s commitments for certain operating costs associated with its leased network, (ii) commitments associated with our mobile virtual network operator ( MVNO ) agreements and (iii) certain repair and maintenance, fiber capacity and energy commitments of Unitymedia . Subsequent to October 1, 2015 , Telenet ’s commitments for certain operating costs will be subject to adjustment based on changes in the network operating costs incurred by Telenet with respect to its own networks. These potential adjustments are not subject to reasonable estimation and, therefore, are not included in the above table. The amounts reflected in the table with respect to certain of our MVNO commitments represent fixed minimum amounts payable under these agreements and, therefore, may be significantly less than the actual amounts we ultimately pay in these periods.

Purchase commitments include unconditional purchase obligations associated with commitments to purchase customer premises and other equipment that are enforceable and legally binding on us.


36

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Commitments arising from acquisition agreements are not reflected in the above table. For information regarding our commitments under acquisition agreements, see notes 3 and 15 .

In addition to the commitments set forth in the table above, we have significant commitments under (i) derivative instruments and (ii) defined benefit plans and similar agreements, pursuant to which we expect to make payments in future periods. For information regarding our derivative instruments, including the net cash paid or received in connection with these instruments during the three months ended March 31, 2015 and 2014 , see note 4 .

We also have commitments pursuant to agreements with, and obligations imposed by, franchise authorities and municipalities, which may include obligations in certain markets to move aerial cable to underground ducts or to upgrade, rebuild or extend portions of our broadband communication systems. Such amounts are not included in the above table because they are not fixed or determinable.
 
Guarantees and Other Credit Enhancements

In the ordinary course of business, we may provide indemnifications to our lenders, our vendors and certain other parties and performance and/or financial guarantees to local municipalities, our customers and vendors. Historically, these arrangements have not resulted in our company making any material payments and we do not believe that they will result in material payments in the future.

Legal and Regulatory Proceedings and Other Contingencies

Interkabel Acquisition. On November 26, 2007 , Telenet and four associations of municipalities in Belgium, which we refer to as the pure intercommunales or the “ PICs ,” announced a non-binding agreement-in-principle to transfer the analog and digital television activities of the PICs , including all existing subscribers to Telenet . Subsequently, Telenet and the PICs entered into a binding agreement (the 2008 PICs Agreement ), which closed effective October 1, 2008 . Beginning in December 2007 , Belgacom NV/SA ( Belgacom ), the incumbent telecommunications operator in Belgium, instituted several proceedings seeking to block implementation of these agreements. It lodged summary proceedings with the President of the Court of First Instance of Antwerp to obtain a provisional injunction preventing the PICs from effecting the agreement-in-principle and initiated a civil procedure on the merits claiming the annulment of the agreement-in-principle. In March 2008 , the President of the Court of First Instance of Antwerp ruled in favor of Belgacom in the summary proceedings, which ruling was overturned by the Court of Appeal of Antwerp in June 2008 .  Belgacom brought this appeal judgment before the Cour de Cassation (the Belgian Supreme Court ), which confirmed the appeal judgment in September 2010. On April 6, 2009 , the Court of First Instance of Antwerp ruled in favor of the PICs and Telenet in the civil procedure on the merits, dismissing Belgacom ’s request for the rescission of the agreement-in-principle and the 2008 PICs Agreement . On June 12, 2009 , Belgacom appealed this judgment with the Court of Appeal of Antwerp. In this appeal, Belgacom is now also seeking compensation for damages should the 2008 PICs Agreement not be rescinded. However, the claim for compensation has not yet been quantified. At the introductory hearing, which was held on September 8, 2009 , the proceedings on appeal were postponed indefinitely at the request of Belgacom .

In parallel with the above proceedings, Belgacom filed a complaint with the Government Commissioner seeking suspension of the approval by the PICs ’ board of directors of the agreement-in-principle and initiated suspension and annulment procedures before the Belgian Council of State against these approvals and subsequently against the board resolutions of the PICs approving the 2008 PICs Agreement . In this complaint, Belgacom ’s primary argument was that the PICs should have organized a public market consultation before entering into the agreement-in-principal and the 2008 PICs Agreement .  Belgacom ’s efforts to suspend approval of these agreements were unsuccessful. In the annulment cases, the Belgian Council of State decided on May 2, 2012 to refer a number of questions of interpretation of European Union ( EU ) law for preliminary ruling to the European Court of Justice. On November 14, 2013, the European Court of Justice ruled that a majority of the reasons invoked by the PICs not to organize a market consultation were not overriding reasons of public interest to justify abolishing the PICs ’ duty to organize such consultation. The annulment case was subsequently resumed with the Belgian Council of State, which was required to follow the interpretation given by the European Court of Justice with respect to the points of EU law. On May 27, 2014, the Belgian Council of State ruled in favor of Belgacom and annulled (i) the decision of the PICs not to organize a public market consultation and (ii) the decision from the PICs ’ board of directors to approve the 2008 PICs Agreement . The Belgian Council of State ruling did not annul the 2008 PICs Agreement itself. Belgacom may now resume the civil proceedings that are still pending with the Court of Appeal of Antwerp in order to have the 2008 PICs Agreement annulled and claim damages.


37

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



It is possible that Belgacom or another third party or public authority will initiate further legal proceedings in an attempt to annul the 2008 PICs Agreement . No assurance can be given as to the outcome of these or other proceedings. However, an unfavorable outcome of existing or future proceedings could potentially lead to the annulment of the 2008 PICs Agreement and/or to an obligation of Telenet to pay compensation for damages, subject to the relevant provisions of the 2008 PICs Agreement , which stipulate that Telenet is only responsible for damages in excess of €20.0 million ( $21.5 million ). In light of the fact that Belgacom has not quantified the amount of damages that it is seeking and we have no basis for assessing the amount of losses we would incur in the unlikely event that the 2008 PICs Agreement were to be annulled, we cannot provide a reasonable estimate of the range of loss that would be incurred in the event the ultimate resolution of this matter were to be unfavorable to Telenet . However, we do not expect the ultimate resolution of this matter to have a material impact on our results of operations, cash flows or financial position.

Deutsche Telekom Litigation. On December 28, 2012, Unitymedia filed a lawsuit against Telekom Deutschland GmbH ( Deutsche Telekom ), an operating subsidiary of Deutsche Telekom AG, in which Unitymedia asserts that it pays excessive prices for the co-use of Deutsche Telekom ’s cable ducts in Unitymedia ’s footprint. The Federal Network Agency approved rates for the co-use of certain ducts of Deutsche Telekom in March 2011. Based in part on these approved rates, Unitymedia is seeking a reduction of the annual lease fees (approximately €76 million ( $82 million ) for 2012) by approximately two-thirds and the return of similarly calculated overpayments from 2009 through the ultimate settlement date, plus accrued interest. While we expect a decision by the court of first instance during 2015, the resolution of this matter may take several years and no assurance can be given that Unitymedia ’s claims will be successful. Any recovery by Unitymedia will not be reflected in our consolidated financial statements until such time as the final disposition of this matter has been reached.

Vivendi Litigation. A wholly-owned subsidiary of our company is a plaintiff in certain litigation titled Liberty Media Corporation, et. al. v. Vivendi S.A. and Universal Studios. A predecessor of Liberty Global was a subsidiary of Liberty Media Corporation ( Liberty Media ) through June 6, 2004. In connection with Liberty Media ’s prosecution of the action, our subsidiary assigned its rights to Liberty Media in exchange for a contingent payout in the event Liberty Media recovered any amounts as a result of the action. Our subsidiary’s interest in any such recovery will be equal to 10% of the recovery amount, including any interest awarded, less the amount to be retained by Liberty Media for (i) all fees and expenses incurred by Liberty Media in connection with the action (including expenses to be incurred in connection with any appeals and the payment of certain deferred legal fees) and (ii) agreed upon interest on such fees and expenses. On January 17, 2013, following a jury trial, the court entered a final judgment in favor of the plaintiffs in the amount of €944 million ( $1,013 million ), including prejudgment interest. Vivendi S.A. and Universal Studios have filed a notice of appeal of the court’s final judgment to the Second Circuit Court of Appeals. As a result, the amount that our subsidiary may ultimately recover in connection with the final resolution of the action, if any, is uncertain. Any recovery by our company will not be reflected in our consolidated financial statements until such time as the final disposition of this matter has been reached.

Liberty Puerto Rico Matter. In November 2012, we completed a business combination that resulted in, among other matters, the combination of our then operating subsidiary in Puerto Rico with San Juan Cable, LLC dba OneLink Communications ( OneLink ). In connection with this transaction (the OneLink Acquisition ), Liberty Puerto Rico , as the surviving entity, became a party to certain claims previously asserted by the incumbent telephone operator against OneLink based on alleged conduct of OneLink that occurred prior to the OneLink Acquisition (the PRTC Claim ). This claim included an allegation that OneLink acted in an anticompetitive manner in connection with a series of legal and regulatory proceedings it initiated against the incumbent telephone operator in Puerto Rico beginning in 2009. In March 2014, a separate class action claim was filed in Puerto Rico (the Class Action Claim ) containing allegations substantially similar to those asserted in the PRTC Claim , but alleging ongoing injury on behalf of a consumer class (as opposed to harm to a competitor). The former owners of OneLink have partially indemnified us for any losses we may incur in connection with the PRTC Claim up to a specified maximum amount. However, the indemnity does not cover any potential losses resulting from the Class Action Claim . Liberty Puerto Rico has recorded a provision and a related indemnification asset representing its best estimate of the net loss that it may incur upon the ultimate resolution of the PRTC Claim . While Liberty Puerto Rico expects that the net amount required to satisfy these contingencies will not materially differ from the estimated amount it has accrued, no assurance can be given that the ultimate resolution of these matters will not have an adverse impact on our results of operations, cash flows or financial position in any given period.

Belgium Regulatory Developments. In December 2010, the Belgisch Instituut voor Post en Telecommunicatie and the regional regulators for the media sectors (together, the Belgium Regulatory Authorities ) published their respective draft decisions reflecting the results of their joint analysis of the broadcasting market in Belgium.


38

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



The Belgium Regulatory Authorities adopted a final decision on July 1, 2011 (the July 2011 Decision ) with some minor revisions. The regulatory obligations imposed by the July 2011 Decision include (i) an obligation to make a resale offer at “retail minus’’ of the cable analog package available to third-party operators (including Belgacom ), (ii) an obligation to grant third-party operators (except Belgacom ) access to digital television platforms (including the basic digital video package) at “retail minus,” and (iii) an obligation to make a resale offer at “retail minus’’ of broadband internet access available to beneficiaries of the digital television access obligation that wish to offer bundles of digital video and broadband internet services to their customers (except Belgacom ).

Telenet submitted draft reference offers regarding the obligations described above in February 2012, and the Belgium Regulatory Authorities published the final decision on September 9, 2013. Telenet has implemented the access obligations as described in its reference offers and, as of June 23, 2014, access to the Telenet network had become operational and can be applied by wireless operator Mobistar SA ( Mobistar ). In addition, as a result of the November 2014 decision by the Brussels Court of Appeal described below, on November 14, 2014, Belgacom submitted a request to Telenet to commence access negotiations. Telenet contests this request and has asked the Belgium Regulatory Authorities to assess the reasonableness of the Belgacom request. The timing for a decision regarding this assessment by the Belgium Regulatory Authorities is not known.

On April 2, 2013, the Belgium Regulatory Authorities issued a draft decision regarding the “retail-minus” tariffs of minus 35% for basic television (basic analog and digital video package) and minus 30% for the bundle of basic television and broadband internet services. A “retail-minus” method of pricing involves a wholesale tariff calculated as the retail price for the offered service by Telenet, excluding VAT and copyrights, and further deducting the retail costs avoided by offering the wholesale service (such as costs for billing, franchise, consumer service, marketing and sales). On October 4, 2013, the Belgium Regulatory Authorities notified a draft quantitative decision to the European Commission in which they changed the “retail-minus” tariffs to minus 30% for basic television (basic analog and digital video package) and to minus 23% for the bundle of basic television and broadband internet services. Even though the European Commission made a number of comments regarding the appropriateness of certain assumptions in the proposed costing methodology, the Belgium Regulatory Authorities adopted such “retail-minus” tariffs on December 11, 2013.

Telenet filed an appeal against the July 2011 Decision with the Brussels Court of Appeal. On November 12, 2014, the Brussels Court of Appeal rejected Telenet ’s appeal of the July 2011 Decision and accepted Belgacom ’s claim that Belgacom should be allowed access to Telenet ’s, among other operators, digital television platform and the resale of bundles of digital video and broadband internet services. Telenet is currently considering the possibility to file an appeal against this decision with the Belgian Supreme Court . Telenet also filed an appeal with the Brussels Court of Appeal against the decision regarding the quantitative aspects of the reference offers. Wireless operator Mobistar also filed an appeal against the decision regarding the quantitative aspects of the reference offers. A decision with respect to these appeals is not expected before the end of 2015. There can be no certainty that Telenet ’s appeals will be successful.

The July 2011 Decision aims to, and in its application may, strengthen Telenet ’s competitors by granting them resale access to Telenet ’s network to offer competing products and services notwithstanding Telenet ’s substantial historical financial outlays in developing the infrastructure. In addition, any resale access granted to competitors could (i) limit the bandwidth available to Telenet to provide new or expanded products and services to the customers served by its network and (ii) adversely impact Telenet ’s ability to maintain or increase its revenue and cash flows. The extent of any such adverse impacts ultimately will be dependent on the extent that competitors take advantage of the resale access ultimately afforded to Telenet ’s network and other competitive factors or market developments.

FCO Regulatory Issues. Our 2011 acquisition (the KBW Acquisition ) of the German cable network Kabel BW GmbH ( KBW ) was subject to the approval of The Federal Cartel Office (the FCO ) in Germany, which approval was received in December 2011. In January 2012, two of our competitors (collectively, the Appellants ), including the incumbent telecommunications operator, each filed an appeal (collectively, the FCO Appeals ) against the FCO regarding its decision to approve our KBW Acquisition . On August 14, 2013, the Düsseldorf Court of Appeal issued a ruling that set aside the FCO ’s clearance decision.
During the fourth quarter of 2014, we, together with our German subsidiaries, entered into agreements with the Appellants pursuant to which the Appellants withdrew the FCO Appeals and, on January 21, 2015, the FCO consented to the withdrawal. On March 15, 2015, the Federal Court of Justice terminated the proceedings, as a result of which the FCO ’s clearance decision with respect to our KBW Acquisition became final (without any additional review or conditions). On April 29, 2015, we paid the

39

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Appellants an aggregate amount of €183.5 million ( $196.9 million ), in satisfaction of the provision that we recorded during the fourth quarter of 2014. We consider this matter to be closed.
Financial Transactions Tax. Eleven countries in the EU , including Belgium, Germany, Austria and Slovakia, are participating in an enhanced cooperation procedure to introduce a financial transactions tax (the FTT ). Under the draft language of the FTT proposal, a wide range of financial transactions could be taxed at rates of at least 0.01% for derivative transactions based on the notional amount and 0.1% for other covered financial transactions based on the underlying transaction price. Each of the individual countries would be permitted to determine an exact rate, which could be higher than the proposed rates of 0.01% and 0.1% . Any implementation of the FTT could have a global impact because it would apply to all financial transactions where a financial institution is involved (including unregulated entities that engage in certain types of covered activity) and either of the parties (whether the financial institution or its counterparty) is in one of the eleven participating countries. Although ongoing debate in the relevant countries demonstrates continued momentum around the FTT , uncertainty remains as to when the FTT would be implemented and the breadth of its application. Based on our understanding of the current status of the potential FTT , we do not expect that any implementation of the FTT would occur before 2016. Any imposition of the FTT could increase banking fees and introduce taxes on internal transactions that we currently perform. Due to the uncertainty regarding the FTT , we are currently unable to estimate the financial impact that the FTT could have on our results of operations, cash flows or financial position.

Virgin Media VAT Matters. Virgin Media ’s application of the VAT with respect to certain revenue generating activities has been challenged by the U.K. tax authorities. Virgin Media has estimated its maximum exposure in the event of an unfavorable outcome to be £42.2 million ( $62.6 million ) as of March 31, 2015 . No portion of this exposure has been accrued by Virgin Media as the likelihood of loss is not considered to be probable. A court hearing was held at the end of September 2014 in relation to the U.K. tax authorities’ challenge and the court’s decision is expected prior to September 30, 2015.

On March 19, 2014, the U.K. government announced a change in legislation with respect to the charging of VAT in connection with prompt payment discounts such as those that Virgin Media offers to its fixed-line telephony customers. The changes, which took effect on May 1, 2014, impacted Virgin Media and as a result of this legislation, Virgin Media ’s revenue was £10.8 million ( $16.0 million ) lower during the first quarter of 2015 , as compared to 2014 . Recent correspondence from the U.K. government indicates that it may seek to challenge Virgin Media ’s application of the prompt payment discount rules prior to the May 1, 2014 change in legislation. If such a challenge were to be issued by the U.K. government, Virgin Media could be required to make a payment of the challenged amount in order to make an appeal. Virgin Media currently estimates that the challenged amount could be up to approximately £65 million ( $96 million ) before any penalties or interest. Any challenge and subsequent appeal would likely be subject to court proceedings that could delay the ultimate resolution of this matter for an extended period of time. No portion of this potential exposure has been accrued by Virgin Media as no claim has been asserted or assessed and the likelihood of loss is not considered to be probable.

Other Regulatory Issues. Video distribution, broadband internet, fixed-line telephony, mobile and content businesses are regulated in each of the countries in which we operate. The scope of regulation varies from country to country, although in some significant respects regulation in European markets is harmonized under the regulatory structure of the EU . Adverse regulatory developments could subject our businesses to a number of risks. Regulation, including conditions imposed on us by competition or other authorities as a requirement to close acquisitions or dispositions, could limit growth, revenue and the number and types of services offered and could lead to increased operating costs and property and equipment additions. In addition, regulation may restrict our operations and subject them to further competitive pressure, including pricing restrictions, interconnect and other access obligations, and restrictions or controls on content, including content provided by third parties. Failure to comply with current or future regulation could expose our businesses to various penalties. In this regard, during September 2014, VTR received a tariff proposal from the Chilean regulatory authority that would have retroactive effect to June 2012. The tariff proposal represented a significant reduction in the fixed-line termination rates currently charged by VTR , and VTR continued to recognize fixed-line interconnect revenue at the currently enacted rates. In February 2015, the Chilean regulatory authority revised its tariff proposal and, as this revised proposal was more in line with market rates, VTR recorded a $3.5 million reduction to its revenue during the first quarter of 2015, representing the impact of the revised tariff proposal from June 2012 through January 2015. Final resolution of the tariff-setting process in Chile is expected to occur during the first half of 2015.  VTR believes that any difference between the revised tariff proposal and the final resolution will not be material.

We have security accreditations across a range of business-to-business ( B2B ) products and services in order to increase our offerings to public sector organizations in the U.K. These accreditations are granted subject to periodic reviews of our policies

40

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



and procedures by U.K. governmental authorities. If we were to fail to maintain these accreditations or obtain new accreditations when required, it could impact our ability to provide certain offerings to the public sector.

Other. In addition to the foregoing items, we have contingent liabilities related to matters arising in the ordinary course of business, including (i) legal proceedings, (ii) issues involving VAT and wage, property and other tax issues and (iii) disputes over interconnection, programming, copyright and carriage fees. While we generally expect that the amounts required to satisfy these contingencies will not materially differ from any estimated amounts we have accrued, no assurance can be given that the resolution of one or more of these contingencies will not result in a material impact on our results of operations, cash flows or financial position in any given period. Due, in general, to the complexity of the issues involved and, in certain cases, the lack of a clear basis for predicting outcomes, we cannot provide a meaningful range of potential losses or cash outflows that might result from any unfavorable outcomes.

( 14 )     Segment Reporting

We generally identify our reportable segments as those consolidated subsidiaries that represent 10% or more of our revenue, operating cash flow (as defined below) or total assets. In certain cases, we may elect to include an operating segment in our segment disclosure that does not meet the above-described criteria for a reportable segment. We evaluate performance and make decisions about allocating resources to our operating segments based on financial measures such as revenue and operating cash flow. In addition, we review non-financial measures such as subscriber growth, as appropriate.

Operating cash flow is the primary measure used by our chief operating decision maker to evaluate segment operating performance. Operating cash flow is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, operating cash flow is defined as revenue less operating and SG&A expenses (excluding share-based compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items). Other operating items include (a) gains and losses on the disposition of long-lived assets, (b) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (c) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe operating cash flow is a meaningful measure and is superior to available GAAP measures because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between segments and (3) identify strategies to improve operating performance in the different countries in which we operate. We believe our operating cash flow measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. Operating cash flow should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings or loss, cash flow from operating activities and other GAAP measures of income or cash flows. A reconciliation of total segment operating cash flow to our loss from continuing operations before income taxes is presented below.
 
During the fourth quarter of 2014, we began presenting (i) our operating segments in the U.K. and Ireland as one combined reportable segment, (ii) our operating segments in Switzerland and Austria as one combined reportable segment and (iii) our UPC DTH operating segment, as described below, as part of our Central and Eastern Europe reportable segment. These changes were made as a result of internal changes in organizational structures, changes in how these segments are evaluated and monitored by the chief operating decision maker and the integration of certain functions within these reportable segments. Previously, (a) our operating segments in the U.K. and Switzerland were each separate reportable segments, (b) our operating segments in Ireland and Austria were combined into one reportable segment, “Other Western Europe,” and (c) our UPC DTH operating segment was included in the European Operations Division ’s central and other category. Segment information for all periods presented reflects the above-described changes. We present only the reportable segments of our continuing operations in the tables below.


41

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



As of March 31, 2015 , our reportable segments are as follows:

•
European Operations Division :
•
U.K./Ireland
•
The Netherlands
•
Germany
•
Belgium
•
Switzerland/Austria
•
Central and Eastern Europe

•
Chile

All of the reportable segments set forth above derive their revenue primarily from broadband communications services, including video, broadband internet and fixed-line telephony services. Most of our reportable segments also provide B2B services and all of our reportable segments provide mobile services. At March 31, 2015 , our operating segments in the European Operations Division provided broadband communications services in 12 European countries and DTH services to customers in the Czech Republic, Hungary, Romania and Slovakia through a Luxembourg-based organization that we refer to as “ UPC DTH .” In addition to UPC DTH , our Central and Eastern Europe segment includes our broadband communications operations in the Czech Republic, Hungary, Poland, Romania and Slovakia. The European Operations Division ’s central and other category includes (i) costs associated with certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions, and (ii) intersegment eliminations within the European Operations Division . In Chile, we provide video, broadband internet, fixed-line telephony and mobile services. Our corporate and other category includes (a) less significant consolidated operating segments that provide (1) broadband communications services in Puerto Rico and (2) programming and other services and (b) our corporate category. Intersegment eliminations primarily represent the elimination of intercompany transactions between our broadband communications and programming operations.
  

42

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Performance Measures of Our Reportable Segments

The amounts presented below represent 100% of each of our reportable segment’s revenue and operating cash flow. As we have the ability to control Telenet and Liberty Puerto Rico , we consolidate 100% of the revenue and expenses of these entities in our condensed consolidated statements of operations despite the fact that third parties own significant interests in these entities. The noncontrolling owners’ interests in the operating results of Telenet , Liberty Puerto Rico and other less significant majority-owned subsidiaries are reflected in net earnings or loss attributable to noncontrolling interests in our condensed consolidated statements of operations.
 
Revenue
 
Three months ended March 31,
 
2015
 
2014
 
in millions
European Operations Division:
 
 
 
U.K./Ireland
$
1,711.4

 
$
1,847.5

The Netherlands (a)
707.4

 
318.1

Germany
597.9

 
695.9

Belgium
502.7

 
574.2

Switzerland/Austria
439.3

 
463.8

Total Western Europe
3,958.7

 
3,899.5

Central and Eastern Europe
268.2

 
323.9

Central and other
(2.8
)
 
(0.8
)
Total European Operations Division
4,224.1

 
4,222.6

Chile
208.8

 
225.3

Corporate and other
91.8

 
93.1

Intersegment eliminations (b)
(7.8
)
 
(7.3
)
Total
$
4,516.9


$
4,533.7

______________

(a)
The amount presented for the 2014 period excludes the revenue of Ziggo , which was acquired on November 11, 2014.

(b)
Amounts are primarily related to transactions between our European Operations Division and our continuing programming operations.


43

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



 
Operating cash flow
 
Three months ended March 31,
 
2015
 
2014
 
in millions
European Operations Division:
 
 
 
U.K./Ireland
$
763.3

 
$
791.6

The Netherlands (a)
367.9

 
183.3

Germany
364.0

 
429.0

Belgium
247.0

 
302.1

Switzerland/Austria
248.8

 
264.4

Total Western Europe
1,991.0

 
1,970.4

Central and Eastern Europe
118.1

 
158.2

Central and other
(67.9
)
 
(70.9
)
Total European Operations Division
2,041.2

 
2,057.7

Chile
76.0

 
82.7

Corporate and other
(19.9
)
 
(16.9
)
Intersegment eliminations (b)
—

 
4.0

Total
$
2,097.3


$
2,127.5

______________

(a)
The amount presented for the 2014 period excludes the operating cash flow of Ziggo , which was acquired on November 11, 2014.

(b)
The amount for the 2014 period is related to transactions between our European Operations Division and the Chellomedia Disposal Group , which eliminations are no longer recorded following the completion of the Chellomedia Transaction on January 31, 2014.

44

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)




The following table provides a reconciliation of total segment operating cash flow from continuing operations to loss from continuing operations before income taxes:
 
Three months ended March 31,
 
2015
 
2014
 
in millions
 
 
 
 
Total segment operating cash flow from continuing operations
$
2,097.3

 
$
2,127.5

Share-based compensation expense
(71.4
)
 
(55.1
)
Depreciation and amortization
(1,451.4
)
 
(1,377.1
)
Impairment, restructuring and other operating items, net
(17.0
)
 
(113.6
)
Operating income
557.5

 
581.7

Interest expense
(615.9
)
 
(653.5
)
Realized and unrealized gains (losses) on derivative instruments, net
618.5

 
(376.6
)
Foreign currency transaction losses, net
(1,035.6
)
 
(20.8
)
Realized and unrealized gains (losses) due to changes in fair values of certain investments, net
151.4

 
(60.2
)
Losses on debt modification and extinguishment, net
(274.5
)
 
(20.9
)
Other income (expense), net
(1.0
)
 
13.3

Loss from continuing operations before income taxes
$
(599.6
)
 
$
(537.0
)


45

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Property and Equipment Additions of our Reportable Segments

The property and equipment additions of our reportable segments (including capital additions financed under vendor financing or capital lease arrangements) are presented below and reconciled to the capital expenditure amounts included in our condensed consolidated statements of cash flows. For additional information concerning capital additions financed under vendor financing and capital lease arrangements, see note 7 .
 
Three months ended March 31,
 
2015
 
2014
 
in millions
European Operations Division:
 
 
 
U.K./Ireland
$
347.3

 
$
369.3

The Netherlands (a)
120.8

 
52.2

Germany
142.9

 
146.0

Belgium
63.2

 
91.8

Switzerland/Austria
56.6

 
73.8

Total Western Europe
730.8

 
733.1

Central and Eastern Europe
48.6

 
46.1

Central and other
50.3

 
69.9

Total European Operations Division
829.7

 
849.1

Chile
40.4

 
45.3

Corporate and other
54.8

 
15.8

Property and equipment additions
924.9

 
910.2

Assets acquired under capital-related vendor financing arrangements
(295.0
)
 
(170.5
)
Assets acquired under capital leases
(62.0
)
 
(49.0
)
Changes in current liabilities related to capital expenditures
93.3

 
44.3

Total capital expenditures
$
661.2

 
$
735.0

______________

(a)
The amount presented for the 2014 period excludes the property and equipment additions of Ziggo , which was acquired on November 11, 2014.

46

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Revenue by Major Category

Our revenue by major category is set forth below:  
 
Three months ended March 31,
 
2015
 
2014
 
in millions
Subscription revenue (a):
 
 
 
Video
$
1,607.9

 
$
1,640.5

Broadband internet
1,239.2

 
1,143.9

Fixed-line telephony
799.7

 
826.4

Cable subscription revenue
3,646.8

 
3,610.8

Mobile subscription revenue (b)
251.7

 
257.3

Total subscription revenue
3,898.5

 
3,868.1

B2B revenue (c)
373.9

 
367.0

Other revenue (b) (d)
244.5

 
298.6

Total revenue
$
4,516.9

 
$
4,533.7

_______________

(a)
Subscription revenue includes amounts received from subscribers for ongoing services, excluding installation fees and late fees. Subscription revenue from subscribers who purchase bundled services at a discounted rate is generally allocated proportionally to each service based on the standalone price for each individual service. As a result, changes in the standalone pricing of our cable and mobile products or the composition of bundles can contribute to changes in our product revenue categories from period to period.

(b)
Mobile subscription revenue excludes mobile interconnect revenue of $54.4 million and $60.8 million during the three months ended March 31, 2015 and 2014 , respectively. Mobile interconnect revenue and revenue from mobile handset sales are included in other revenue.

(c)
B2B revenue includes revenue from business broadband internet, video, voice, wireless and data services offered to medium to large enterprises and, on a wholesale basis, to other operators. We also provide services to certain small office and home office ( SOHO ) subscribers. SOHO subscribers pay a premium price to receive enhanced service levels along with video, broadband internet, fixed-line telephony or mobile services that are the same or similar to the mass marketed products offered to our residential subscribers. Revenue from SOHO subscribers, which aggregated $66.6 million and $52.0 million during the three months ended March 31, 2015 and 2014 , respectively, is included in cable subscription revenue.

(d)
Other revenue includes, among other items, interconnect, carriage fee, mobile handset and installation revenue .


47

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Geographic Segments

The revenue of our geographic segments is set forth below:
 
Three months ended March 31,
 
2015
 
2014
 
in millions
European Operations Division:
 
 
 
U.K.
$
1,612.0

 
$
1,727.9

The Netherlands (a)
707.4

 
318.1

Germany
597.9

 
695.9

Belgium
502.7

 
574.2

Switzerland
346.8

 
352.8

Poland
101.0

 
120.5

Ireland
99.4

 
119.6

Austria
92.5

 
111.0

Hungary
65.0

 
78.7

The Czech Republic
44.4

 
58.8

Romania
38.9

 
43.5

Slovakia
15.2

 
19.2

Other
0.9

 
2.4

Total European Operations Division
4,224.1

 
4,222.6

Chile
208.8

 
225.3

Puerto Rico
79.0

 
74.7

Other, including intersegment eliminations
5.0

 
11.1

Total
$
4,516.9


$
4,533.7

______________

(a)
The amount presented for the 2014 period excludes the revenue of Ziggo , which was acquired on November 11, 2014.

48

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



( 15 )      Subsequent Events

UPC Broadband Holding Refinancing Transactions

UPCB Finance IV Limited ( UPCB Finance IV ), a special purpose financing entity that is owned 100% by a charitable trust, was created for the primary purpose of facilitating the April 15, 2015 offering of (i) $800.0 million aggregate principal amount of 5.375% senior secured notes due January 15, 2025 (the UPCB Finance IV Dollar Notes ) and (ii) €600.0 million ( $643.7 million ) aggregate principal amount of 4.0% senior secured notes due January 15, 2027 (the UPCB Finance IV Euro Notes and, together with the UPCB Finance IV Dollar Notes , the UPCB Finance IV Notes ).

UPCB Finance IV , which has no material business operations, used the proceeds from (i) the UPCB Finance IV Dollar Notes to fund a new additional facility ( Facility AL ) and (ii) the UPCB Finance IV Euro Notes to fund a new additional facility ( Facility AK and, together with Facility AL , the New Facilities ), each under the UPC Broadband Holding Bank Facility , with UPC Financing as the borrower. The call provisions, maturity and applicable interest rate for Facility AL and Facility AK are the same as those of the UPCB Finance IV Dollar Notes and the UPCB Finance IV Euro Notes , respectively.

The proceeds of the New Facilities were used to (i) prepay the remaining €190.0 million ( $203.8 million ) outstanding principal amount of Facility Y under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium, to UPCB Finance II and, in turn UPCB Finance II used such proceeds to fully redeem the remaining outstanding amount of its UPCB Finance II Notes , (ii) prepay the outstanding principal amount of Facility Z under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium, to UPCB Finance III Limited ( UPCB Finance III ) and, in turn UPCB Finance III used such proceeds to fully redeem the UPCB Finance III Notes , (iii) redeem 10% of the outstanding principal amount of each of the following: (a) Facility AC under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium, to UPCB Finance V Limited ( UPCB Finance V ) and, in turn UPCB Finance V used such proceeds to redeem 10% of the outstanding principal amount of the UPCB Finance V Notes and (b) Facility AD under the UPC Broadband Holding Bank Facility , together with accrued and unpaid interest and the related prepayment premium, to UPCB Finance VI Limited ( UPCB Finance VI ) and, in turn UPCB Finance VI used such proceeds to redeem 10% of the outstanding principal amount of the UPCB Finance VI Notes , each at a redemption price equal to 103% of the applicable redeemed principal amount in accordance with the indentures governing each of the notes, and (iv) repay the €200.0 million ( $214.6 million ) amount outstanding under Facility AI of the UPC Broadband Holding Bank Facility .

Subject to the circumstances described below, the UPCB Finance IV Dollar Notes are non-callable until January 15, 2020 and the UPCB Finance IV Euro Notes are non-callable until January 15, 2021 (each a UPCB Finance IV Notes Call Date ). If, however, at any time prior to the applicable UPCB Finance IV Notes Call Date , all or a portion of the loans under the New Facilities are voluntarily prepaid (an Early Redemption Event ), then UPCB Finance IV will be required to redeem an aggregate principal amount of the applicable UPCB Finance IV Notes equal to the aggregate principal amount of the loans so prepaid under the relevant New Facility . In general, the redemption price payable will equal 100% of the principal amount of the applicable UPCB Finance IV Notes to be redeemed and a “make-whole” premium, which is the present value of all remaining scheduled interest payments to the applicable UPCB Finance IV Notes Call Date using the discount rate (as specified in the indenture) as of the redemption date plus 50 basis points .

49

LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
March 31, 2015
(unaudited)



Upon the occurrence of an Early Redemption Event on or after the applicable UPCB Finance IV Notes Call Date , UPCB Finance IV will redeem an aggregate principal amount of the UPCB Finance IV Notes equal to the principal amount of the related facility prepaid at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest and additional amounts, (as specified in the applicable indenture), if any, to the applicable redemption date, if redeemed during the 12 -month period commencing on January 15 of the years set forth below:
 
 
Redemption price
Year
 
UPCB Finance IV Dollar Notes
 
UPCB Finance IV Euro Notes
 
 
 
 
 
2020
102.688%
 
N.A.
2021
101.792%
 
102.000%
2022
100.896%
 
101.000%
2023
100.000%
 
100.500%
2024 and thereafter
100.000%
 
100.000%

If there is a change in control (as specified in the indenture) under the UPC Broadband Holding Bank Facility , UPCB Finance IV must offer to repurchase the UPCB Finance IV Notes at a redemption price of 101% .

Prior to the applicable UPCB Finance IV Notes Call Date , during each 12 -month period commencing on the date on which the UPCB Finance IV Notes were issued, UPCB Finance IV may redeem up to 10% of the principal amount of the UPCB Finance IV Notes at a redemption price of 103% of the principal amount of the relevant UPCB Finance IV Notes plus accrued and unpaid interest up to (but excluding) the redemption date.

Virgin Media Refinancing Transactions

On April 30, 2015, Virgin Media Secured Finance issued the Additional 2026 VM Senior Secured Notes . For additional information, see note 7 .

Pending Acquisition of BASE

On April 18, 2015, Telenet entered into a definitive agreement (the BASE Agreement ) to acquire BASE Company NV ( BASE ) for a purchase price of €1,324.4 million ( $1,420.9 million ). BASE is the third-largest mobile network operator in Belgium. We expect that this acquisition will provide Telenet with cost-effective long-term mobile access to effectively compete for future growth opportunities in the Belgium mobile market. Telenet intends to finance the acquisition of BASE through a combination of €1.0 billion ( $1,072.8 million ) of new debt facilities and existing liquidity. The acquisition of BASE is subject to customary closing conditions, including merger approval from the relevant competition authorities, and is expected to close by the end of March 2016. The BASE Agreement provides that in the event the relevant competition authorities fail to approve the transaction, Telenet would be required to pay the seller a termination fee of €100.0 million ( $107.3 million ).





50

Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis, which should be read in conjunction with our condensed consolidated financial statements and the discussion and analysis included in our 2014 Annual Report on Form 10-K, is intended to assist in providing an understanding of our financial condition, changes in financial condition and results of operations and is organized as follows:

•
Forward-Looking Statements. This section provides a description of certain factors that could cause actual results or events to differ materially from anticipated results or events.
•
Overview. This section provides a general description of our business and recent events.
•
Material Changes in Results of Operations. This section provides an analysis of our results of operations for the three months ended March 31, 2015 and 2014 .
•
Material Changes in Financial Condition. This section provides an analysis of our corporate and subsidiary liquidity, condensed consolidated statements of cash flows and contractual commitments.
•
Quantitative and Qualitative Disclosures about Market Risk. This section provides discussion and analysis of the foreign currency, interest rate and other market risk that our company faces.

The capitalized terms used below have been defined in the notes to our condensed consolidated financial statements. In the following text, the terms, “we,” “our,” “our company” and “us” may refer, as the context requires, to Liberty Global or collectively to Liberty Global and its subsidiaries.

Unless otherwise indicated, convenience translations into U.S. dollars are calculated as of March 31, 2015 .
 
Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that statements in this Quarterly Report are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. In particular, statements under Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk may contain forward-looking statements, including statements regarding our business, product, foreign currency and finance strategies, our property and equipment additions, subscriber growth and retention rates, competitive, regulatory and economic factors, the timing and impacts of proposed transactions, the maturity of our markets, the anticipated impacts of new legislation (or changes to existing rules and regulations), anticipated revenue decreases or cost increases, liquidity, credit risks, foreign currency risks, target leverage levels, our future projected contractual commitments and cash flows and other information and statements that are not historical fact. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. In addition to the risk factors described in our 2014 Annual Report on Form 10-K, the following are some but not all of the factors that could cause actual results or events to differ materially from anticipated results or events:
 
•
economic and business conditions and industry trends in the countries in which we operate;
•
the competitive environment in the industries in the countries in which we operate, including competitor responses to our products and services;
•
fluctuations in currency exchange rates and interest rates;
•
instability in global financial markets, including sovereign debt issues and related fiscal reforms;
•
consumer disposable income and spending levels, including the availability and amount of individual consumer debt;
•
changes in consumer television viewing preferences and habits;

51

•
consumer acceptance of our existing service offerings, including our enhanced video, broadband internet, fixed-line telephony, mobile and business service offerings, and of new technology, programming alternatives and other products and services that we may offer in the future;
•
our ability to manage rapid technological changes;
•
our ability to maintain or increase the number of subscriptions to our enhanced video, broadband internet, fixed-line telephony and mobile service offerings and our average revenue per household;
•
our ability to provide satisfactory customer service, including support for new and evolving products and services;
•
our ability to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers;
•
our ability to maintain our revenue from channel carriage arrangements, particularly in Germany;
•
the impact of our future financial performance, or market conditions generally, on the availability, terms and deployment of capital;
•
changes in, or failure or inability to comply with, government regulations in the countries in which we operate and adverse outcomes from regulatory proceedings;
•
government intervention that opens our broadband distribution networks to competitors, such as the obligations imposed in Belgium;
•
our ability to obtain regulatory approval and satisfy other conditions necessary to close acquisitions and dispositions, and the impact of conditions imposed by competition and other regulatory authorities in connection with acquisitions, including the impact of the conditions imposed in connection with the acquisition of KBW on our operations in Germany and the Ziggo Acquisition on our operations in the Netherlands;
•
our ability to successfully acquire new businesses and, if acquired, to integrate, realize anticipated efficiencies from, and implement our business plan with respect to, the businesses we have acquired, such as Ziggo , or may acquire, such as BASE ;
•
changes in laws or treaties relating to taxation, or the interpretation thereof, in the U.K. , U.S. or in other countries in which we operate;
•
changes in laws and government regulations that may impact the availability and cost of credit and the derivative instruments that hedge certain of our financial risks;
•
the ability of suppliers and vendors (including our third-party wireless network providers under our MVNO arrangements) to timely deliver quality products, equipment, software, services and access;
•
the availability of attractive programming for our enhanced video services and the costs associated with such programming, including retransmission and copyright fees payable to public and private broadcasters;
•
uncertainties inherent in the development and integration of new business lines and business strategies;
•
our ability to adequately forecast and plan future network requirements including the costs and benefits associated with the planned U.K. network extension;
•
the availability of capital for the acquisition and/or development of telecommunications networks and services;
•
problems we may discover post-closing with the operations, including the internal controls and financial reporting process, of businesses we acquire;
•
the leakage of sensitive customer data;
•
the outcome of any pending or threatened litigation;
•
the loss of key employees and the availability of qualified personnel;

52

•
changes in the nature of key strategic relationships with partners and joint venturers; and
•
events that are outside of our control, such as political unrest in international markets, terrorist attacks, malicious human acts, natural disasters, pandemics and other similar events.
The broadband distribution and mobile service industries are changing rapidly and, therefore, the forward-looking statements of expectations, plans and intent in this Quarterly Report are subject to a significant degree of risk. These forward-looking statements and the above-described risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on any forward-looking statement.

Overview

We are an international provider of video, broadband internet, fixed-line telephony and mobile services, with consolidated operations at March 31, 2015 in 14 countries. Through Unitymedia , Ziggo Group Holding and Telenet , we provide video, broadband internet, fixed-line telephony and mobile services in Germany, the Netherlands and Belgium, respectively. Through Virgin Media , we provide (i) video, broadband internet and fixed-line telephony services in the U.K. and Ireland and (ii) mobile services in the U.K. We also provide (a) video, broadband internet and fixed-line telephony services in eight other European countries and (b) mobile services in four other European countries. The operations of Virgin Media , Unitymedia , Ziggo Group Holding , Telenet and our other operations in Europe are collectively referred to herein as the “ European Operations Division .” In Chile, we provide video, broadband internet, fixed-line telephony and mobile services through VTR . Our consolidated operations also include the broadband communications operations of Liberty Puerto Rico .

We have completed a number of transactions that impact the comparability of our 2015 and 2014 results of operations, including the Ziggo Acquisition on November 11, 2014 and a number of less significant acquisitions during 2014 . For further information regarding our pending and completed acquisitions, see notes 3 and 15 to our condensed consolidated financial statements.
  
On January 31, 2014, we completed the Chellomedia Transaction and, accordingly, the Chellomedia Disposal Group is presented as a discontinued operation in our condensed consolidated financial statements for all applicable periods presented. In the following discussion and analysis, the operating statistics, results of operations, cash flows and financial condition that we present and discuss are those of our continuing operations unless otherwise indicated.

Through our subsidiaries and affiliates, we are the largest international broadband communications operator in terms of customers. At March 31, 2015 , we owned and operated networks that passed 52,123,100 homes and served 56,022,200 revenue generating units ( RGU s), consisting of 24,178,100 video subscribers, 17,424,500 broadband internet subscribers and 14,419,600 fixed-line telephony subscribers. In addition, at March 31, 2015 , we served 4,570,000 mobile subscribers.

During the first quarter of 2015, we modified certain video subscriber definitions to better align these definitions with the underlying services received by our subscribers and have replaced our “digital cable” and “analog cable” subscriber definitions with “enhanced video” and “basic video,” respectively. A basic video subscriber receives our video service via an analog video signal or a digital video signal without subscribing to any recurring monthly service that requires the use of encryption-enabling technology. An enhanced video subscriber receives our video service via a digital video signal while subscribing to any recurring monthly service that requires the use of encryption-enabling technology.

Including the effects of acquisitions, we added a total of 71,600 RGU s during the first three months of 2015 . Excluding the effects of acquisitions ( RGU s added on the acquisition date), but including post-acquisition date RGU additions, we added 68,400 RGU s on an organic basis during the three months ended March 31, 2015 , as compared to 345,100 RGU s that we added on an organic basis during the corresponding period in 2014. The organic RGU growth during the three months ended March 31, 2015 is attributable to the net effect of (i) a decrease of 170,100 basic video RGU s, (ii) an increase of 153,900 broadband internet RGU s, (iii) an increase of 83,200 fixed-line telephony RGU s and (iv) an increase of 7,300 enhanced video RGU s.


53

We are experiencing significant competition from incumbent telecommunications operators (particularly in the Netherlands and, to a lesser extent, Switzerland, where the incumbent telecommunications operators are overbuilding our networks with fiber-to-the-home, -cabinet, -building or -node and advanced digital subscriber line technologies), DTH operators and/or other providers in all of our broadband communications markets. This significant competition, together with the maturation of certain of our markets, has contributed to organic declines in certain of our markets in revenue, RGU s and/or average monthly subscription revenue per average RGU ( ARPU ), the more notable of which include:

(i)
an organic decline in overall revenue in the Netherlands during the first quarter of 2015 , as compared to the first quarter of 2014 ;
(ii)
organic declines during the first quarter of 2015 in (a) video RGU s in most of our markets, as net declines in our basic video RGU s generally exceeded net additions to our enhanced video RGU s (including migrations from basic video) in these markets, (b) fixed-line telephony RGU s in the Netherlands and (c) total RGU s in the Netherlands; and
(iii)
organic declines in overall cable ARPU in the Netherlands and many of our other markets during the first quarter of 2015 , as compared to the first quarter of 2014 .

Material Changes in Results of Operations

As noted under Overview above, the comparability of our operating results during 2015 and 2014 is affected by acquisitions. In the following discussion, we quantify the estimated impact of acquisitions on our operating results. The acquisition impact represents our estimate of the difference between the operating results of the periods under comparison that is attributable to an acquisition. In general, we base our estimate of the acquisition impact on an acquired entity’s operating results during the first three months following the acquisition date such that changes from those operating results in subsequent periods are considered to be organic changes. Accordingly, in the following discussion, variances attributed to an acquired entity during the first 12 months following the acquisition date represent differences between the estimated acquisition impact and the actual results. Our organic growth percentages may be impacted by the fact that the numerator for the organic growth percentages includes the organic growth of the acquired entity, while the denominator may not include any amounts related to the acquired entity.

Changes in foreign currency exchange rates have a significant impact on our reported operating results as all of our operating segments, except for Puerto Rico, have functional currencies other than the U.S. dollar. Our primary exposure to foreign currency translation effects ( FX ) risk during the three months ended March 31, 2015 was to the euro and British pound sterling as 45.1% and 35.7% of our U.S. dollar revenue during the period was derived from subsidiaries whose functional currencies are the euro and British pound sterling, respectively. In addition, our reported operating results are impacted by changes in the exchange rates for the Swiss franc and other local currencies in Europe, as well as the Chilean peso. The portions of the changes in the various components of our results of operations that are attributable to changes in FX are highlighted under Discussion and Analysis of our Reportable Segments and Discussion and Analysis of our Consolidated Operating Results below. For information concerning applicable foreign currency exchange rates in effect for the periods covered by this Quarterly Report, see Quantitative and Qualitative Disclosures about Market Risk — Foreign Currency Exchange Rates below.

The amounts presented and discussed below represent 100% of each operating segment’s revenue and operating cash flow. As we have the ability to control Telenet and Liberty Puerto Rico , we consolidate 100% of the revenue and expenses of these entities in our condensed consolidated statements of operations despite the fact that third parties own significant interests in these entities. The noncontrolling owners’ interests in the operating results of Telenet , Liberty Puerto Rico and other less significant majority-owned subsidiaries are reflected in net earnings or loss attributable to noncontrolling interests in our condensed consolidated statements of operations.
    
Discussion and Analysis of our Reportable Segments

General

All of the reportable segments set forth below derive their revenue primarily from broadband communications services, including video, broadband internet and fixed-line telephony services. Most of our reportable segments also provide B2B services, and all of our reportable segments provide mobile services. For detailed information regarding the composition of our reportable segments, see note 14 to our condensed consolidated financial statements.


54

The tables presented below in this section provide a separate analysis of each of the line items that comprise operating cash flow (revenue, operating expenses and SG&A expenses, excluding share-based compensation expense, as further discussed in note 14 to our condensed consolidated financial statements), as well as an analysis of operating cash flow by reportable segment for the three months ended March 31, 2015 and 2014 . These tables present (i) the amounts reported by each of our reportable segments for the comparative periods, (ii) the U.S. dollar change and percentage change from period to period and (iii) the organic percentage change from period to period (percentage change after removing FX and the estimated impact of acquisitions). The comparisons that exclude FX assume that exchange rates remained constant at the prior year rate during the comparative periods that are included in each table. We also provide a table showing the operating cash flow margins of our reportable segments for the three months ended March 31, 2015 and 2014 at the end of this section.

The revenue of our reportable segments includes revenue earned from (i) subscribers to our broadband communications and mobile services and (ii) B2B services, interconnect, channel carriage fees, mobile handset sales, installation fees, late fees and advertising revenue. Consistent with the presentation of our revenue categories in note 14 to our condensed consolidated financial statements, we use the term “subscription revenue” in the following discussion to refer to amounts received from subscribers for ongoing services, excluding installation fees and late fees. In the following tables, mobile subscription revenue excludes the related interconnect revenue.

Most of our revenue is derived from jurisdictions that administer VAT or similar revenue-based taxes. Any increases in these taxes could have an adverse impact on our ability to maintain or increase our revenue to the extent that we are unable to pass such tax increases on to our customers. In the case of revenue-based taxes for which we are the ultimate taxpayer, we will also experience increases in our operating expenses and corresponding declines in our operating cash flow and operating cash flow margins to the extent of any such tax increases. 

We pay interconnection fees to other telephony providers when calls or text messages from our subscribers terminate on another network, and we receive similar fees from such providers when calls or text messages from their customers terminate on our networks or networks that we access through MVNO or other arrangements. The amounts we charge and incur with respect to fixed-line telephony and mobile interconnection fees are subject to regulatory oversight in many of our markets. To the extent that regulatory authorities introduce fixed-line or mobile termination rate changes, we would experience prospective changes and, in very limited cases, we could experience retroactive changes in our interconnect revenue and/or costs. The ultimate impact of any such changes in termination rates on our operating cash flow would be dependent on the call or text messaging patterns that are subject to the changed termination rates. For information regarding an ongoing tariff-setting process in Chile, see note 13 to our condensed consolidated financial statements.


55

Revenue of our Reportable Segments
 
 
Three months ended March 31,
 
Increase (decrease)
 
Organic increase (decrease)
 
2015
 
2014
 
$
 
%
 
%
 
in millions
 
 
 
 
European Operations Division:
 
 
 
 
 
 
 
 
 
U.K./Ireland
$
1,711.4

 
$
1,847.5

 
$
(136.1
)
 
(7.4
)
 
2.4

The Netherlands (a)
707.4

 
318.1

 
389.3

 
122.4

 
(1.9
)
Germany
597.9

 
695.9

 
(98.0
)
 
(14.1
)
 
4.6

Belgium
502.7

 
574.2

 
(71.5
)
 
(12.5
)
 
6.5

Switzerland/Austria
439.3

 
463.8

 
(24.5
)
 
(5.3
)
 
3.8

Total Western Europe
3,958.7

 
3,899.5

 
59.2

 
1.5

 
3.2

Central and Eastern Europe
268.2

 
323.9

 
(55.7
)
 
(17.2
)
 
0.8

Central and other
(2.8
)
 
(0.8
)
 
(2.0
)
 
N.M.

 
N.M.

Total European Operations Division
4,224.1

 
4,222.6

 
1.5

 
—

 
3.0

Chile
208.8

 
225.3

 
(16.5
)
 
(7.3
)
 
4.8

Corporate and other
91.8

 
93.1

 
(1.3
)
 
(1.4
)
 
0.9

Intersegment eliminations
(7.8
)
 
(7.3
)
 
(0.5
)
 
N.M.

 
N.M.

Total
$
4,516.9

 
$
4,533.7

 
$
(16.8
)
 
(0.4
)
 
3.0

_______________

(a)
The amount presented for the 2014 period excludes the revenue of Ziggo , which was acquired on November 11, 2014.

N.M. — Not Meaningful.

General. While not specifically discussed in the below explanations of the changes in the revenue of our reportable segments, we are experiencing significant competition in all of our broadband communications markets. This competition has an adverse impact on our ability to increase or maintain our RGU s and/or ARPU . For a description of the more notable recent impacts of this competition on our broadband communications markets, see Overview above.


56

U.K./Ireland . The decrease in U.K./Ireland ’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $44.6 million or 2.4% , (ii) the impacts of acquisitions, (iii) the impact of a disposal and (iv) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
22.3

 
$
—

 
$
22.3

ARPU (b)
8.3

 
—

 
8.3

Total increase in cable subscription revenue
30.6

 
—

 
30.6

Increase in mobile subscription revenue (c)
3.6

 
—

 
3.6

Total increase in subscription revenue
34.2

 
—

 
34.2

Increase in B2B revenue (d)
—

 
7.7

 
7.7

Increase in other non-subscription revenue (e)
—

 
2.7

 
2.7

Total organic increase
34.2

 
10.4

 
44.6

Impact of acquisitions
0.4

 
0.8

 
1.2

Impact of a disposal   (f)
—

 
(10.6
)
 
(10.6
)
Impact of FX
(141.9
)
 
(29.4
)
 
(171.3
)
Total
$
(107.3
)
 
$
(28.8
)
 
$
(136.1
)
_______________

(a)
The increase in cable subscription revenue related to a change in the average number of RGU s is primarily attributable to increases in the average numbers of broadband internet and fixed-line telephony RGU s that were only partially offset by declines in the average numbers of basic and enhanced video RGU s.

(b)
The increase in cable subscription revenue related to a change in ARPU is due to the net effect of (i) a net increase resulting from the following factors: (a) higher ARPU due to February 2015 and February 2014 price increases for broadband internet, enhanced video and fixed-line telephony services, (b) lower ARPU due to the impact of higher discounts, (c) higher ARPU due to an increase in the proportion of subscribers receiving higher-priced tiers of broadband internet services in U.K./Ireland ’s bundles, (d) lower ARPU due to lower fixed-line telephony call volume, (e) lower ARPU of $17.9 million due to a change in legislation in the U.K. with respect to the charging of VAT , as discussed below, and (f) lower ARPU resulting from the $12.2 million impact of a January 1, 2015 change in how VAT is applied to certain components of our U.K. operations and (ii) an adverse change in RGU mix in Ireland.

(c)
The increase in mobile subscription revenue relates to Virgin Media and is primarily due to the net effect of (i) an increase in the number of customers taking postpaid mobile services, (ii) a decline in the number of prepaid mobile customers, (iii) a decline of $3.6 million in postpaid mobile services revenue due to the November 2014 introduction of a new mobile program in the U.K. whereby customers can elect to purchase a mobile handset pursuant to a contract that is independent of a mobile airtime services contract (the Freestyle Mobile Proposition ), (iv) a decrease of $3.0 million related to the above-described change in VAT applicable to certain components of our U.K. operations and (v) a decline in chargeable usage as subscribers moved to higher-limit and unlimited usage bundles for voice and short message service (or SMS ). Revenue associated with handsets sold under the Freestyle Mobile Proposition is recognized upfront and included in other non-subscription revenue, as noted below. Prior to the Freestyle Mobile Proposition , this revenue, which was contingent upon delivering future airtime services, was recognized over the life of the customer contract as part of the monthly fee and included in subscription revenue.

(d)
The increase in B2B revenue is primarily due to the net effect of (i) an increase in data revenue, primarily attributable to (a) increased volume and (b) an increase of $6.5 million in the U.K. ’s amortization of deferred upfront fees on B2B contracts, (ii) a decline in voice revenue, primarily attributable to a decline in usage, and (iii) a decline in other revenue in the U.K. , largely attributable to lower equipment sales.


57

(e)
The increase in other non-subscription revenue is largely due to the net effect of (i) an increase in mobile handset sales, primarily attributable to a $21.4 million increase associated with the November 2014 introduction of the Freestyle Mobile Proposition , (ii) a decrease in installation revenue of $7.0 million and (iii) a decrease in interconnect revenue of $5.4 million, primarily due to (a) a decline in mobile SMS termination volume and (b) a reduction in fixed-line termination rates beginning in February 2014. Under the Freestyle Mobile Proposition , Virgin Media generally recognizes the full sales price for the mobile handset upon delivery, regardless of whether the sales price is received upfront or in installments.

(f)
Represents the estimated impact of the non-cable subscribers in the U.K. that we agreed to sell in the fourth quarter of 2014 (the U.K. Non-Cable Disposal ). The non-cable subscribers are being migrated to a third-party over time and Virgin Media expects this migration to be substantially complete by the end of the second quarter of 2015.

On March 19, 2014, the U.K. government announced a change in legislation with respect to the charging of VAT in connection with prompt payment discounts such as those that Virgin Media offers to its fixed-line telephony customers. The changes, which took effect on May 1, 2014, impacted Virgin Media and some of its competitors. For additional information regarding a potential challenge from the U.K. government regarding Virgin Media’s application of the prompt payment discount rules prior to the May 1, 2014 change in legislation, see note 13 to our condensed consolidated financial statements.

The Netherlands. The increase in the Netherlands’ revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , is primarily due to the Ziggo Acquisition . Due to the size of the Ziggo Acquisition and the resulting impact on the organic growth rate of the Netherlands, the below discussion and analysis of the Netherlands’ revenue is presented on a pro forma basis as if the results of Ziggo were included along with those of UPC Nederland for the three months ended March 31, 2014 . The pro forma revenue amounts for Ziggo are based on Ziggo ’s publicly-reported results for the three months ended March 31, 2014 , as adjusted to (i) convert Ziggo ’s publicly-reported results from International Financial Reporting Standards, as adopted by the EU , to GAAP , (ii) conform Ziggo ’s accounting policies to Liberty Global ’s accounting policies, (iii) reflect the impacts of the acquisition accounting applied to the Ziggo Acquisition and (iv) exclude the revenue related to a partner network agreement that was terminated shortly after the Ziggo Acquisition . We believe this pro forma revenue analysis provides the most meaningful comparison of the Netherlands’ revenue.

The pro forma decrease in the Netherlands’ revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) a pro forma organic increase of $5.2 million or 0.6% and (ii) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase (decrease) in pro forma cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
(1.3
)
 
$
—

 
$
(1.3
)
ARPU (b)
8.4

 
—

 
8.4

Total increase in pro forma cable subscription revenue
7.1

 
—

 
7.1

Increase in pro forma mobile subscription revenue (c)
5.2

 
—

 
5.2

Total increase in pro forma subscription revenue
12.3

 
—

 
12.3

Decrease in pro forma B2B revenue
—

 
(0.5
)
 
(0.5
)
Decrease in pro forma other non-subscription revenue (d)
—

 
(6.6
)
 
(6.6
)
Total pro forma organic increase (decrease)
12.3

 
(7.1
)
 
5.2

Pro forma impact of FX
(142.4
)
 
(10.7
)
 
(153.1
)
Total
$
(130.1
)
 
$
(17.8
)
 
$
(147.9
)
_______________

(a)
The pro forma decrease in cable subscription revenue related to a change in the average number of RGU s is attributable to a decline in the average number of basic video RGU s that was mostly offset by increases in the average numbers of broadband internet, enhanced video and fixed-line telephony RGU s.


58

(b)
The pro forma increase in cable subscription revenue related to a change in ARPU is due to (i) a net increase primarily resulting from the following factors: (a) higher ARPU due to the impact of lower discounts, (b) lower ARPU due to a decrease in fixed-line telephony call volume, (c) higher ARPU due to the impact of increases in the proportions of subscribers receiving higher-priced tiers of fixed-line telephony and video services in the Netherlands’ bundles, including the impact of price increases in March 2015, October 2014 and April 2014, and (d) lower ARPU from incremental enhanced video services and (ii) an improvement in RGU mix.

(c)
The pro forma increase in mobile subscription revenue is primarily due to an increase in the average number of mobile subscribers.

(d)
The pro forma decrease in other non-subscription revenue is due to (i) lower revenue from set-top box sales due to the Netherlands’ increased emphasis on the rental, as opposed to the sale, of set-top boxes, (ii) a decrease in installation revenue and (iii) a net decrease resulting from individually insignificant changes in other non-subscription revenue categories.

Germany. The decrease in Germany’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $31.7 million or 4.6% and (ii) the impact of FX , as set forth below:
 
Subscription
revenue (a)
 
Non-subscription
revenue (b)
 
Total
 
in millions
Increase in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (c)
$
24.3

 
$
—

 
$
24.3

ARPU (d)
21.1

 
—

 
21.1

Total increase in cable subscription revenue
45.4

 
—

 
45.4

Increase in mobile subscription revenue
0.6

 
—

 
0.6

Total increase in subscription revenue
46.0

 
—

 
46.0

Increase in B2B revenue
—

 
0.8

 
0.8

Decrease in other non-subscription revenue (e)
—

 
(15.1
)
 
(15.1
)
Total organic increase (decrease)
46.0

 
(14.3
)
 
31.7

Impact of FX
(118.6
)
 
(11.1
)
 
(129.7
)
Total
$
(72.6
)
 
$
(25.4
)
 
$
(98.0
)
_______________

(a)
Subscription revenue includes revenue from multi-year bulk agreements with landlords or housing associations or with third parties that operate and administer the in-building networks on behalf of housing associations. These bulk agreements, which generally allow for the procurement of the basic video signals at volume-based discounts, provide access to approximately two-thirds of Germany’s video subscribers. Germany’s bulk agreements are, to a significant extent, medium- and long-term contracts. As of March 31, 2015 , bulk agreements covering approximately 36% of the video subscribers that Germany serves through these agreements expire by the end of 2016 or are terminable on 30-days notice. During the three months ended March 31, 2015 , Germany’s 20 largest bulk agreement accounts generated approximately 8% of its total revenue (including estimated amounts billed directly to the building occupants for enhanced video, broadband internet and fixed-line telephony services). No assurance can be given that Germany’s bulk agreements will be renewed or extended on financially equivalent terms or at all.

(b)
Other non-subscription revenue includes fees received for the carriage of certain channels included in Germany’s basic and enhanced video offerings. This carriage fee revenue is subject to contracts that expire or are otherwise terminable by either party on various dates ranging from 2015 through 2018. The aggregate amount of revenue related to these carriage contracts represented approximately 4% of Germany’s total revenue during the three months ended March 31, 2015 . No assurance can be given that these contracts will be renewed or extended on financially equivalent terms, or at all. Also, our ability to increase the aggregate carriage fees that Germany receives for each channel is limited through 2016 by certain commitments we made to regulators in connection with the acquisition of KBW . 

59


(c)
The increase in cable subscription revenue related to a change in the average number of RGU s is attributable to increases in the average numbers of broadband internet, fixed-line telephony and enhanced video RGU s that were only partially offset by a decline in the average number of basic video RGU s.

(d)
The increase in cable subscription revenue related to a change in ARPU is due to (i) a net increase primarily resulting from the following factors: (a) higher ARPU due to the impact of price increases in February 2015, November 2014 and September 2014 for internet and video services, partially offset by an increase in the proportion of subscribers receiving lower-priced tiers of services in Germany’s bundles, (b) higher ARPU from fixed-line telephony services due to the net effect of (1) an increase in ARPU associated with the migration of customers to fixed-rate calling plans and related value-added services and (2) a decrease in ARPU associated with lower fixed-line telephony call volume for customers on usage-based calling plans and (c) slightly lower ARPU from basic video services, primarily due to the net effect of (A) a higher proportion of customers receiving discounted basic video services through certain bulk agreements and (B) higher negotiated rates through these agreements, and (ii) an improvement in RGU mix. The net increase in cable subscription revenue related to a change in ARPU also includes the negative impact of higher bundling and promotional discounts.
 
(e)
The decrease in other non-subscription revenue includes the unfavorable impact of $11.9 million of nonrecurring network usage revenue recorded during the first quarter of 2014 that was related to the settlement of prior period amounts. In addition, Germany’s other non-subscription revenue includes a net decrease resulting from individually insignificant changes in other non-subscription revenue categories.

Belgium. The decrease in Belgium’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $37.4 million or 6.5% and (ii) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
11.8

 
$
—

 
$
11.8

ARPU (b)
11.1

 
—

 
11.1

Total increase in cable subscription revenue
22.9

 
—

 
22.9

Increase in mobile subscription revenue (c)
8.4

 
—

 
8.4

Total increase in subscription revenue
31.3

 
—

 
31.3

Increase in B2B revenue (d)
—

 
3.7

 
3.7

Increase in other non-subscription revenue (e)
—

 
2.4

 
2.4

Total organic increase
31.3

 
6.1

 
37.4

Impact of FX
(92.9
)
 
(16.0
)
 
(108.9
)
Total
$
(61.6
)
 
$
(9.9
)
 
$
(71.5
)
_______________

(a)
The increase in cable subscription revenue related to a change in the average number of RGU s is attributable to increases in the average numbers of fixed-line telephony, broadband internet and enhanced video RGU s that were only partially offset by a decline in the average number of basic video RGU s.

(b)
The increase in cable subscription revenue related to a change in ARPU is due to (i) a net increase primarily resulting from the following factors: (a) higher ARPU due to (1) the impact of an increase in the proportion of subscribers receiving higher-priced tiers of service in Belgium’s current bundles and migrations to higher-priced bundle offerings and (2) February 2015 price increases for certain existing broadband internet, video and fixed-line telephony services and (b) lower ARPU due to the impact of higher bundling and promotional discounts and (ii) an improvement in RGU mix.


60

(c)
The increase in mobile subscription revenue is primarily due to the net effect of (i) an increase in the average number of mobile subscribers and (ii) lower ARPU primarily due to (a) a reduction in billable usage and (b) the impact of an increase in the proportion of subscribers receiving lower-priced tiers of mobile services.

(d)
The increase in B2B revenue is primarily due to higher revenue from information technology security services and related equipment sales.

(e)
The increase in other non-subscription revenue is primarily due to an increase in interconnect revenue of $4.0 million, primarily attributable to the net effect of (i) growth in mobile customers and (ii) lower SMS usage.

For information concerning certain regulatory developments that could have an adverse impact on our revenue in Belgium, see note 13 to our condensed consolidated financial statements.

Switzerland/Austria . The decrease in Switzerland/Austria ’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $17.6 million or 3.8% , (ii) the impact of an acquisition and (iii) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
4.9

 
$
—

 
$
4.9

ARPU (b)
6.8

 
—

 
6.8

Total increase in cable subscription revenue
11.7

 
—

 
11.7

Increase in mobile subscription revenue
1.5

 
—

 
1.5

Total increase in subscription revenue
13.2

 
—

 
13.2

Increase in B2B revenue (c)
—

 
3.7

 
3.7

Increase in other non-subscription revenue
—

 
0.7

 
0.7

Total organic increase
13.2

 
4.4

 
17.6

Impact of an acquisition
1.9

 
(0.1
)
 
1.8

Impact of FX
(36.1
)
 
(7.8
)
 
(43.9
)
Total
$
(21.0
)
 
$
(3.5
)
 
$
(24.5
)
_______________

(a)
The increase in cable subscription revenue related to a change in the average number of RGU s is attributable to increases in the average numbers of broadband internet, enhanced video and fixed-line telephony RGU s that were largely offset by a decline in the average number of basic video RGU s.

(b)
The increase in cable subscription revenue related to a change in ARPU is primarily due to an increase in Switzerland, as Austria’s ARPU remained relatively unchanged. The increase in ARPU in Switzerland is due to (i) an improvement in RGU mix and (ii) a net increase primarily resulting from the following factors: (a) higher ARPU due to price increases in March 2015, January 2015 and April 2014 for certain existing broadband internet, video and fixed-line telephony services, (b) lower ARPU due to the impact of an increase in the proportion of subscribers receiving lower-priced tiers of broadband internet services in Switzerland’s bundles and (c) lower ARPU due to the impact of higher bundling discounts. ARPU in Austria remained relatively unchanged, primarily due to the net effect of (1) higher ARPU due to a January 2015 price increase for video and broadband internet services and (2) lower ARPU due to the impact of higher bundling discounts.

(c)
The increase in B2B revenue is primarily due to higher revenue from voice and data services in Switzerland.




61

Central and Eastern Europe. The decrease in Central and Eastern Europe’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $2.5 million or 0.8% and (ii) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase (decrease) in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
8.2

 
$
—

 
$
8.2

ARPU (b)
(6.2
)
 
—

 
(6.2
)
Total increase in cable subscription revenue
2.0

 
—

 
2.0

Increase in mobile subscription revenue
0.1

 
—

 
0.1

Total increase in subscription revenue
2.1

 
—

 
2.1

Increase in B2B revenue (c)
—

 
2.0

 
2.0

Decrease in other non-subscription revenue
—

 
(1.6
)
 
(1.6
)
Total organic increase
2.1

 
0.4

 
2.5

Impact of FX
(53.5
)
 
(4.7
)
 
(58.2
)
Total
$
(51.4
)
 
$
(4.3
)
 
$
(55.7
)
_______________

(a)
The increase in cable subscription revenue related to a change in the average number of RGU s is primarily attributable to the net effect of (i) increases in the average numbers of enhanced video, broadband internet and fixed-line telephony RGU s in Poland, Hungary, Romania and Slovakia, (ii) a decline in the average numbers of basic video RGU s in Poland, Hungary, Romania and Slovakia, (iii) declines in the average numbers of fixed-line telephony and enhanced video RGU s in the Czech Republic and (iv) an increase in the average number of RGU s at UPC DTH .

(b)
The decrease in cable subscription revenue related to a change in ARPU is due to the net effect of (i) a decrease primarily resulting from the following factors: (a) lower ARPU due to the inclusion of lower-priced tiers of video and fixed-line telephony services in Central and Eastern Europe’s bundles, (b) lower ARPU resulting from the $4.2 million impact of a January 1, 2015 change in how VAT is calculated for the UPC DTH operations in Hungary, the Czech Republic and Slovakia and (c) higher ARPU due to the impact of lower bundling discounts and (ii) an improvement in RGU mix.

(c)
The increase in B2B revenue is primarily due to higher revenue from voice services in Poland.




62

Chile. The decrease in Chile’s revenue during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , includes (i) an organic increase of $10.9 million or 4.8% and (ii) the impact of FX , as set forth below:
 
Subscription
revenue
 
Non-subscription
revenue
 
Total
 
in millions
Increase in cable subscription revenue due to change in:
 
 
 
 
 
Average number of RGUs (a)
$
5.8

 
$
—

 
$
5.8

ARPU (b)
2.4

 
—

 
2.4

Total increase in cable subscription revenue
8.2

 
—

 
8.2

Increase in mobile subscription revenue (c)
4.4

 
—

 
4.4

Total increase in subscription revenue
12.6

 
—

 
12.6

Decrease in non-subscription revenue (d)
—

 
(1.7
)
 
(1.7
)
Total organic increase (decrease)
12.6

 
(1.7
)
 
10.9

Impact of FX
(26.0
)
 
(1.4
)
 
(27.4
)
Total
$
(13.4
)
 
$
(3.1
)
 
$
(16.5
)
_______________

(a)
The increase in cable subscription revenue related to a change in the average number of RGU s is attributable to increases in the average numbers of broadband internet, enhanced video and fixed-line telephony RGU s that were only partially offset by a decline in the average number of basic video RGU s.

(b)
The increase in cable subscription revenue related to a change in ARPU is due to (i) a net increase resulting from the following factors: (a) higher ARPU due to semi-annual inflation and other price adjustments for video, broadband internet and fixed-line telephony services, (b) lower ARPU due to the impact of higher promotional and bundling discounts, (c) higher ARPU due to the inclusion of higher-priced tiers of broadband internet and fixed-line telephony services in Chile’s bundles, (d) lower fixed-line telephony ARPU resulting from a $2.5 million adjustment recorded during the first quarter of 2015 to reflect the retroactive application of a proposed tariff on ancillary services provided directly to customers from July 2013 through February 2014 and (e) higher ARPU from incremental enhanced video services and (ii) an improvement in RGU mix.

(c)
The increase in mobile subscription revenue is attributable to increases in (i) the average number of postpaid subscribers, which more than offset the decrease in the average number of prepaid subscribers, and (ii) mobile ARPU , primarily due to a higher proportion of mobile subscribers on postpaid plans, which generate higher ARPU than prepaid plans.

(d)
The decrease in non-subscription revenue is primarily due to the net effect of (i) a decrease in interconnect revenue, partially associated with an adjustment recorded during the first quarter of 2015 to reflect a proposed tariff on fixed-line termination rates, including the $1.4 million impact of the retroactive application from June 2012 through December 2014, and (ii) an increase in installation revenue.

For information regarding the proposed tariff discussed in (b) and (d) above, see note 13 to our condensed consolidated financial statements.



63


Operating Expenses of our Reportable Segments
 
 
Three months ended March 31,
 
Increase (decrease)
 
Organic increase (decrease)
 
2015
 
2014
 
$
 
%
 
%
 
in millions
 
 
 
 
European Operations Division:
 
 
 
 
 
 
 
 
 
U.K./Ireland
$
724.4

 
$
817.3

 
$
(92.9
)
 
(11.4
)
 
(1.5
)
The Netherlands (a)
225.6

 
96.1

 
129.5

 
134.8

 
(3.4
)
Germany
144.3

 
162.0

 
(17.7
)
 
(10.9
)
 
8.2

Belgium
203.5

 
206.5

 
(3.0
)
 
(1.5
)
 
19.5

Switzerland/Austria
125.0

 
135.3

 
(10.3
)
 
(7.6
)
 
1.7

Total Western Europe
1,422.8

 
1,417.2

 
5.6

 
0.4

 
2.8

Central and Eastern Europe
109.9

 
123.1

 
(13.2
)
 
(10.7
)
 
8.6

Central and other
17.9

 
16.3

 
1.6

 
9.8

 
12.7

Total European Operations Division
1,550.6

 
1,556.6

 
(6.0
)
 
(0.4
)
 
3.4

Chile
93.2

 
101.4

 
(8.2
)
 
(8.1
)
 
4.0

Corporate and other
49.5

 
50.2

 
(0.7
)
 
(1.4
)
 
4.9

Intersegment eliminations
(8.1
)
 
(10.7
)
 
2.6

 
N.M.

 
N.M.

Total operating expenses excluding share-based compensation expense
1,685.2

 
1,697.5

 
(12.3
)
 
(0.7
)
 
3.6

Share-based compensation expense
0.7

 
1.3

 
(0.6
)
 
(46.2
)
 
 
Total
$
1,685.9

 
$
1,698.8

 
$
(12.9
)
 
(0.8
)
 
 
_______________

(a)
The amount presented for the 2014 period excludes the operating expenses of Ziggo , which was acquired on November 11, 2014.

N.M. — Not Meaningful.

General. Operating expenses include programming and copyright, network operations, mobile access and interconnect, customer operations, customer care, share-based compensation and other costs related to our operations. We do not include share-based compensation in the following discussion and analysis of the operating expenses of our reportable segments as share-based compensation expense is not included in the performance measures of our reportable segments. Share-based compensation expense is discussed under Discussion and Analysis of Our Consolidated Operating Results below. Programming and copyright costs, which represent a significant portion of our operating costs, are expected to rise in future periods as a result of (i) growth in the number of our enhanced video subscribers, (ii) higher costs associated with the expansion of our digital video content, including rights associated with ancillary product offerings and rights that provide for the broadcast of live sporting events, and (iii) rate increases. In addition, we are subject to inflationary pressures with respect to our labor and other costs and foreign currency exchange risk with respect to costs and expenses that are denominated in currencies other than the respective functional currencies of our operating segments ( non-functional currency expenses ). Any cost increases that we are not able to pass on to our subscribers through rate increases would result in increased pressure on our operating margins.

European Operations Division . The European Operations Division ’s operating expenses (exclusive of share-based compensation expense ) decreased $6.0 million or 0.4% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This decrease includes (i) an increase of $182.9 million attributable to the impacts of the Ziggo Acquisition and other less significant acquisitions and (ii) a decrease of $8.5 million attributable to the U.K. Non-Cable Disposal . Excluding the effects of acquisitions, the U.K. Non-Cable Disposal and FX , the European Operations Division ’s operating expenses increased $52.8 million or 3.4%. This increase includes the following factors:

•
An increase in programming and copyright costs of $53.2 million or 11.3%, due in part to growth in enhanced video services, predominantly in U.K./Ireland and, to a lesser extent, in Germany and Poland. The increase in programming and copyright costs also includes the impacts of certain nonrecurring adjustments related to the settlement or

64

reassessment of operational contingencies, which resulted in a net increase in programming and copyright costs of $18.0 million, as the impacts of accrual releases during the first quarter of 2015 in Switzerland/Austria of $2.6 million, in Belgium of $2.5 million and in U.K./Ireland of $1.7 million were more than offset by the impacts of accrual releases that reduced programming costs by $17.5 million in Belgium and $7.3 million in Poland during the first quarter of 2014;

•
A decrease in network-related expenses of $24.3 million or 10.9%, due in part to the impact of a reduction in local authority charges for certain elements of network infrastructure in the U.K. resulting in (i) a non-recurring benefit during the first quarter of 2015 of $7.9 million and (ii) a recurring benefit of $6.0 million during the first quarter of 2015 arising from successful appeals during the last half of 2014. The decrease in network-related expenses also includes (a) a decrease in network and customer premises equipment maintenance costs, primarily in U.K./Ireland , the European Operations Division ’s central operation and Belgium, (b) lower duct and pole rental costs, primarily in Belgium, and (c) a $1.8 million decrease due to the impacts of accrual releases in the first quarter of 2015 associated with the reassessment of operational contingencies in U.K./Ireland ;

•
An increase in outsourced labor and professional fees of $14.0 million or 15.8%, due to (i) higher call center costs, predominantly in U.K./Ireland , Germany and Belgium, and (ii) higher consulting costs, primarily in Belgium and Germany;

•
An increase in mobile handset costs of $10.2 million, primarily due to the net effect of (i) an increase in costs associated with subscriber promotions involving free or heavily-discounted handsets in Belgium, (ii) a decrease in costs as a result of continued growth of subscriber identification module or “SIM”-only contracts in U.K./Ireland and (iii) an increase in mobile handset sales to third-party retailers, primarily in Switzerland/Austria ;

•
An increase in mobile access and interconnect costs of $6.7 million or 2.8%, primarily due to the net effect of (i) increased costs in U.K./Ireland and Belgium attributable to mobile subscriber growth, (ii) lower fixed-line telephony call volumes, predominantly in U.K./Ireland , and (iii) a $2.7 million increase in Belgium due to the impact of an accrual release in the first quarter of 2014 associated with the reassessment of an operational contingency; and

•
A decrease in bad debt and collection expense of $6.4 million or 15.4%, primarily due to decreases occurring in U.K./Ireland and Belgium.

Chile. Chile’s operating expenses (exclusive of share-based compensation expense) decreased $8.2 million or 8.1% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . Excluding the effects of FX , Chile’s operating expenses increased $4.1 million or 4.0% . This increase includes the following factors:
•
An increase in programming and copyright costs of $4.1 million or 10.6%, primarily associated with (i) growth in enhanced video services and (ii) a $1.2 million increase arising from foreign currency exchange rate fluctuations with respect to Chile’s U.S. dollar denominated programming contracts. During the three months ended March 31, 2015 , $9.6 million or 26.9% of Chile’s programming costs were denominated in U.S. dollars;

•
A decrease in personnel costs of $1.7 million or 13.8%, due to individually insignificant changes in various personnel cost categories;

•
An increase in outsourced labor and professional fees of $1.4 million or 18.4%, primarily due to higher call center costs; and

•
A decrease in mobile access and interconnect costs of $0.1 million or 0.8%, primarily attributable to the net effect of (i) a $2.4 million decrease in mobile access charges due to a February 2015 tariff decline that was retroactive to May 2014, including a $1.8 million decrease related to 2014 access charges, (ii) higher roaming costs due to the impact of increased volume and (iii) an increase in interconnect costs resulting from higher call volume and higher rates.


65

SG&A Expenses of our Reportable Segments 
 
 
Three months ended March 31,
 
Increase (decrease)
 
Organic increase (decrease)
 
2015
 
2014
 
$
 
%
 
%
 
in millions
 
 
 
 
European Operations Division:
 
 
 
 
 
 
 
 
 
U.K./Ireland
$
223.7

 
$
238.6

 
$
(14.9
)
 
(6.2
)
 
3.1

The Netherlands (a)
113.9

 
38.7

 
75.2

 
194.3

 
19.3

Germany
89.6

 
104.9

 
(15.3
)
 
(14.6
)
 
3.9

Belgium
52.2

 
65.6

 
(13.4
)
 
(20.4
)
 
(3.3
)
Switzerland/Austria
65.5

 
64.1

 
1.4

 
2.2

 
12.8

Total Western Europe
544.9

 
511.9

 
33.0

 
6.4

 
4.9

Central and Eastern Europe
40.2

 
42.6

 
(2.4
)
 
(5.6
)
 
15.2

Central and other
47.2

 
53.8

 
(6.6
)
 
(12.3
)
 
13.8

Total European Operations Division
632.3

 
608.3

 
24.0

 
3.9

 
6.4

Chile
39.6

 
41.2

 
(1.6
)
 
(3.9
)
 
9.1

Corporate and other
62.2

 
59.8

 
2.4

 
4.0

 
11.0

Intersegment eliminations
0.3

 
(0.6
)
 
0.9

 
N.M.

 
N.M.

Total SG&A expenses excluding share-based compensation expense
734.4

 
708.7

 
25.7

 
3.6

 
7.0

Share-based compensation expense
70.7

 
53.8

 
16.9

 
31.4

 
 
Total
$
805.1

 
$
762.5

 
$
42.6

 
5.6

 
 
_______________

(a)
The amount presented for the 2014 period excludes the SG&A expenses of Ziggo , which was acquired on November 11, 2014.

N.M. — Not Meaningful.

General. SG&A expenses include human resources, information technology, general services, management, finance, legal and sales and marketing costs, share-based compensation and other general expenses. We do not include share-based compensation in the following discussion and analysis of the SG&A expenses of our reportable segments as share-based compensation expense is not included in the performance measures of our reportable segments. Share-based compensation expense is discussed under Discussion and Analysis of Our Consolidated Operating Results below. As noted under Operating Expenses of our Reportable Segments above, we are subject to inflationary pressures with respect to our labor and other costs and foreign currency exchange risk with respect to non-functional currency expenses .

European Operations Division . The European Operations Division ’s SG&A expenses (exclusive of share-based compensation expense) increased $24.0 million or 3.9% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This increase includes $92.7 million, attributable to the impacts of the Ziggo Acquisition and other less significant acquisitions. Excluding the effects of acquisitions and FX , the European Operations Division ’s SG&A expenses increased $38.8 million or 6.4% . This increase includes the following factors:

•
An increase in personnel costs of $11.7 million or 4.8%, primarily due to (i) increased staffing levels, primarily in Switzerland/Austria , the Netherlands and Belgium, and (ii) higher incentive compensation costs, predominantly in the European Operations Division ’s central operations and Belgium;

•
An increase in sales and marketing costs of $8.6 million or 4.0%, primarily due to the net effect of (i) higher third-party sales commissions, predominantly in Germany, (ii) lower costs associated with advertising campaigns in Germany, Belgium and U.K./Ireland , and (iii) higher costs associated with advertising campaigns, primarily in Switzerland/Austria and the Netherlands and, to a lesser extent, Poland;


66

•
An increase in information technology-related expenses of $5.2 million or 15.2%, primarily due to the net effect of (i) higher software and other information technology-related maintenance costs, predominantly in U.K./Ireland and the European Operations Division ’s central operations, and (ii) a $2.1 million decrease in Belgium due to the impact of an accrual release in the first quarter of 2015 associated with the reassessment of an operational contingency; and

•
An increase in outsourced labor and professional fees of $4.6 million or 14.2%, primarily due to the net effect of (i) increased consulting costs related to information technology and finance initiatives, primarily in the European Operations Division ’s central operations, and (ii) decreased consulting and legal costs, predominantly in Germany.

Chile. Chile’s SG&A expenses (exclusive of share-based compensation expense) decreased $1.6 million or 3.9% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . Excluding the effects of FX , Chile’s SG&A expenses increased $3.8 million or 9.1% . This increase includes the following factors:
•
An increase in sales and marketing costs of $3.7 million or 24.3%, primarily due to higher advertising costs and third-party sales commissions;

•
A decrease in personnel costs of $2.0 million or 15.4%, primarily due to lower severance and incentive compensation costs; and

•
An increase in outsourced labor and professional fees of $1.4 million, primarily due to higher consulting costs.

Operating Cash Flow of our Reportable Segments

Operating cash flow is the primary measure used by our chief operating decision maker to evaluate segment operating performance. As we use the term, operating cash flow is defined as revenue less operating and SG&A expenses (excluding share-based compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items). For additional information concerning this performance measure and for a reconciliation of total segment operating cash flow to our loss from continuing operations before income taxes, see note 14 to our condensed consolidated financial statements.
 
 
Three months ended March 31,
 
Increase (decrease)
 
Organic increase (decrease)
 
2015
 
2014
 
$
 
%
 
%
 
in millions
 
 
 
 
European Operations Division:
 
 
 
 
 
 
 
 
 
U.K./Ireland
$
763.3

 
$
791.6

 
$
(28.3
)
 
(3.6
)
 
6.3

The Netherlands (a)
367.9

 
183.3

 
184.6

 
100.7

 
(5.5
)
Germany
364.0

 
429.0

 
(65.0
)
 
(15.2
)
 
3.3

Belgium
247.0

 
302.1

 
(55.1
)
 
(18.2
)
 
(0.2
)
Switzerland/Austria
248.8

 
264.4

 
(15.6
)
 
(5.9
)
 
2.7

Total Western Europe
1,991.0

 
1,970.4

 
20.6

 
1.0

 
3.1

Central and Eastern Europe
118.1

 
158.2

 
(40.1
)
 
(25.3
)
 
(9.2
)
Central and other
(67.9
)
 
(70.9
)
 
3.0

 
4.2

 
(18.8
)
Total European Operations Division
2,041.2

 
2,057.7

 
(16.5
)
 
(0.8
)
 
1.6

Chile
76.0

 
82.7

 
(6.7
)
 
(8.1
)
 
3.7

Corporate and other
(19.9
)
 
(16.9
)
 
(3.0
)
 
(17.8
)
 
(61.0
)
Intersegment eliminations
—

 
4.0

 
(4.0
)
 
N.M.

 
N.M.

Total
$
2,097.3

 
$
2,127.5

 
$
(30.2
)
 
(1.4
)
 
1.0

_______________

(a)
The amount presented for the 2014 period excludes the operating cash flow of Ziggo , which was acquired on November 11, 2014.

N.M. — Not Meaningful.

67

Operating Cash Flow Margin

The following table sets forth the operating cash flow margins (operating cash flow divided by revenue) of each of our reportable segments: 
 
Three months ended March 31,
 
2015
 
2014
 
%
European Operations Division:
 
 
 
U.K./Ireland
44.6
 
42.8
The Netherlands
52.0
 
57.6
Germany
60.9
 
61.6
Belgium
49.1
 
52.6
Switzerland/Austria
56.6
 
57.0
Total Western Europe
50.3
 
50.5
Central and Eastern Europe
44.0
 
48.8
Total European Operations Division
48.3
 
48.7
Chile
36.4
 
36.7

With the exception of U.K./Ireland , the operating cash flow margins of the European Operations Division ’s reportable segments decreased or remained relatively unchanged during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . The increase in the operating cash flow margin of U.K./Ireland is primarily due to improved operational leverage resulting from organic revenue growth and an organic decrease in operating expenses that more than offset an organic increase in SG&A expenses, including the impact of synergies realized as a result of reorganization and integration activities following our June 7, 2013 acquisition of Virgin Media . The decline in the operating cash flow margin of the Netherlands is primarily due to (i) the inclusion of the relatively lower operating cash flow margin of Ziggo and (ii) the impact of significant competition from the incumbent telecommunications operator. The declines in the operating cash flow margins of Germany, Belgium and Central and Eastern Europe are due to the negative impacts of favorable nonrecurring items recorded in the first quarter of 2014 and other factors.

The operating cash flow margin of Chile remained relatively unchanged during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 .
For additional discussion of the factors contributing to the changes in the operating cash flow margins of our reportable segments, see the above analyses of the revenue, operating expenses and SG&A expenses of our reportable segments.


68

Discussion and Analysis of our Consolidated Operating Results

General

For more detailed explanations of the changes in our revenue, operating expenses and SG&A expenses, including the impacts of nonrecurring items, see the Discussion and Analysis of our Reportable Segments above.

Revenue

Our revenue by major category is set forth below:
 
 
Three months ended March 31,
 
Increase (decrease)
 
Organic increase (decrease)
 
2015
 
2014
 
$
 
%
 
%
 
in millions
 
 
 
 
Subscription revenue (a):
 
 
 
 
 
 
 
 
 
Video
$
1,607.9

 
$
1,640.5

 
$
(32.6
)
 
(2.0
)
 
1.0

Broadband internet
1,239.2

 
1,143.9

 
95.3

 
8.3

 
10.1

Fixed-line telephony
799.7

 
826.4

 
(26.7
)
 
(3.2
)
 
(1.2
)
Cable subscription revenue
3,646.8

 
3,610.8

 
36.0

 
1.0

 
3.4

Mobile subscription revenue (b)
251.7

 
257.3

 
(5.6
)
 
(2.2
)
 
7.3

Total subscription revenue
3,898.5

 
3,868.1

 
30.4

 
0.8

 
3.6

B2B revenue (c)
373.9

 
367.0

 
6.9

 
1.9

 
4.9

Other revenue (b) (d)
244.5

 
298.6

 
(54.1
)
 
(18.1
)
 
(8.0
)
Total revenue
$
4,516.9

 
$
4,533.7

 
$
(16.8
)
 
(0.4
)
 
3.0

_______________

(a)
Subscription revenue includes amounts received from subscribers for ongoing services, excluding installation fees and late fees. Subscription revenue from subscribers who purchase bundled services at a discounted rate is generally allocated proportionally to each service based on the standalone price for each individual service. As a result, changes in the standalone pricing of our cable and mobile products or the composition of bundles can contribute to changes in our product revenue categories from period to period.

(b)
Mobile subscription revenue excludes mobile interconnect revenue of $54.4 million and $60.8 million during the three months ended March 31, 2015 and 2014 , respectively. Mobile interconnect revenue and revenue from mobile handset sales are included in other revenue.

(c)
B2B revenue includes revenue from business broadband internet, video, voice, wireless and data services offered to medium to large enterprises and, on a wholesale basis, to other operators. We also provide services to certain SOHO subscribers. SOHO subscribers pay a premium price to receive enhanced service levels along with video, broadband internet, fixed-line telephony or mobile services that are the same or similar to the mass marketed products offered to our residential subscribers. Revenue from SOHO subscribers, which aggregated $66.6 million and $52.0 million during the three months ended March 31, 2015 and 2014 , respectively, is included in cable subscription revenue.

(d)
Other revenue includes, among other items, interconnect, carriage fee, mobile handset and installation revenue .

Total revenue. Our consolidated revenue decreased $16.8 million during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This decrease includes (i) an increase of $551.3 million attributable to the impacts of acquisitions and (ii) a decrease of $10.6 million attributable to the U.K. Non-Cable Disposal . Excluding the effects of acquisitions, the U.K. Non-Cable Disposal and FX , total consolidated revenue increased $134.9 million or 3.0% .


69

Subscription revenue. The details of the increase in our consolidated subscription revenue for the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , is as follows (in millions):
Increase in cable subscription revenue due to change in:
 
Average number of RGUs
$
89.0

ARPU
33.1

Total increase in cable subscription revenue
122.1

Increase in mobile subscription revenue
18.7

Total organic increase in subscription revenue
140.8

Impacts of acquisitions
499.7

Impact of FX
(610.1
)
Total
$
30.4


Excluding the effects of acquisitions and FX , our consolidated cable subscription revenue increased $122.1 million or 3.4% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This increase is attributable to (i) an increase in subscription revenue from broadband internet services of $115.2 million or 10.1% , primarily attributable to an increase in the average number of broadband internet RGU s and higher ARPU from broadband internet services, (ii) an increase in subscription revenue from video services of $16.6 million or 1.0% , primarily attributable to the net effect of (a) higher ARPU from video services and (b) a decline in the average number of video RGU s, and (iii) a decrease in subscription revenue from fixed-line telephony services of $9.7 million or 1.2% , primarily attributable to the net effect of (1) lower ARPU from fixed-line telephony services and (2) an increase in the average number of fixed-line telephony RGU s.

Excluding the effects of acquisitions and FX , our consolidated mobile subscription revenue increased $18.7 million or 7.3% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This increase is primarily due to increases in Belgium, Chile, the U.K. and Switzerland.

B2B revenue. Excluding the effects of acquisitions and FX , our consolidated B2B revenue increased $17.8 million or 4.9% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This increase is primarily due to increases in the U.K. , Switzerland, Belgium and Poland.

Other revenue. Excluding the effects of acquisitions, the U.K. Non-Cable Disposal and FX , our consolidated other revenue decreased $23.7 million or 8.0% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This decrease is largely attributable to (i) an increase in mobile handset sales, primarily in the U.K. , (ii) a decrease in installation revenue and (iii) a decrease in fixed-line interconnect revenue.

For additional information concerning the changes in our subscription, B2B and other revenue, see Discussion and Analysis of Reportable Segments above. For information regarding the competitive environment in certain of our markets, see Overview and Discussion and Analysis of our Reportable Segments above.

Operating expenses

Our operating expenses decreased $12.9 million during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This decrease includes (i) an increase of $182.9 million attributable to the impacts of the Ziggo Acquisition and other less significant acquisitions and (ii) a decrease of $8.5 million attributable to the U.K. Non-Cable Disposal . Our operating expenses include share-based compensation expense, which decreased $0.6 million during the three months ended March 31, 2015 . For additional information, see the discussion under Share-based compensation expense below. Excluding the effects of acquisitions, the U.K. Non-Cable Disposal , FX and share-based compensation expense, our operating expenses increased $60.4 million or 3.6% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , primarily attributable to the net effect of (i) an increase in programming and copyright costs, (ii) a decrease in network-related expenses, (iii) an increase in outsourced labor and professional fees and (iv) an increase in mobile handset costs. For additional information regarding the changes in our operating expenses, see Discussion and Analysis of our Reportable Segments - Operating Expenses of our Reportable Segments above.


70

SG&A expenses

Our SG&A expenses increased $42.6 million during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . This increase includes $92.7 million attributable to the impacts of acquisitions. Our SG&A expenses include share-based compensation expense, which increased $16.9 million during the three months ended March 31, 2015 . For additional information, see the discussion under Share-based compensation expense below. Excluding the effects of acquisitions, FX and share-based compensation expense, our SG&A expenses increased $49.8 million or 7.0% during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 , primarily due to increases in (i) sales and marketing costs, (ii) personnel costs, (iii) outsourced labor and professional fees, (iv) information technology-related expenses and (v) facilities expenses. For additional information regarding the changes in our SG&A expenses, see Discussion and Analysis of our Reportable Segments — SG&A Expenses of our Reportable Segments above .

Share-based compensation expense (included in operating and SG&A expenses)

We record share-based compensation that is associated with Liberty Global shares and the shares of certain of our subsidiaries. A summary of the aggregate share-based compensation expense that is included in our operating and SG&A expenses is set forth below: 
 
Three months ended March 31,
 
2015
 
2014
 
in millions
Liberty Global shares:
 
 
 
Performance-based incentive awards (a)
$
42.1

 
$
20.6

Other share-based incentive awards
25.4

 
30.2

Total Liberty Global shares
67.5

 
50.8

Telenet share-based incentive awards
3.2

 
2.9

Other
0.7

 
1.4

Total
$
71.4

 
$
55.1

Included in:
 
 
 
Operating expense
$
0.7

 
$
1.3

SG&A expense
70.7

 
53.8

Total
$
71.4

 
$
55.1

_______________ 

(a)
Includes share-based compensation expense related to (i) Liberty Global PSU s, (ii) the Challenge Performance Awards and (iii) for the 2015 period, the PGUs .
 
Depreciation and amortization expense

Our depreciation and amortization expense increased $74.3 million during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . Excluding the effects of FX , depreciation and amortization expense increased $300.9 million or 21.8%. This increase is primarily due to the impact of the Ziggo Acquisition . In addition, a net decrease resulted from the following factors: (i) a decrease associated with certain assets becoming fully depreciated, primarily in U.K./Ireland , and to a lesser extent, Germany, Switzerland/Austria and Belgium, and (ii) an increase associated with property and equipment additions related to the installation of customer premises equipment, the expansion and upgrade of our networks and other capital initiatives.


71

Impairment, restructuring and other operating items, net

We recognized impairment, restructuring and other operating items, net, of $17.0 million during the three months ended March 31, 2015 , as compared to $113.6 million during the corresponding period in 2014 . 

The 2015 amount includes (i) gains from the disposition of assets of $17.5 million, primarily in U.K./Ireland , (ii) restructuring charges of $15.6 million , including $13.4 million of employee severance and termination costs related to certain reorganization activities, primarily in Switzerland/Austria, Puerto Rico and the Netherlands , and (iii) impairment charges of $13.8 million, primarily in U.K./Ireland , the Netherlands and Switzerland/Austria.

The 2014 amount includes (i) restructuring charges of $99.6 million, including an $86.1 million charge recorded by Telenet in connection with its digital terrestrial television ( DTT ) capacity contracts, as described below, and $12.7 million of employee severance and termination costs related to certain reorganization activities, primarily in the U.K. and Germany, and (ii) direct acquisition costs of $17.8 million, primarily related to the Ziggo Acquisition .

Prior to March 31, 2014, Telenet operated a DTT business that served a limited number of subscribers. The DTT network was accessed by Telenet pursuant to third-party capacity contracts that were accounted for as operating agreements. On March 31, 2014, Telenet discontinued the provision of DTT services and, accordingly, recorded an $86.1 million restructuring charge during the three months ended March 31, 2014. This charge was equal to the then fair value of the remaining payments due under the DTT capacity contracts.

We expect to record further restructuring charges during the remainder of 2015 in connection with the continued integration of Ziggo with UPC Nederland and the European Operations Division .

For additional information regarding our restructuring charges, see note 11 to our condensed consolidated financial statements.

If, among other factors, (i) our equity values were to decline significantly or (ii) the adverse impacts of economic, competitive, regulatory or other factors were to cause our results of operations or cash flows to be worse than anticipated, we could conclude in future periods that impairment charges are required in order to reduce the carrying values of our goodwill, and to a lesser extent, other long-lived assets. Any such impairment charges could be significant.

Interest expense

Our interest expense decreased $37.6 million during the three months ended March 31, 2015 , as compared to the corresponding period in 2014 . Excluding the effects of FX , interest expense increased $49.4 million or 7.6%. This increase is primarily attributable to the net effect of (i) a higher average outstanding debt balance, largely due to debt incurred in connection with the Ziggo Acquisition , and (ii) a lower weighted average interest rate related to the completion of certain financing transactions that resulted in extended maturities and net decreases to certain of our interest rates. For additional information regarding our outstanding indebtedness, see note 7 to our condensed consolidated financial statements.
    
It is possible that (i) the interest rates on any new borrowings could be higher than the current interest rates on our existing indebtedness and (ii) the interest rates on our variable-rate indebtedness could increase in future periods. As further discussed in note 4 to our condensed consolidated financial statements and under Qualitative and Quantitative Disclosures about Market Risk below, we use derivative instruments to manage our interest rate risks.

72

Realized and unrealized gains (losses) on derivative instruments, net

Our realized and unrealized gains or losses on derivative instruments include (i) unrealized changes in the fair values of our derivative instruments that are non-cash in nature until such time as the derivative contracts are fully or partially settled and (ii) realized gains or losses upon the full or partial settlement of the derivative contracts. The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows:
 
Three months ended March 31,
 
2015
 
2014
 
in millions
 
 
 
 
Cross-currency and interest rate derivative contracts (a)
$
740.5

 
$
(420.2
)
Equity-related derivative instruments (b):
 
 
 
ITV Collar
(105.4
)
 
—

Sumitomo Collar
(10.1
)
 
8.5

Virgin Media Capped Calls
0.6

 
0.2

Ziggo Collar
—

 
15.4

Total equity-related derivative instruments
(114.9
)
 
24.1

Foreign currency forward contracts
(8.1
)
 
20.0

Other
1.0

 
(0.5
)
Total
$
618.5

 
$
(376.6
)
_______________ 

(a)
The gain during the 2015 period is primarily attributable to the net effect of (i) gains associated with decreases in the values of the euro, British pound sterling and Chilean peso relative to the U.S. dollar, (ii) losses associated with increases in the values of the Swiss franc and Polish zloty relative to the euro, (iii) gains associated with increases in market interest rates in the U.S. dollar market and (iv) losses associated with decreases in market interest rates in the euro, Swiss franc and British pound sterling markets. In addition, the gain during the 2015 period includes a net loss of $16.9 million resulting from changes in our credit risk valuation adjustments. The loss during the 2014 period is primarily attributable to the net effect of (i) losses associated with decreases in market interest rates in the euro, Swiss franc and British pound sterling markets, (ii) losses associated with an increase in the value of the British pound sterling relative to the U.S. dollar, (iii) gains associated with decreases in the values of the Hungarian forint and Chilean peso relative to the euro, and (iv) gains associated with a decrease in the value of the Chilean peso relative to the U.S. dollar. In addition, the loss during the 2014 period includes a net loss of $29.5 million resulting from changes in our credit risk valuation adjustments.

(b)
For information concerning the factors that impact the valuations of our equity-related derivative instruments, see note 5 to our condensed consolidated financial statements.

For additional information concerning our derivative instruments, see notes 4 and 5 to our condensed consolidated financial statements and Quantitative and Qualitative Disclosure about Market Risk below.


73

Foreign currency transaction losses, net

Our foreign currency transaction gains or losses primarily result from the remeasurement of monetary assets and liabilities that are denominated in currencies other than the underlying functional currency of the applicable entity. Unrealized foreign currency transaction gains or losses are computed based on period-end exchange rates and are non-cash in nature until such time as the amounts are settled. The details of our foreign currency transaction losses, net, are as follows:
 
Three months ended March 31,
 
2015
 
2014
 
in millions
 
 
 
 
U.S. dollar denominated debt issued by euro functional currency entities
$
(800.1
)
 
$
(6.4
)
U.S. dollar denominated debt issued by a British pound sterling functional currency entity
(139.7
)
 
27.9

Intercompany payables and receivables denominated in a currency other than the entity’s functional currency (a)
(117.8
)
 
(17.3
)
Cash and restricted cash denominated in a currency other than the entity’s functional currency
53.5

 
(9.5
)
U.S. dollar denominated debt issued by a Chilean peso functional currency entity
(41.1
)
 
2.0

Euro denominated debt issued by a U.S. dollar functional currency entity
31.6

 
3.9

Yen denominated debt issued by a U.S. dollar functional currency entity
0.6

 
(19.0
)
Other
(22.6
)
 
(2.4
)
Total
$
(1,035.6
)
 
$
(20.8
)
_______________ 

(a)
Amounts primarily relate to (i) loans between certain of our non-operating and operating subsidiaries in Europe, which generally are denominated in the currency of the applicable operating subsidiary, and (ii) loans between certain of our non-operating subsidiaries in the U.S. , Europe and Chile.

Realized and unrealized gains (losses) due to changes in fair values of certain investments, net

Our realized and unrealized gains or losses due to changes in fair values of certain investments include unrealized gains or losses associated with changes in fair values that are non-cash in nature until such time as these gains or losses are realized through cash transactions. For additional information regarding our fair value measurements, see note 5 to our condensed consolidated financial statements. The details of our realized and unrealized gains (losses) due to changes in fair values of certain investments, net, are as follows:
 
Three months ended March 31,
 
2015
 
2014
 
in millions
 
 
 
 
ITV
$
104.2

 
$
—

Sumitomo
16.1

 
8.6

Ziggo
—

 
(77.7
)
Other, net
31.1

 
8.9

Total
$
151.4

 
$
(60.2
)


74

Losses on debt modification and extinguishment, net

We recognized a loss on debt modification and extinguishment, net, of $274.5 million during the three months ended March 31, 2015 . This loss includes the following:

•
a $91.2 million loss related to the redemption of the UM Senior Exchange Notes , including (i) the payment of $89.8 million of redemption premium and (ii) the write-off of $1.4 million of unamortized discount;

•
a $74.7 million loss related to the redemption of the UPCB Finance I Notes and the UPCB Finance II Notes and the prepayment of Facility AG under the UPC Broadband Holding Bank Facility . This loss includes (i) the payment of $53.5 million of redemption premium, (ii) the write-off of $16.5 million of deferred financing costs and (iii) the write-off of $4.7 million of unamortized discount;

•
a $69.3 million loss related to the redemption of the UPC Holding 8.375% Senior Notes , including (i) the payment of $59.2 million of redemption premium and (ii) the write-off of $10.1 million of deferred financing costs;

•
a $30.1 million loss related to (i) the redemption of 10% of the principal amount of the April 2021 VM Senior Secured Notes and the 2025 VM Sterling Senior Secured Notes and (ii) the prepayment of VM Facility A and VM Facility B under the VM Credit Facility . This loss includes (a) the write-off of $17.9 million of deferred financing costs, (b) the payment of $10.7 million of redemption premium and (c) the write-off of $1.5 million of unamortized discount; and

•
an $8.1 million loss related to the redemption of 10% of the principal amount of (i) the September 2012 UM Senior Secured Notes , (ii) the December 2012 UM Euro Senior Secured Notes , (iii) the January 2013 UM Senior Secured Notes and (iv) the April 2013 UM Senior Secured Notes . This loss includes (a) the payment of $6.4 million of redemption premium and (b) the write-off of $1.7 million of deferred financing costs.

We recognized a loss on debt modification and extinguishment, net, of $20.9 million during the three months ended March 31, 2014 , respectively. This loss includes the following:

•
a $16.5 million loss related to the repayment of Facilities R, S, AE and AF under the UPC Broadband Holding Bank Facility . This loss includes (i) the write-off of $11.6 million of deferred financing costs and (ii) the write-off of $4.9 million of unamortized discount; and

•
an aggregate loss of $4.3 million related to the write-off of deferred financing costs, including (i) a $2.3 million loss associated with the repayment of the limited recourse margin loan that was secured by a portion of our investment in Ziggo and (ii) a $2.0 million loss associated with the repayment of VTR ’s then-existing term loan bank facility.

For additional information concerning our losses on debt modification and extinguishment, net, see note 7 to our condensed consolidated financial statements.

Income tax benefit

We recognized income tax benefit of $77.9 million and $117.0 million during the three months ended March 31, 2015 and 2014 , respectively.

The income tax benefit during the three months ended March 31, 2015 differs from the expected income tax benefit of $121.4 million (based on the U.K. statutory income tax rate of 20.25% ) primarily due to the net negative impact of an increase in valuation allowances. The net negative impact of this item was partially offset by the net positive impact of (i) statutory tax rates in certain jurisdictions in which we operate that are different than the U.K. statutory income tax rate, (ii) non-deductible or non-taxable foreign currency exchange results and (iii) the tax effect of intercompany financing.

The income tax benefit during the three months ended March 31, 2014 differs from the expected income tax benefit of $115.5 million (based on the U.K. statutory income tax rate of 21.5% ) primarily due to the net positive impact of (i) statutory tax rates in certain jurisdictions in which we operate that are different than the U.K. statutory income tax rate, (ii) the tax effect of intercompany financing and (iii) the recognition of previously unrecognized tax benefits. The net positive impact of these items were partially offset by the net negative impact of (a) an increase in valuation allowances, (b) certain permanent differences

75

between the financial and tax accounting treatment of items associated with investments in subsidiaries and affiliates and (c) certain permanent differences between the financial and tax accounting treatment of interest and other items.

For additional information concerning our income taxes, see note 8 to our condensed consolidated financial statements.

Loss from continuing operations

During the three months ended March 31, 2015 and 2014 , we reported losses from continuing operations of $521.7 million and $420.0 million , respectively, including (i) operating income of $557.5 million and $581.7 million , respectively, (ii) net non-operating expense of $1,157.1 million and $1,118.7 million , respectively, and (iii) income tax benefit of $77.9 million and $117.0 million , respectively.

Gains or losses associated with (i) changes in the fair values of derivative instruments, (ii) movements in foreign currency exchange rates and (iii) the disposition of assets and changes in ownership are subject to a high degree of volatility and, as such, any gains from these sources do not represent a reliable source of income. In the absence of significant gains in the future from these sources or from other non-operating items, our ability to achieve earnings from continuing operations is largely dependent on our ability to increase our aggregate operating cash flow to a level that more than offsets the aggregate amount of our (a) share-based compensation expense, (b) depreciation and amortization, (c) impairment, restructuring and other operating items, net, (d) interest expense, (e) other net non-operating expenses and (f) income tax expenses.

Due largely to the fact that we seek to maintain our debt at levels that provide for attractive equity returns, as discussed under Material Changes in Financial Condition — Capitalization below, we expect that we will continue to report significant levels of interest expense for the foreseeable future. For information concerning our expectations with respect to trends that may affect certain aspects of our operating results in future periods, see the discussion under Overview above. For information concerning the reasons for changes in specific line items in our condensed consolidated statements of operations, see the discussion under Discussion and Analysis of our Reportable Segments and Discussion and Analysis of our Consolidated Operating Results above.

Discontinued operation

Our earnings from discontinued operation, net of taxes, of $0.8 million during the three months ended March 31, 2014 , relate to the operations of the Chellomedia Disposal Group . In addition, we recognized an after-tax gain on the disposal of a discontinued operation of $332.7 million (including a gain of $339.9 million recorded in the first quarter of 2014 and a $7.2 million adjustment to the gain recorded in the second quarter of 2014) related to the January 31, 2014 completion of the Chellomedia Transaction .

Net loss (earnings) attributable to noncontrolling interests

Net earnings or loss attributable to noncontrolling interests includes the noncontrolling interests’ share of the results of our continuing and discontinued operations. We reported net earnings attributable to noncontrolling interests of $15.8 million during the three months ended March 31, 2015 , as compared to a net loss attributable to noncontrolling interests of $0.5 million during the corresponding period in 2014 . This change is primarily attributable to an improvement in the results of operations of Telenet .


76

Material Changes in Financial Condition

Sources and Uses of Cash

We are a holding company that is dependent on the capital resources of our subsidiaries to satisfy our liquidity requirements at the corporate level. Although our consolidated operating subsidiaries generate cash from operating activities, each of our significant operating subsidiaries is included within one of our seven subsidiary “borrowing groups,” which borrowing groups comprise Virgin Media , UPC Holding , Unitymedia , Ziggo Group Holding , Telenet , VTR Finance and Liberty Puerto Rico , each together with their respective restricted subsidiaries. As set forth in the table below, our borrowing groups accounted for a significant portion of our consolidated cash and cash equivalents at March 31, 2015 . The terms of the instruments governing the indebtedness of these borrowing groups restrict our ability to access the assets of these subsidiaries. In addition, our ability to access the liquidity of these and other subsidiaries may be limited by tax and legal considerations, the presence of noncontrolling interests and other factors.

Cash and cash equivalents

The details of the U.S. dollar equivalent balances of our consolidated cash and cash equivalents at March 31, 2015 are set forth in the following table (in millions):
Cash and cash equivalents held by:
 
Liberty Global and unrestricted subsidiaries:
 
Liberty Global (a)
$
85.0

Unrestricted subsidiaries (b) (c)
121.6

Total Liberty Global and unrestricted subsidiaries
206.6

Borrowing groups (d):
 
Telenet
138.4

Ziggo Group Holding
93.8

Virgin Media (c)
54.3

VTR Finance
49.8

UPC Holding
48.0

Liberty Puerto Rico
30.2

Unitymedia
9.3

Total borrowing groups
423.8

Total cash and cash equivalents
$
630.4

_______________

(a)
Represents the amount held by Liberty Global on a standalone basis.

(b)
Represents the aggregate amount held by subsidiaries of Liberty Global that are outside of our borrowing groups.

(c)
The Virgin Media borrowing group includes certain subsidiaries of Virgin Media , but excludes Virgin Media . The $1.0 million of cash and cash equivalents held by Virgin Media is included in the amount shown for Liberty Global ’s unrestricted subsidiaries.

(d)
Except as otherwise noted, represents the aggregate amounts held by the parent entity and restricted subsidiaries of our borrowing groups.


77

Liquidity of Liberty Global and its unrestricted subsidiaries

The $85.0 million of cash and cash equivalents held by Liberty Global and, subject to certain tax and legal considerations, the $121.6 million of cash and cash equivalents held by Liberty Global ’s unrestricted subsidiaries, represented available liquidity at the corporate level at March 31, 2015 . Our remaining cash and cash equivalents of $423.8 million at March 31, 2015 were held by our borrowing groups as set forth in the table above. As noted above, various factors may limit our ability to access the cash of our borrowing groups. For information regarding certain limitations imposed by our subsidiaries’ debt instruments at March 31, 2015 , see note 7 to our condensed consolidated financial statements.

Our current sources of corporate liquidity include (i) cash and cash equivalents held by Liberty Global and, subject to certain tax and legal considerations, Liberty Global ’s unrestricted subsidiaries, (ii) interest received on a note receivable from a subsidiary (outstanding principal of $9.6 billion at March 31, 2015 ) and (iii) interest and dividend income received on our and, subject to certain tax and legal considerations, our unrestricted subsidiaries’ cash and cash equivalents and investments.

From time to time, Liberty Global and its unrestricted subsidiaries may also receive (i) proceeds in the form of distributions or loan repayments from Liberty Global ’s borrowing groups or affiliates, including any principal payments received on the aforementioned note receivable from a subsidiary, upon (a) the completion of recapitalizations, refinancings, asset sales or similar transactions by these entities or (b) the accumulation of excess cash from operations or other means, (ii) proceeds upon the disposition of investments and other assets of Liberty Global and its unrestricted subsidiaries and (iii) proceeds in connection with the incurrence of debt by Liberty Global or its unrestricted subsidiaries or the issuance of equity securities by Liberty Global , including equity securities issued to satisfy subsidiary obligations. No assurance can be given that any external funding would be available to Liberty Global or its unrestricted subsidiaries on favorable terms, or at all.

At March 31, 2015 , our consolidated cash and cash equivalents balance includes $504.7 million that is held by entities that are domiciled outside of the U.K. Based on our assessment of our ability to access the liquidity of our subsidiaries on a tax efficient basis and our expectations with respect to our corporate liquidity requirements, we do not anticipate that tax considerations will adversely impact our corporate liquidity over the next 12 months. Our ability to access the liquidity of our subsidiaries on a tax efficient basis is a consideration in assessing the extent of our share repurchase program.

The ongoing cash needs of Liberty Global and its unrestricted subsidiaries include (i) corporate general and administrative expenses, (ii) interest payments on notes payable to certain subsidiaries (aggregate outstanding principal of $1.1 billion at March 31, 2015 ) and (iii) interest payments on the Sumitomo Collar Loan . In addition, Liberty Global and its unrestricted subsidiaries may require cash in connection with (a) the repayment of third-party and intercompany debt, (b) the satisfaction of contingent liabilities, (c) acquisitions, (d) the repurchase of equity and debt securities, (e) other investment opportunities or (f) income tax payments. For information regarding our contingencies, see note 13 to our condensed consolidated financial statements.

During the three months ended March 31, 2015 , we purchased a total of 9,781,810 Liberty Global Class C ordinary shares at a weighted average price of $48.87 per share, for an aggregate purchase price of $478.1 million , including direct acquisition costs and the effects of derivative instruments. At March 31, 2015 , the remaining amount authorized for share repurchases was $3,458.1 million .

Liquidity of borrowing groups

The cash and cash equivalents of our borrowing groups are detailed in the table above. In addition to cash and cash equivalents, the primary sources of liquidity of our borrowing groups are cash provided by operations and borrowing availability under their respective debt instruments. For the details of the borrowing availability of such entities at March 31, 2015 , see note 7 to our condensed consolidated financial statements. The aforementioned sources of liquidity may be supplemented in certain cases by contributions and/or loans from Liberty Global and its unrestricted subsidiaries. The liquidity of our borrowing groups generally is used to fund property and equipment additions and debt service requirements. From time to time, our borrowing groups may also require liquidity in connection with (i) acquisitions and other investment opportunities, (ii) loans to Liberty Global , (iii) capital distributions to Liberty Global and other equity owners or (iv) the satisfaction of contingencies. No assurance can be given that any external funding would be available to our borrowing groups on favorable terms, or at all. For information regarding the liquidity requirements of certain of our borrowing groups with respect to Liberty Puerto Rico ’s pending acquisition of Choice and Telenet ’s pending acquisition of BASE , see notes 3 and 15 to our condensed consolidated financial statements. For information regarding our borrowing groups’ contingencies, see note 13 to our condensed consolidated financial statements.


78

For additional information regarding our consolidated cash flows, see the discussion under Condensed Consolidated Statements of Cash Flows below.

Capitalization

We seek to maintain our debt at levels that provide for attractive equity returns without assuming undue risk. In this regard, we generally seek to cause our operating subsidiaries to maintain their debt at levels that result in a consolidated debt balance (excluding the Sumitomo Collar Loan and the ITV Collar Loan and measured using subsidiary debt figures at swapped foreign currency exchange rates, consistent with the covenant calculation requirements of our subsidiary debt agreements) that is between four and five times our consolidated operating cash flow, although it should be noted that the timing of our acquisitions and financing transactions (including those related to the Ziggo Acquisition ) and the interplay of average and spot foreign currency rates may impact this ratio. The ratio of our March 31, 2015 consolidated debt to our annualized consolidated operating cash flow for the quarter ended March 31, 2015 was 4.9x. In addition, the ratio of our March 31, 2015 consolidated net debt (debt, as defined above, less cash and cash equivalents) to our annualized consolidated operating cash flow for the quarter ended March 31, 2015 was 4.8x.

When it is cost effective, we generally seek to match the denomination of the borrowings of our subsidiaries with the functional currency of the operations that are supporting the respective borrowings. As further discussed in note 4 to our condensed consolidated financial statements, we also use derivative instruments to mitigate foreign currency and interest rate risk associated with our debt instruments.

Our ability to service or refinance our debt and to maintain compliance with the leverage covenants in the credit agreements and indentures of our borrowing groups is dependent primarily on our ability to maintain or increase the operating cash flow of our operating subsidiaries and to achieve adequate returns on our property and equipment additions and acquisitions. In addition, our ability to obtain additional debt financing is limited by the leverage covenants contained in the various debt instruments of our borrowing groups. For example, if the operating cash flow of UPC Broadband Holding were to decline, we could be required to partially repay or limit our borrowings under the UPC Broadband Holding Bank Facility in order to maintain compliance with applicable covenants. No assurance can be given that we would have sufficient sources of liquidity, or that any external funding would be available on favorable terms, or at all, to fund any such required repayment. At March 31, 2015 , each of our borrowing groups was in compliance with its debt covenants. In addition, we do not anticipate any instances of non-compliance with respect to the debt covenants of our borrowing groups that would have a material adverse impact on our liquidity during the next 12 months.

At March 31, 2015 , our outstanding consolidated debt and capital lease obligations aggregated $44.1 billion , including $1,292.8 million that is classified as current in our condensed consolidated balance sheet and $40.9 billion that is not due until 2020 or thereafter. For additional information concerning our current debt maturities, see note 7 to our condensed consolidated financial statements.

Notwithstanding our negative working capital position at March 31, 2015 , we believe that we have sufficient resources to repay or refinance the current portion of our debt and capital lease obligations and to fund our foreseeable liquidity requirements during the next 12 months. However, as our maturing debt grows in later years, we anticipate that we will seek to refinance or otherwise extend our debt maturities. No assurance can be given that we will be able to complete these refinancing transactions or otherwise extend our debt maturities. In this regard, it is not possible to predict how political and economic conditions, sovereign debt concerns or any adverse regulatory developments could impact the credit and equity markets we access and, accordingly, our future liquidity and financial position. However, (i) the financial failure of any of our counterparties could (a) reduce amounts available under committed credit facilities and (b) adversely impact our ability to access cash deposited with any failed financial institution and (ii) tightening of the credit markets could adversely impact our ability to access debt financing on favorable terms, or at all. In addition, any weakness in the equity markets could make it less attractive to use our shares to satisfy contingent or other obligations, and sustained or increased competition, particularly in combination with adverse economic or regulatory developments, could have an unfavorable impact on our cash flows and liquidity.

All of our consolidated debt and capital lease obligations have been borrowed or incurred by our subsidiaries at March 31, 2015 .

For additional information concerning our debt and capital lease obligations, see notes 7 and 15 to our condensed consolidated financial statements.

79


Condensed Consolidated Statements of Cash Flows

General. Our cash flows are subject to significant variations due to FX . All of the cash flows discussed below are those of our continuing operations.

Summary. Our condensed consolidated statements of cash flows for the three months ended March 31, 2015 and 2014 are summarized as follows:
 
Three months ended
 
 
 
March 31,
 
 
 
2015
 
2014
 
Change
 
in millions
 
 
 
 
 
 
Net cash provided by operating activities
$
1,373.9

 
$
1,320.4

 
$
53.5

Net cash provided (used) by investing activities
(775.0
)
 
231.7

 
(1,006.7
)
Net cash used by financing activities
(1,110.6
)
 
(1,162.3
)
 
51.7

Effect of exchange rate changes on cash
(16.4
)
 
15.0

 
(31.4
)
Net increase (decrease) in cash and cash equivalents
$
(528.1
)
 
$
404.8

 
$
(932.9
)

Operating Activities. The increase in net cash provided by our operating activities is primarily attributable to the net effect of (i) a decrease in the reported net cash provided by operating activities due to FX , (ii) an increase in the cash provided by our operating cash flow and related working capital items, largely due to the impact of the Ziggo Acquisition , (iii) a decrease in cash provided due to higher cash payments for taxes, (iv) an increase in cash provided due to lower cash payments related to derivative instruments and (v) a decrease in cash provided due to higher cash payments for interest.

Investing Activities. The change in net cash provided (used) by our investing activities is primarily attributable to the net effect of (i) a decrease in cash of $993.0 million associated with cash proceeds received during 2014 in connection with the Chellomedia Transaction , (ii) a decrease in cash of $113.6 million associated with higher cash paid in connection with investments in and loans to affiliates and others and (iii) an increase in cash of $73.8 million due to lower capital expenditures. Capital expenditures decreased from $735.0 million during the first three months of 2014 to $661.2 million during the first three months of 2015 due to the net effect of (i) a decrease due to FX , (ii) an increase related to the Ziggo Acquisition and (iii) a net decrease in the local currency capital expenditures of our subsidiaries, primarily due to an increase in vendor financing during the 2015 period as compared to 2014.

The capital expenditures that we report in our consolidated statements of cash flows do not include amounts that are financed under capital-related vendor financing or capital lease arrangements. Instead, these amounts are reflected as non-cash additions to our property and equipment when the underlying assets are delivered, and as repayments of debt when the principal is repaid. In the following discussion, we refer to (i) our capital expenditures as reported in our consolidated statements of cash flows, which exclude amounts financed under capital-related vendor financing or capital lease arrangements, and (ii) our total property and equipment additions, which include our capital expenditures on an accrual basis and amounts financed under capital-related vendor financing or capital lease arrangements. For further details on property and equipment additions, including a reconciliation of our consolidated property and equipment additions to our consolidated capital expenditures as reported in our condensed consolidated statements of cash flows, see note 14 to our condensed consolidated financial statements.

The European Operations Division accounted for $829.7 million and $849.1 million of our consolidated property and equipment additions during the three months ended March 31, 2015 and 2014 , respectively. The decrease in the European Operations Division ’s property and equipment additions is primarily due to the net effect of (i) a decrease due to FX , (ii) an increase due to the impact of the Ziggo Acquisition , (iii) a decrease in expenditures for the purchase and installation of customer premises equipment, (iv) a decrease in expenditures for new build and upgrade projects to expand services and (v) an increase in expenditures for support capital, such as information technology upgrades and general support systems.

Chile accounted for $40.4 million and $45.3 million of our consolidated property and equipment additions during the three months ended March 31, 2015 and 2014 , respectively. The decrease in Chile’s property and equipment additions is primarily due to decreases in (i) FX and (ii) expenditures for the purchase and installation of customer premises equipment.


80

Financing Activities. The decrease in net cash used by our financing activities is primarily attributable to the net effect of (i) a decrease in cash used of $656.0 million related to higher net borrowings of debt, (ii) an increase in cash used of $388.3 million due to higher cash paid related to derivative instruments, (iii) an increase in cash used of $230.7 million due to higher payments for financing costs and debt premiums, (iv) a decrease in cash used of $57.4 million due to changes in cash collateral and (v) an increase in cash used of $49.1 million related to higher repurchases of our shares.

Free cash flow

We define free cash flow as net cash provided by our operating activities, plus (i) excess tax benefits related to the exercise of share-based incentive awards, (ii) cash payments for third-party costs directly associated with successful and unsuccessful acquisitions and dispositions and (iii) expenses financed by an intermediary, less (a) capital expenditures, as reported in our consolidated statements of cash flows, (b) principal payments on amounts financed by vendors and intermediaries and (c) principal payments on capital leases (exclusive of the portions of the network lease in Belgium and the duct leases in Germany that we assumed in connection with certain acquisitions), with each item excluding any cash provided or used by our discontinued operations. We believe that our presentation of free cash flow provides useful information to our investors because this measure can be used to gauge our ability to service debt and fund new investment opportunities. Free cash flow should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at this amount. Investors should view free cash flow as a supplement to, and not a substitute for, GAAP measures of liquidity included in our consolidated statements of cash flows.

The following table provides the details of our free cash flow:
 
Three months ended
 
March 31,
 
2015
 
2014
 
in millions
 
 
 
 
Net cash provided by operating activities of our continuing operations
$
1,373.9

 
$
1,320.4

Excess tax benefits from share-based compensation (a)
20.0

 
—

Cash payments for direct acquisition and disposition costs
7.6

 
11.2

Expenses financed by an intermediary (b)
9.1

 
6.9

Capital expenditures
(661.2
)
 
(735.0
)
Principal payments on amounts financed by vendors and intermediaries
(381.7
)
 
(220.8
)
Principal payments on certain capital leases
(37.7
)
 
(46.4
)
Free cash flow
$
330.0

 
$
336.3

_______________

(a)
Excess tax benefits from share-based compensation represent the excess of tax deductions over the related financial reporting share-based compensation expense. The hypothetical cash flows associated with these excess tax benefits are reported as an increase to cash flows from financing activities and a corresponding decrease to cash flows from operating activities in our consolidated statements of cash flows.

(b)
For purposes of our consolidated statement of cash flows, expenses financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our consolidated statements of cash flows. For purposes of our free cash flow definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary. The inclusion of this adjustment represents a change in our definition of free cash flow that we implemented effective January 1, 2015. The free cash flow reported for the 2014 period has been revised to calculate free cash flow on a basis that is consistent with the new definition.


81

Contractual Commitments

The U.S. dollar equivalents of the commitments of our continuing operations as of March 31, 2015 are presented below:  
 
Payments due during:
 
Total
 
Remainder
of 2015
 
 
 
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt (excluding interest)
$
984.3

 
$
483.0

 
$
887.5

 
$
244.0

 
$
18.1

 
$
4,184.1

 
$
35,868.9

 
$
42,669.9

Capital leases (excluding interest)
143.8

 
144.2

 
107.4

 
82.0

 
70.0

 
70.4

 
789.9

 
1,407.7

Programming commitments
626.2

 
772.8

 
613.8

 
530.0

 
231.6

 
1.6

 
0.3

 
2,776.3

Network and connectivity commitments
265.3

 
249.1

 
228.0

 
120.2

 
84.9

 
60.5

 
873.2

 
1,881.2

Purchase commitments
800.8

 
116.8

 
56.8

 
11.3

 
3.9

 
—

 
—

 
989.6

Operating leases
128.7

 
138.9

 
116.1

 
97.7

 
76.4

 
45.2

 
245.6

 
848.6

Other commitments
272.2

 
180.0

 
138.9

 
82.9

 
42.5

 
21.5

 
26.6

 
764.6

Total (a)
$
3,221.3

 
$
2,084.8

 
$
2,148.5

 
$
1,168.1

 
$
527.4

 
$
4,383.3

 
$
37,804.5

 
$
51,337.9

Projected cash interest payments on debt and capital lease obligations (b)
$
1,491.0

 
$
2,215.1

 
$
2,158.4

 
$
2,145.7

 
$
2,122.2

 
$
2,072.9

 
$
5,780.4

 
$
17,985.7

_______________ 

(a)
The commitments reflected in this table do not reflect any liabilities that are included in our March 31, 2015 condensed consolidated balance sheet other than debt and capital lease obligations. Our liability for uncertain tax positions in the various jurisdictions in which we operate ($371.7 million at March 31, 2015 ) has been excluded from the table as the amount and timing of any related payments are not subject to reasonable estimation.

(b)
Amounts are based on interest rates, interest payment dates and contractual maturities in effect as of March 31, 2015 . These amounts are presented for illustrative purposes only and will likely differ from the actual cash payments required in future periods. In addition, the amounts presented do not include the impact of our interest rate derivative contracts, deferred financing costs, discounts or premiums, all of which affect our overall cost of borrowing.

Programming commitments consist of obligations associated with certain of our programming, studio output and sports rights contracts that are enforceable and legally binding on us in that we have agreed to pay minimum fees without regard to (i) the actual number of subscribers to the programming services, (ii) whether we terminate service to a portion of our subscribers or dispose of a portion of our distribution systems or (iii) whether we discontinue our premium sports services. In addition, programming commitments do not include increases in future periods associated with contractual inflation or other price adjustments that are not fixed. Accordingly, the amounts reflected in the above table with respect to these contracts are significantly less than the amounts we expect to pay in these periods under these contracts. Payments to programming vendors have in the past represented, and are expected to continue to represent in the future, a significant portion of our operating costs. In this regard, during the three months ended March 31, 2015 and 2014 , the third-party programming and copyright costs incurred by our broadband communications and DTH operations aggregated $557.5 million and $517.0 million , respectively.

Network and connectivity commitments include (i) Telenet ’s commitments for certain operating costs associated with its leased network, (ii) commitments associated with our MVNO agreements and (iii) certain repair and maintenance, fiber capacity and energy commitments of Unitymedia . Subsequent to October 1, 2015 , Telenet ’s commitments for certain operating costs will be subject to adjustment based on changes in the network operating costs incurred by Telenet with respect to its own networks. These potential adjustments are not subject to reasonable estimation and, therefore, are not included in the above table. The amounts reflected in the table with respect to certain of our MVNO commitments represent fixed minimum amounts payable under these agreements and, therefore, may be significantly less than the actual amounts we ultimately pay in these periods.


82

Purchase commitments include unconditional purchase obligations associated with commitments to purchase customer premises and other equipment that are enforceable and legally binding on us.

Commitments arising from acquisition agreements are not reflected in the above table. For additional information, see note 13 to our condensed consolidated financial statements. For information regarding our commitments under acquisition agreements, see notes 3 and 15 to our condensed consolidated financial statements.

In addition to the commitments set forth in the table above, we have significant commitments under (i) derivative instruments and (ii) defined benefit plans and similar agreements, pursuant to which we expect to make payments in future periods. For information regarding projected cash flows associated with these derivative instruments, see Quantitative and Qualitative Disclosures about Market Risk - Projected Cash Flows Associated with Derivatives below . For information regarding our derivative instruments, including the net cash paid or received in connection with these instruments during the three months ended March 31, 2015 and 2014 , see note 4 to our condensed consolidated financial statements.

We also have commitments pursuant to agreements with, and obligations imposed by, franchise authorities and municipalities, which may include obligations in certain markets to move aerial cable to underground ducts or to upgrade, rebuild or extend portions of our broadband communication systems. Such amounts are not included in the above table because they are not fixed or determinable.

Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

The information in this section should be read in conjunction with the more complete discussion that appears under Quantitative and Qualitative Disclosures About Market Risk in our 2014 Annual Report on Form 10-K. The following discussion updates selected numerical information to March 31, 2015 .

We are exposed to market risk in the normal course of our business operations due to our investments in various foreign countries and ongoing investing and financing activities. Market risk refers to the risk of loss arising from adverse changes in foreign currency exchange rates, interest rates and stock prices. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. As further described below, we have established policies, procedures and processes governing our management of market risks and the use of derivative instruments to manage our exposure to such risks.

Cash

We invest our cash in highly liquid instruments that meet high credit quality standards. We are exposed to exchange rate risk to the extent that the denominations of our cash and cash equivalent balances, revolving lines of credit and other short-term sources of liquidity do not correspond to the denominations of our and our subsidiaries’ short-term liquidity requirements. In order to mitigate this risk, we actively manage the denominations of our cash balances in light of our and our subsidiaries’ forecasted liquidity requirements. At March 31, 2015 , $280.9 million or 44.6% and $212.7 million or 33.7% of our consolidated cash balances were denominated in euros and U.S. dollars, respectively.


83

Foreign Currency Exchange Rates

The relationship between (i) the euro, the British pound sterling, the Swiss franc, the Hungarian forint, the Polish zloty, the Czech koruna, the Romanian lei and the Chilean peso and (ii) the U.S. dollar, which is our reporting currency, is shown below, per one U.S. dollar:
 
March 31, 2015
 
December 31, 2014
Spot rates:
 
 
 
Euro
0.9321

 
0.8264

British pound sterling
0.6737

 
0.6418

Swiss franc
0.9729

 
0.9939

Hungarian forint
280.09

 
261.44

Polish zloty
3.7983

 
3.5397

Czech koruna
25.701

 
22.914

Romanian lei
4.1135

 
3.7059

Chilean peso
625.24

 
606.90

 
 
Three months ended
 
March 31,
 
2015
 
2014
Average rates:
 
 
 
Euro
0.8883

 
0.7296

British pound sterling
0.6602

 
0.6041

Swiss franc
0.9536

 
0.8924

Hungarian forint
274.21

 
224.63

Polish zloty
3.7232

 
3.0522

Czech koruna
24.536

 
20.021

Romanian lei
3.9552

 
3.2845

Chilean peso
624.55

 
552.13


Interest Rate Risks

In general, we seek to enter into derivative instruments to protect against increases in the interest rates on our variable-rate debt. Accordingly, we have entered into various derivative transactions to reduce exposure to increases in interest rates. We use interest rate derivative contracts to exchange, at specified intervals, the difference between fixed and variable interest rates calculated by reference to an agreed-upon notional principal amount. We also use interest rate cap and collar agreements that lock in a maximum interest rate if variable rates rise, but also allow our company to benefit, to a limited extent in the case of collars, from declines in market rates. At March 31, 2015 , we effectively paid a fixed interest rate on 98% of our total debt after considering the impact of our interest rate derivative instruments that convert variable rates to fixed rates, including interest rate caps and collars for which the specified maximum rate is in excess of the applicable March 31, 2015 base rate (out-of-the-money caps and collars). If out-of-the-money caps and collars are excluded from this analysis, the percentage of our total debt on which we effectively paid a fixed interest rate at March 31, 2015 declines to 96%. The final maturity dates of our various portfolios of interest rate derivative instruments generally fall short of the respective maturities of the underlying variable-rate debt. In this regard, we use judgment to determine the appropriate maturity dates of our portfolios of interest rate derivative instruments, taking into account the relative costs and benefits of different maturity profiles in light of current and expected future market conditions, liquidity issues and other factors. For additional information concerning the terms of these interest rate derivative instruments, see note 4 to our condensed consolidated financial statements.


84



Sensitivity Information

Information concerning the sensitivity of the fair value of certain of our more significant derivative instruments to changes in market conditions is set forth below. The potential changes in fair value set forth below do not include any amounts associated with the remeasurement of the derivative asset or liability into the applicable functional currency. For additional information, see notes 4 and 5 to our condensed consolidated financial statements.

Virgin Media Cross-currency and Interest Rate Derivative Contracts

Holding all other factors constant, at March 31, 2015 :

(i)
an instantaneous increase (decrease) of 10% in the value of the British pound sterling relative to the U.S. dollar would have decreased (increased) the aggregate fair value of the Virgin Media cross-currency and interest rate derivative contracts by approximately £495 million ( $735 million ); and

(ii)
an instantaneous increase (decrease) in the relevant base rate of 50 basis points (0.50%) would have increased (decreased) the aggregate fair value of the Virgin Media cross-currency and interest rate derivative contracts by approximately £42 million ( $62 million ).

UPC Broadband Holding Cross-currency and Interest Rate Derivative Contracts

Holding all other factors constant, at March 31, 2015 :

(i)
an instantaneous increase (decrease) of 10% in the value of the Swiss franc, Polish zloty, Czech koruna, Hungarian forint and Chilean peso relative to the euro would have decreased (increased) the aggregate fair value of the UPC Broadband Holding cross-currency and interest rate derivative contracts by approximately €490 million ( $526 million );

(ii)
an instantaneous increase (decrease) of 10% in the value of the euro relative to the U.S. dollar would have decreased (increased) the aggregate fair value of the UPC Broadband Holding cross-currency and interest rate derivative contracts by approximately €253 million ( $271 million );

(iii)
an instantaneous increase (decrease) of 10% in the value of the Swiss franc and Romanian lei relative to the U.S. dollar would have decreased (increased) the aggregate fair value of the UPC Broadband Holding cross-currency and interest rate derivative contracts by approximately €133 million ( $143 million ); and

(iv)
an instantaneous increase in the relevant base rate of 50 basis points (0.50%) would have increased the aggregate fair value of the UPC Broadband Holding cross-currency and interest rate derivative contracts by approximately €61 million ( $65 million ) and, conversely, a decrease of 50 basis points would have decreased the aggregate fair value by approximately €70 million ( $75 million ).

Ziggo Group Holding Cross-currency and Interest Rate Derivative Contracts

Holding all other factors constant, at March 31, 2015 :

(i)
an instantaneous increase (decrease) of 10% in the value of the euro relative to the U.S. dollar would have decreased (increased) the aggregate fair value of the Ziggo cross-currency and interest rate derivative contracts by approximately €278 million ( $298 million ); and

(ii)
an instantaneous increase (decrease) in the relevant base rate of 50 basis points (0.50%) would have increased (decreased) the aggregate fair value of the Ziggo cross-currency and interest rate derivative contracts by approximately €168 million ( $180 million ).

85

Unitymedia Cross-currency Derivative Contracts

Holding all other factors constant, at March 31, 2015 , an instantaneous increase (decrease) of 10% in the value of the euro relative to the U.S. dollar would have decreased (increased) the aggregate value of the Unitymedia cross-currency derivative contracts by approximately €245 million ( $263 million ).

Telenet Interest Rate Caps, Collars and Swaps

Holding all other factors constant, at March 31, 2015 , an instantaneous increase (decrease) in the relevant base rate of 50 basis points (0.50%) would have decreased (increased) the aggregate fair value of the Telenet interest rate cap, collar and swap contracts by approximately €70 million ( $75 million ).

VTR Cross-currency Derivative Contracts

Holding all other factors constant, at March 31, 2015 , an instantaneous increase (decrease) of 10% in the value of the Chilean peso relative to the U.S. dollar would have decreased (increased) the aggregate fair value of the VTR cross-currency derivative contracts by approximately CLP 107.0 billion ( $171 million ).

ITV Collar

Holding all other factors constant, at March 31, 2015 , an instantaneous increase of 10% in the per share market price of ITV ’s ordinary shares would have decreased the fair value of the ITV Collar by approximately £58 million ( $86 million ) and, conversely, a decrease of 10% would have increased the fair value by approximately £55 million ( $82 million ).

Sumitomo Collar

Holding all other factors constant, at March 31, 2015 , an instantaneous increase (decrease) of 10% in the per share market price of Sumitomo ’s common stock would have decreased (increased) the fair value of the Sumitomo Collar by approximately ¥5.0 billion ( $42 million ).

Projected Cash Flows Associated with Derivative Instruments

The following table provides information regarding the projected cash flows of our continuing operations associated with our derivative instruments. The U.S. dollar equivalents presented below are based on interest rates and exchange rates that were in effect as of March 31, 2015 . These amounts are presented for illustrative purposes only and will likely differ from the actual cash payments required in future periods. For additional information regarding our derivative instruments, including our counterparty credit risk, see note 4 to our condensed consolidated financial statements.
 
Payments (receipts) due during:
 
Total
 
Remainder of 2015
 
 
 
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
 
in millions
Projected derivative cash payments (receipts), net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-related (a)
$
48.1

 
$
68.9

 
$
125.2

 
$
85.0

 
$
35.2

 
$
20.4

 
$
81.9

 
$
464.7

Principal-related (b)
—

 
55.7

 
227.2

 
(120.4
)
 
(87.2
)
 
(251.9
)
 
(1,543.9
)
 
(1,720.5
)
Other (c)
17.4

 
(151.3
)
 
(212.8
)
 
(68.5
)
 
—

 
—

 
—

 
(415.2
)
Total
$
65.5

 
$
(26.7
)
 
$
139.6

 
$
(103.9
)
 
$
(52.0
)
 
$
(231.5
)
 
$
(1,462.0
)
 
$
(1,671.0
)
_______________

(a)
Includes (i) the cash flows of our interest rate cap, collar and swap contracts and (ii) the interest-related cash flows of our cross-currency and interest rate swap contracts.

(b)
Includes the principal-related cash flows of our cross-currency contracts.


86

(c)
Includes amounts related to our equity-related derivative instruments and, to a lesser extent, our foreign currency forward contracts. We may elect to use cash or the collective value of the related shares and equity-related derivative instrument to settle the ITV Collar Loan and the Sumitomo Collar Loan .
        
Item 4.
CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

In accordance with Exchange Act Rule 13a-15, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer, principal accounting officer and principal financial officer (the Executives), of the effectiveness of our disclosure controls and procedures as of March 31, 2015 . In designing and evaluating the disclosure controls and procedures, the Executives recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is necessarily required to apply judgment in evaluating the cost-benefit relationship of possible controls and objectives. Based on that evaluation, the Executives concluded that our disclosure controls and procedures are effective as of March 31, 2015 , in timely making known to them material information relating to us and our consolidated subsidiaries required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934.  

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation described above that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

87

PART II — OTHER INFORMATION

Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)
Issuer Purchases of Equity Securities

The following table sets forth information concerning our company’s purchase of its own equity securities during the three months ended March 31, 2015 :  
Period
 
Total number  of shares  purchased
 
Average  price
paid per  share (a)
 
Total number of 
shares purchased as part of publicly 
announced  plans
or programs
 
Approximate
dollar value of
shares that may
yet be  purchased
under the plans or programs
 
 
 
 
 
 
 
 
 
January 1, 2015 through January 31, 2015:
 
 
 
 
 
 
 
Class A
—

 
$
—

 
—

 
(b)
Class C
4,178,736

 
$
46.60

 
4,178,736

 
(b)
February 1, 2015 through February 28, 2015:
 
 
 
 
 
 
 
Class A
—

 
$
—

 
—

 
(b)
Class C
2,681,005

 
$
49.66

 
2,681,005

 
(b)
March 1, 2015 through March 31, 2015:
 
 
 
 
 
 
 
Class A
—

 
$
—

 
—

 
(b)
Class C
2,922,069

 
$
51.40

 
2,922,069

 
(b)
Total — January 1, 2015 through March 31, 2015:
 
 
 
 
 
 
 
Class A
—

 
$
—

 
—

 
(b)
Class C
9,781,810

 
$
48.87

 
9,781,810

 
(b)
_______________ 

(a)
Average price paid per share includes direct acquisition costs and the effects of derivative instruments, where applicable.

(b)
At March 31, 2015 , the remaining amount authorized for share repurchases was $3,458.1 million .


88

Item 6.
EXHIBITS

Listed below are the exhibits filed as part of this Quarterly Report (according to the number assigned to them in Item 601 of Regulation S-K):
4 — Instruments Defining the Rights of Securities Holders, including Indentures:
4.1
 
Indenture dated January 28, 2015 between Virgin Media Secured Finance PLC, The Bank of New York Mellon, London Branch, as Trustee and Paying Agent and The Bank of New York Mellon (Luxembourg) S.A., as Registrar and Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed February 3, 2015 (File No. 001-35961) (the February 2015 8-K/A)).
 
 
 
4.2
 
Indenture dated January 28, 2015 between Virgin Media Finance PLC, The Bank of New York Mellon, London Branch, as Trustee and Principal Paying Agent, The Bank of New York Mellon as Paying Agent and Dollar Notes Transfer Agent and Registrar and The Bank of New York Mellon (Luxembourg) S.A., as Euro Notes Registrar and Transfer Agent (incorporated by reference to Exhibit 4.2 to the February 2015 8-K/A).
 
 
 
4.3
 
Indenture dated January 29, 2015 between Ziggo Bond Finance B.V., Deutsche Trustee Company Limited as Trustee and Security Trustee, Deutsche Bank Trust Company Americas as Dollar Notes Paying Agent, Registrar and Transfer Agent, Deutsche Bank AG London Branch as Euro Notes Paying Agent and Deutsche Bank Luxembourg S.A. as Euro Notes Registrar and Transfer agent (incorporated by reference to Exhibit 4.3 to the February 2015 8-K/A).
 
 
 
4.4
 
Indenture dated February 4, 2015 between Ziggo Secured Finance B.V., Deutsche Trustee Company Limited as Trustee and Security Trustee, Deutsche Bank AG London Branch as Paying Agent and Deutsche Bank Luxembourg S.A. as Registrar and Transfer agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed February 10, 2015 (File No. 001-35961)).
 
 
 
4.5
 
Additional Facility AJ Accession Agreement, dated February 13, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent and Liberty Global Services B.V. as Additional Facility AJ Lender, under the UPC Broadband Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed March 2, 2015 (File No. 001-35961)).
 
 
 
4.6
 
Indenture dated April 15, 2015, among UPCB Finance IV Limited, The Bank of New York Mellon, London Branch as Trustee, Principal Paying Agent, Transfer Agent and Security Agent, The Bank of New York Mellon as New York Paying Agent, New York Transfer Agent and Dollar Notes Registrar and The Bank of New York Mellon (Luxembourg) S.A. as Euro Notes Registrar and Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed April 21, 2015 (File No. 001-35961) (the April 2015 8-K/A)).
 
 
 
4.7
 
Additional Facility AK Accession Agreement, dated April 15, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent, UPC Broadband Holding B.V. and UPCB Finance IV Limited as Additional Facility AK Lender, under the UPC Broadband Holding Credit Facility (incorporated by reference to Exhibit 4.2 to the April 2015 8-K/A).
 
 
 
4.8
 
Additional Facility AL Accession Agreement, dated April 15, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent, UPC Broadband Holding B.V. and UPCB Finance IV Limited as Additional Facility AL Lender, under the UPC Broadband Holding Credit Facility (incorporated by reference to Exhibit 4.3 to the April 2015 8-K/A).
 
 
 
4.9
 
Indenture dated March 30, 2015, among Virgin Media Secured Finance plc, The Bank of New York Mellon, London Branch as Trustee and Principal Paying Agent, The Bank of New York Mellon as Paying Agent, and Dollar Notes Transfer Agent and Dollar Notes Registrar and The Bank of New York Mellon (Luxembourg) S.A. as Sterling Notes Registrar and Sterling Notes Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed April 29, 2015 (File No. 001-35961).
 
 
 
10 — Material Contracts:
 
 
 
10.1
 
Liberty Global 2014 Incentive Plan (Effective March 1, 2014) as amended and restated effective February 24, 2015 (the Incentive Plan).*
 
 
 
10.2
 
Liberty Global 2015 Performance Incentive Plan for executive officers under the Incentive Plan (a description of said plan is incorporated by reference to the description thereof included in Item 5.02(e) of the Registrant’s Current Report on Form 8-K filed March 24, 2015 (File No. 001-35961) (the March 2015 8-K)).
 
 
 
10.3
 
Liberty Global 2015 Annual Cash Performance Award Program for executive officers under the Incentive Plan (description of said plan is incorporated by reference to the description thereof included in Item 5.01(e) of the March 2015 8-K).
 
 
 

89

10.4
 
Rules of the Virgin Media Inc. 2015 Sharesave Plan.*
 
 
 
31 — Rule 13a-14(a)/15d-14(a) Certification:
 
 
 
31.1
 
Certification of President and Chief Executive Officer*
 
 
 
31.2
 
Certification of Executive Vice President and Co-Chief Financial Officer (Principal Financial Officer)*
 
 
 
31.3
 
Certification of Executive Vice President and Co-Chief Financial Officer (Principal Accounting Officer)*
 
 
 
32 — Section 1350 Certification**
 
 
 
101.INS
 
XBRL Instance Document*
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document*
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document*
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase*
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document*
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document*
_______________ 
*
Filed herewith
**
Furnished herewith




90

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
  
LIBERTY GLOBAL PLC
 
 
 
Dated:
May 7, 2015
  
/s/    M ICHAEL  T. F RIES        
 
 
  
Michael T. Fries
President and Chief Executive Officer
 
 
 
Dated:
May 7, 2015
  
/s/    C HARLES  H.R. B RACKEN        
 
 
  
Charles H.R. Bracken
Executive Vice President and Co-Chief
Financial Officer (Principal Financial Officer)
 
 
 
Dated:
May 7, 2015
  
/s/    B ERNARD  G. D VORAK        
 
 
  
Bernard G. Dvorak
Executive Vice President and Co-Chief
Financial Officer (Principal Accounting Officer)



91

EXHIBIT INDEX  

4 — Instruments Defining the Rights of Securities Holders, including Indentures:
4.1
 
Indenture dated January 28, 2015 between Virgin Media Secured Finance PLC, The Bank of New York Mellon, London Branch, as Trustee and Paying Agent and The Bank of New York Mellon (Luxembourg) S.A., as Registrar and Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed February 3, 2015 (File No. 001-35961) (the February 2015 8-K/A)).
 
 
 
4.2
 
Indenture dated January 28, 2015 between Virgin Media Finance PLC, The Bank of New York Mellon, London Branch, as Trustee and Principal Paying Agent, The Bank of New York Mellon as Paying Agent and Dollar Notes Transfer Agent and Registrar and The Bank of New York Mellon (Luxembourg) S.A., as Euro Notes Registrar and Transfer Agent (incorporated by reference to Exhibit 4.2 to the February 2015 8-K/A).
 
 
 
4.3
 
Indenture dated January 29, 2015 between Ziggo Bond Finance B.V., Deutsche Trustee Company Limited as Trustee and Security Trustee, Deutsche Bank Trust Company Americas as Dollar Notes Paying Agent, Registrar and Transfer Agent, Deutsche Bank AG London Branch as Euro Notes Paying Agent and Deutsche Bank Luxembourg S.A. as Euro Notes Registrar and Transfer agent (incorporated by reference to Exhibit 4.3 to the February 2015 8-K/A).
 
 
 
4.4
 
Indenture dated February 4, 2015 between Ziggo Secured Finance B.V., Deutsche Trustee Company Limited as Trustee and Security Trustee, Deutsche Bank AG London Branch as Paying Agent and Deutsche Bank Luxembourg S.A. as Registrar and Transfer agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed February 10, 2015 (File No. 001-35961)).
 
 
 
4.5
 
Additional Facility AJ Accession Agreement, dated February 13, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent and Liberty Global Services B.V. as Additional Facility AJ Lender, under the UPC Broadband Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed March 2, 2015 (File No. 001-35961)).
 
 
 
4.6
 
Indenture dated April 15, 2015, among UPCB Finance IV Limited, The Bank of New York Mellon, London Branch as Trustee, Principal Paying Agent, Transfer Agent and Security Agent, The Bank of New York Mellon as New York Paying Agent, New York Transfer Agent and Dollar Notes Registrar and The Bank of New York Mellon (Luxembourg) S.A. as Euro Notes Registrar and Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed April 21, 2015 (File No. 001-35961) (the April 2015 8-K/A)).
 
 
 
4.7
 
Additional Facility AK Accession Agreement, dated April 15, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent, UPC Broadband Holding B.V. and UPCB Finance IV Limited as Additional Facility AK Lender, under the UPC Broadband Holding Credit Facility (incorporated by reference to Exhibit 4.2 to the April 2015 8-K/A).
 
 
 
4.8
 
Additional Facility AL Accession Agreement, dated April 15, 2015, among UPC Financing Partnership as Borrower, The Bank of Nova Scotia as Facility Agent and Security Agent, UPC Broadband Holding B.V. and UPCB Finance IV Limited as Additional Facility AL Lender, under the UPC Broadband Holding Credit Facility (incorporated by reference to Exhibit 4.3 to the April 2015 8-K/A).
 
 
 
4.9
 
Indenture dated March 30, 2015, among Virgin Media Secured Finance plc, The Bank of New York Mellon, London Branch as Trustee and Principal Paying Agent, The Bank of New York Mellon as Paying Agent, and Dollar Notes Transfer Agent and Dollar Notes Registrar and The Bank of New York Mellon (Luxembourg) S.A. as Sterling Notes Registrar and Sterling Notes Transfer Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed April 29, 2015 (File No. 001-35961).
 
 
 
10 — Material Contracts:
 
 
 
10.1
 
Liberty Global 2014 Incentive Plan (Effective March 1, 2014) as amended and restated effective February 24, 2015 (the Incentive Plan).*
 
 
 
10.2
 
Liberty Global 2015 Performance Incentive Plan for executive officers under the Incentive Plan (a description of said plan is incorporated by reference to the description thereof included in Item 5.02(e) of the Registrant’s Current Report on Form 8-K filed March 24, 2015 (File No. 001-35961) (the March 2015 8-K)).
 
 
 


10.3
 
Liberty Global 2015 Annual Cash Performance Award Program for executive officers under the Incentive Plan (description of said plan is incorporated by reference to the description thereof included in Item 5.01(e) of the March 2015 8-K).
 
 
 
10.4
 
Rules of the Virgin Media Inc. 2015 Sharesave Plan.*
 
 
 
31 — Rule 13a-14(a)/15d-14(a) Certification:
 
 
 
31.1
 
Certification of President and Chief Executive Officer*
 
 
 
31.2
 
Certification of Executive Vice President and Co-Chief Financial Officer (Principal Financial Officer)*
 
 
 
31.3
 
Certification of Executive Vice President and Co-Chief Financial Officer (Principal Accounting Officer)*
 
 
 
32 — Section 1350 Certification**
 
 
 
101.INS
  
XBRL Instance Document*
 
 
101.SCH
  
XBRL Taxonomy Extension Schema Document*
 
 
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase Document*
 
 
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase*
 
 
101.LAB
  
XBRL Taxonomy Extension Label Linkbase Document*
 
 
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase Document*
_______________ 
*
Filed herewith
**
Furnished herewith





EXHIBIT 10.1
LIBERTY GLOBAL 2014 INCENTIVE PLAN

(Amended and Restated effective February 24, 2015)

Article I

PURPOSE OF PLAN
1.1      Purpose . The purpose of the Plan is to promote the success of the Company by providing a method whereby eligible employees of the Company and its Subsidiaries may be awarded additional remuneration for services rendered and encouraged to acquire shares of the Company, thereby increasing their proprietary interest in the Company’s businesses, encouraging them to remain in the employ of the Company or its Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its Subsidiaries. The Plan is also intended to aid in attracting Persons of exceptional ability to become officers and employees of the Company and its Subsidiaries. All Awards made under the Plan may be settled in Shares only.
1.2      Effective Date . The Plan was originally effective March 1, 2014 (the “Effective Date”) and was amended and restated effective as of February 24, 2015 with respect to Awards made after that date.
ARTICLE II     

DEFINITIONS
2.1      Certain Defined Terms . Capitalized terms not defined elsewhere in the Plan shall have the following meanings (whether used in the singular or plural):
“Act” means the U.K. Companies Act 2006, as amended from time to time, and the rules and regulations thereunder.

“Affiliate” of the Company means any corporation, partnership or other business association that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” means a share option agreement, share appreciation rights agreement, restricted shares agreement, restricted share units agreement or an agreement evidencing more than one type of Award, specified in Section 11.5, as any such Agreement may be supplemented or amended from time to time.


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“Approved Transaction” means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the Shareholders) shall approve (i) any consolidation or merger of the Company, or binding share exchange, pursuant to which Shares of the Company would be changed or converted into or exchanged for cash, securities, or other property (including pursuant to a Scheme of Arrangement), other than any such transaction in which the Shareholders immediately prior to such transaction have the same proportionate ownership of the shares of, and voting power with respect to, the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding share exchange to which the Company is a party as a result of which the Persons who are Shareholders immediately prior thereto have less than a majority of the combined voting power of the outstanding capital shares of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors immediately following such merger, consolidation or binding share exchange (including pursuant to a Scheme of Arrangement), (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Company, or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company.

“Award” means a grant of Options, SARs, Restricted Shares, Restricted Share Units, and/or Performance Awards under the Plan.

“Board” means the Board of Directors of the Company.

“Board Change” means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

“Committee” means the committee of the Board appointed pursuant to Section 3.1 to administer the Plan.

“Company” means Liberty Global plc, a public limited company incorporated under English law.

“Control Purchase” means any transaction (or series of related transactions) in which any person (as such term is so defined), corporation or other entity (other than the Company, any Subsidiary of the Company, any employee benefit plan sponsored by the Company or any Subsidiary of the Company or any Exempt Person (as defined below)) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the then outstanding shares of the Company

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ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or series of related transactions) approved by the Board. For purposes of this definition, “Exempt Person” means the Chairman of the Board and each of the directors of the Company as of June 7, 2013, and (b) the respective family members, estates and heirs of each of the Persons referred to in clause (a) above and any trust or other investment vehicle for the primary benefit of any of such Persons or their respective family members or heirs. As used with respect to any Person, the term “family member” means the spouse, siblings and lineal descendants of such Person.

“Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as supported by a written opinion of a physician and determined by the Company. The Company may seek a second opinion as to the determination of Disability from a physician selected by the Company, and in such case, the Holder will be required to submit to an examination and provide the physician with any information that is necessary for such determination.

“Dividend Equivalents” means, with respect to Restricted Share Units, to the extent specified by the Committee only, a cash amount equal to all dividends and other distributions (or the economic equivalent thereof) which are payable to Shareholders of record during the Restriction Period on a like number and kind of Shares represented by the Award of Restricted Share Units.

“Domestic Relations Order” means any final and legally enforceable judgment, decree or other order regarding the division of property under domestic relations law applicable to the Holder.

“Effective Date” has the meaning ascribed thereto in Section 1.2.

“Equity Security” shall have the meaning ascribed to such term in Section 3(a)(11) of the Exchange Act, and an equity security of an issuer shall have the meaning ascribed thereto in Rule 16a-1 promulgated under the Exchange Act, or any successor Rule.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

“Fair Market Value” of a Share on any day means the last sale price (or, if no last sale price is reported, the average of the high bid and low asked prices) for a Share on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the Nasdaq or, if not traded on the Nasdaq, such other principal U.S. securities exchange for such security on the date of determination. If for any day the Fair Market Value of a Share is not determinable by any of the foregoing means, then the Fair Market Value

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for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate.

“Free Standing SAR” has the meaning ascribed thereto in Section 7.1. “Holder” means a Person who has received an Award under the Plan. “Nasdaq” means the Nasdaq Global Select Market.
“Option” means a share option granted under Article VI.

“Performance Award” means an Award made pursuant to Article X of the Plan to a Holder that is subject to the attainment of one or more Performance Objectives.

“Performance Objective” means a standard established by the Committee to determine in whole or in part whether a Performance Award shall be earned.

“Person” means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.

“Plan” means this Liberty Global 2014 Incentive Plan, as effective March 1, 2014, and as may be amended from time to time.

“Restricted Share Unit” means a unit representing the right to receive one Share that is subject to a Restriction Period and awarded pursuant to Article IX.

“Restricted Shares” means Shares subject to a Restriction Period and awarded pursuant to Article VIII.

“Restriction Period” means a period of time beginning on the date of each Award of Restricted Shares or Restricted Share Units and ending on the Vesting Date with respect to such Award.

“Retained Distribution” has the meaning ascribed thereto in Section 8.3.

“Retirement” means the voluntary termination of a Holder’s employment with the Company and its Subsidiaries on such terms as are determined by the Committee and set forth in the Agreement, or, if not otherwise set forth in the Agreement, the voluntary termination on or after the date that the sum of the Holder’s years of age and years of employment with the Company and its Subsidiaries is at least 70.

“SARs” means share appreciation rights, awarded pursuant to Article VII, with respect to Shares.


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“Scheme of Arrangement” means a scheme of arrangement sanctioned by a court under section 899 of the Act, as may be amended or similar procedure under a succeeding law or regulation.

“Share” means each or any (as the context may require) class of the Company’s ordinary shares.

“Shareholder” means a holder of the ordinary or preference shares of the Company, known as a “member” under English law.

“Subsidiary” of a Person means any present or future subsidiary (as defined in Section 424(f) of the Code) of such Person or any business entity in which such Person owns, directly or indirectly, 50% or more of the voting, capital or profits interests. An entity shall be deemed a subsidiary of a Person for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained. For purposes of Section 5.1, a Subsidiary shall additionally mean a subsidiary within the meaning of Section 1159 of the Act.

“Substitute Awards” means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

“Tandem SARs” has the meaning ascribed thereto in Section 7.1.

“Vesting Date,” with respect to any Restricted Shares or Restricted Share Units awarded hereunder, means the date on which such Restricted Shares or Restricted Share Units cease to be subject to a risk of forfeiture, as designated in or determined in accordance with the Agreement with respect to such Award of Restricted Shares or Restricted Share Units. If more than one Vesting Date is designated for an Award of Restricted Shares or Restricted Share Units, reference in the Plan to a Vesting Date in respect of such Award shall be deemed to refer to each part of such Award and the Vesting Date for such part.

ARTICLE III     

ADMINISTRATION
3.1      Committee . The Plan shall be administered by the Compensation Committee of the Board unless a different committee is subsequently appointed by the Board. The Committee shall be comprised of not less than two Persons who fulfill the “non‑employee director” requirements of Rule 16b‑3 under the Exchange Act, the “outside director” requirements of Section 162(m) of the Code and the “independent” requirement of the rules of any principal securities exchange on which any of the securities of the Company are traded, listed or quoted, if any. To the extent that one or more members of the Committee do not satisfy the foregoing requirements generally or with

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respect to a particular matter, any such members may recuse themselves or abstain from participation, and the remaining members of the Committee may act for the Committee as a whole provided such remaining members satisfy the requirements of the previous sentence. The Board may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may remove members of the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by all of the members shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held.
3.2      Powers. The Committee shall have full power and authority to grant to eligible Persons Options under Article VI of the Plan, SARs under Article VII of the Plan, Restricted Shares under Article VIII of the Plan, Restricted Share Units under Article IX of the Plan and/or Performance Awards under Article X of the Plan, to determine the terms and conditions (which need not be identical) of all Awards so granted (which may include, without limitation, providing for the recoupment of Shares or the cash equivalent thereof), to interpret the provisions of the Plan and any Agreements relating to Awards granted under the Plan, to adopt sub-plans under the Plan, to adopt special terms for Awards granted to eligible Persons in countries outside the United Kingdom and the United States, to enter into arrangements with the trustee of any employee benefit trust established by the Company or any of its Subsidiaries or Affiliates to facilitate the administration of Awards under the Plan, and to supervise the administration of the Plan. The Committee in making an Award may provide for the granting or issuance of additional, replacement or alternative Awards upon the occurrence of specified events, including the exercise of the original Award. The Committee shall have sole authority in the selection of Persons to whom Awards may be granted under the Plan and in the determination of the timing, pricing and amount of any such Award, subject only to the express provisions of the Plan. In making determinations hereunder, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and its Subsidiaries, and such other factors as the Committee in its discretion deems relevant.
3.3      Interpretation . The Committee is authorized, subject to the provisions of the Plan, to establish, amend and rescind such rules and regulations as it deems necessary or advisable for the proper administration of the Plan and to take such other action in connection with or in relation to the Plan as it deems necessary or advisable. Each action and determination made or taken pursuant to the Plan by the Committee, including any interpretation or construction of the Plan, shall be final and conclusive for all purposes and upon all Persons. No member of the Committee shall be liable for any action or determination made or taken by him or her or the Committee in good faith with respect to the Plan.
ARTICLE IV     

SHARES SUBJECT TO THE PLAN
4.1      Number of Shares; Award Limits. Subject to the provisions of this Article IV, the maximum number of Shares with respect to which Awards may be granted during the term of the

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Plan shall be 50 million Shares; provided, however, that the maximum number of class B ordinary shares, nominal value $0.01 per share, of the Company (the “Class B Shares”) with respect to which Awards may be so granted during the term of the Plan shall be 25 million Shares. Shares issued pursuant to the Plan shall be fully paid and, to the extent permitted by the laws of England and Wales, will be made available from Shares acquired by or gifted to the Company, newly allotted and issued Shares, or Shares acquired by or issued or gifted to the trustees of an employee benefit trust established in connection with the Plan. Any Shares (i) subject to any Award granted under the Plan that shall expire, terminate or be annulled for any reason without having been exercised (or considered to have been exercised), (ii) subject to any Award of Restricted Shares or Restricted Share Units that shall be forfeited prior to becoming vested (provided that the Holder received no benefits of ownership of such Restricted Shares or Restricted Share Units other than voting rights), (iii) covered by an Award and not delivered to the Holder due to payment of withholding taxes or purchase prices and (iv) that the Company repurchases on the open market by the Company with the proceeds of an Option purchase price, shall to the extent permitted under applicable law, again be available for purposes of the Plan. Except for Awards described in Section 11.1, and subject to adjustment from time to time as provided in Section 4.2, (i) no Person may be granted in any calendar year Awards covering more than 4 million Shares, and (ii) no Person may be granted in any calendar year Awards covering more than 2 million Shares of Class B Shares.
4.2      Adjustments . If the Company subdivides its outstanding Shares into a greater number of Shares (by Share dividend, Share split, reclassification, alteration of capital, capitalization of profits, bonus issue or otherwise) or combines its outstanding Shares into a smaller number of Shares (by reverse Share split, reclassification, or otherwise) or if the Committee determines that there is any variation in the share capital of the Company or that there is any Share dividend, extraordinary cash dividend, alteration of capital, capitalization of profits, bonus issue, reclassification, recapitalization, reorganization, split-up, spin-off, combination, exchange of Shares, warrants or rights offering to purchase any class of Shares or other similar corporate event (including compromises or arrangements sanctioned by a court under section 899 of the Act, mergers or consolidations, other than those which constitute Approved Transactions, adjustments with respect to which shall be governed by Section 11.1(b)) affects any class of Shares so that an adjustment is required to preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee, in its sole discretion and in such manner as the Committee may deem equitable and appropriate, may make such adjustments to any or all of (i) the number and kind of Shares which thereafter may be awarded, optioned or otherwise made subject to the benefits contemplated by the Plan, (ii) the number and kind of Shares subject to outstanding Awards, and (iii) the purchase or exercise price and the relevant appreciation base with respect to any of the foregoing, provided, however, that the number of Shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, if all Shares of any class of Shares are redeemed, then each outstanding Award shall be adjusted to substitute for the Shares subject thereto the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of Shares of such class of Shares and otherwise the terms of such Award, including, in the case of Options or similar rights, the aggregate exercise price, and, in the case of Free Standing SARs, the aggregate base price, shall remain constant before and after the substitution (unless otherwise determined by the Committee and provided in the applicable Agreement).

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4.3      Substitute Awards . Substitute Awards shall not reduce the Shares authorized for grant under the Plan or authorized for grant to a Person in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre‑existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, a number of Shares equal to the number of shares available for grant pursuant to the terms of such pre‑existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the shareholders of the entities party to such acquisition or combination) shall be available for grant under Section 4.1; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to Persons who were not employed by the Company or its Subsidiaries prior to such acquisition or combination.
ARTICLE V     

ELIGIBILITY
5.1      General . The Persons who shall be eligible to participate in the Plan and to receive Awards under the Plan shall, subject to Section 5.2, be such Persons who are employees (including officers and directors) of the Company or its Subsidiaries as the Committee shall select. Awards may be made to employees who hold or have held Awards under the Plan or any similar or other awards under any other plan of the Company or any of its Affiliates.
5.2      Ineligibility . No member of the Committee, while serving as such, shall be eligible to receive an Award.
ARTICLE VI     

OPTIONS
6.1      Grant of Options . Subject to the limitations of the Plan, the Committee shall designate from time to time those eligible Persons to be granted Options, the time when each Option shall be granted to such eligible Persons, the class and number of Shares subject to such Option, and, subject to Section 6.2, the purchase price of the Shares subject to such Option.
6.2      Option Price. The price at which Shares may be purchased upon exercise of an Option shall be fixed by the Committee and, except in connection with Substitute Awards or as provided by any sub-plan of the Plan, may be no less than the Fair Market Value of the Shares subject to the Option as of the date the Option is granted.
6.3      Term of Options. Subject to the provisions of the Plan with respect to death, Disability, Retirement and termination of employment, the term of each Option shall be for such period as the Committee shall determine as set forth in the applicable Agreement, provided that such term may not exceed ten years.

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6.4      Exercise of Options . An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and the Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part (without reducing the term of such Option).
6.5      Manner of Exercise .
(a)      Form of Payment. An Option shall be exercised by written notice to the Company upon such terms and conditions as the Agreement may provide and in accordance with such other procedures for the exercise of Options as the Committee may establish from time to time. The method or methods of payment of the purchase price for the Shares to be purchased upon exercise of an Option and of any amounts required by Section 11.9 shall be determined by the Committee and may consist of (i) cash, (ii) check, (iii) promissory note (subject to the Act and other applicable law), (iv) the withholding of Shares of the applicable class of Shares issuable upon such exercise of the Option (subject to the Act or other applicable law), (v) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase price (subject to the Act and other applicable law), (vi) any other method as provided in the applicable Agreement or (vii) any combination of the foregoing methods of payment, or such other consideration and method of payment as may be permitted for the issuance of Shares under the Act. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such conditions as the Committee deems appropriate. The Committee may adopt a policy providing for the automatic exercise of an Option due to its expiration.
(b)      Value of Shares . Unless otherwise determined by the Committee and provided in the applicable Agreement, Shares of any class of Shares delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and Shares of any class of Shares withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise date. Notwithstanding the foregoing, with respect to an Option exercise the purchase price of which is paid pursuant to clause (v) of Section 6.5(a), Shares shall be valued at the price Shares are sold in the market.
(c)      Issuance of Shares . The Company shall effect the transfer of the Shares purchased under the Option as soon as practicable after the exercise thereof and payment in full of the purchase price therefor and of any amounts required by Section 11.9, and within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Holder or other Person exercising an Option shall have any of the rights of a Shareholder with respect to Shares subject to an Option granted under the Plan until due exercise and full payment has been made, and (ii) no adjustment shall be made for cash

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dividends or other rights for which the record date is prior to the date of such due exercise and full payment.
ARTICLE VII     

SARS
7.1      Grant of SARs . Subject to the limitations of the Plan, SARs may be granted by the Committee to such eligible Persons in such numbers, with respect to any specified class of Shares, and at such times during the term of the Plan as the Committee shall determine. A SAR may be granted to a Holder of an Option (hereinafter called a “related Option”) with respect to all or a portion of the Shares subject to the related Option (a “Tandem SAR”) or may be granted separately to an eligible employee (a “Free Standing SAR”). Subject to the limitations of the Plan, SARs shall be exercisable in whole or in part upon notice to the Company upon such terms and conditions as are provided in the Agreement.
7.2      Tandem SARs. A Tandem SAR may be granted either concurrently with the grant of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option. Tandem SARs shall be exercisable only at the time and to the extent that the related Option is exercisable (and may be subject to such additional limitations on exercisability as the Agreement may provide) and in no event after the complete termination or full exercise of the related Option. Upon the exercise or termination of the related Option, the Tandem SARs with respect thereto shall be canceled automatically to the extent of the number of Shares with respect to which the related Option was so exercised or terminated. Subject to the limitations of the Plan, upon the exercise of a Tandem SAR and unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder thereof shall be entitled to receive, for each of the applicable classes of Shares with respect to which the Tandem SAR is being exercised, consideration (in the form determined as provided in Section 7.4) equal in value to the excess of the Fair Market Value of a Share of the applicable class of Shares with respect to which the Tandem SAR was granted on the date of exercise over the related Option purchase price per Share, and (ii) the related Option with respect thereto shall be canceled automatically to the extent of the number of Shares with respect to which the Tandem SAR was so exercised.
7.3      Free Standing SARs . Free Standing SARs shall be exercisable at the time, to the extent and upon the terms and conditions set forth in the applicable Agreement. Subject to the provisions of the Plan with respect to death, Disability, Retirement and termination of employment, the term of a Free Standing SAR shall be for such period as the Committee shall determine as set forth in the applicable Agreement, provided that such term may not exceed ten years. Except in connection with Substitute Awards, the base price of a Free Standing SAR may be no less than the Fair Market Value of the Shares with respect to which the Free Standing SAR was granted as of the date the Free Standing SAR is granted. Subject to the limitations of the Plan, upon the exercise of a Free Standing SAR and unless otherwise determined by the Committee and provided in the applicable Agreement, the Holder thereof shall be entitled to receive from the Company, for each Share with respect to which the Free Standing SAR is being exercised, consideration (in the form determined as provided in Section 7.4) equal in value to the excess of the Fair Market Value of a

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Share with respect to which the Free Standing SAR was granted on the date of exercise over the base price per Share of such Free Standing SAR.
7.4      Consideration . The consideration to be received upon the exercise of a SAR by the Holder shall be paid in the applicable class of Shares with respect to which the SAR was granted (valued at Fair Market Value on the date of exercise of such SAR). No fractional Shares shall be issuable upon exercise of a SAR, and unless otherwise provided in the applicable Agreement, the Holder will receive cash in lieu of any fractional Shares. Unless the Committee shall otherwise determine, to the extent a Free Standing SAR is exercisable, it will be exercised automatically on its expiration date.
7.5      Limitations . The applicable Agreement may provide for a limit on the amount payable to a Holder upon exercise of SARs at any time or in the aggregate, for a limit on the time periods during which a Holder may exercise SARs, and for such other limits on the rights of the Holder and such other terms and conditions of the SAR, including a condition that the SAR may be exercised only in accordance with rules and regulations adopted from time to time, as the Committee may determine. Unless otherwise so provided in the applicable Agreement, any such limit relating to a Tandem SAR shall not restrict the exercisability of the related Option. Such rules and regulations may govern the right to exercise SARs granted prior to the adoption or amendment of such rules and regulations as well as SARs granted thereafter.
7.6      Exercise . For purposes of this Article VII, the date of exercise of a SAR shall mean the date on which the Company shall have received notice from the Holder of the SAR of the exercise of such SAR (unless otherwise determined by the Committee and provided in the applicable Agreement).
ARTICLE VIII     

RESTRICTED SHARES
8.1      Grant . Subject to the limitations of the Plan, the Committee shall designate those eligible Persons to be granted Awards of Restricted Shares, shall determine the time when each such Award shall be granted, and shall designate (or set forth the basis for determining) the Vesting Date or Vesting Dates for each Award of Restricted Shares, and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Committee shall determine the price to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid. All determinations made by the Committee pursuant to this Section 8.1 shall be specified in the Agreement.
8.2      Award of Restricted Shares . An Award of Restricted Shares may be registered electronically in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, any electronically registered Restricted Shares and any securities constituting Retained Distributions shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable

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Agreement. Any such electronically registered Restricted Shares and Retained Distributions shall remain in the custody of the Company or its designee, and the Holder shall deposit with the custodian share powers or other instruments of assignment, each endorsed in blank, so as to permit transfer to any employee benefit trust established by the Company or its Subsidiary or to such other entity or employee, as determined by the Committee in its sole discretion, of all or any portion of the Restricted Shares and any securities constituting Retained Distributions that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement.
8.3      Restrictions . Restricted Shares shall constitute issued and outstanding Shares of the applicable class of Shares for all corporate purposes. The Holder will have the right to vote such Restricted Shares, to receive and retain such dividends and distributions, as the Committee may designate, paid or distributed on such Restricted Shares, and to exercise all other rights, powers and privileges of a Holder of Shares of the applicable class of Shares with respect to such Restricted Shares; except, that , unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder will not be entitled to delivery of any electronically registered Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (ii) the Company or its designee will retain custody of any electronically registered Restricted Shares during the Restriction Period as provided in Section 8.2; (iii) other than such dividends and distributions as the Committee may designate, the Company or its designee may retain custody of all distributions (“Retained Distributions”) made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and vesting, and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account; (iv) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions or his or her interest in any of them during the Restriction Period; and (v) a breach of any restrictions, terms or conditions provided in the Plan or established by the Committee with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.
8.4      Completion of Restriction Period . On the Vesting Date with respect to each Award of Restricted Shares and the satisfaction of any other applicable restrictions, terms and conditions, (i) all or the applicable portion of such Restricted Shares shall become vested and (ii) any Retained Distributions with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested, in accordance with the terms of the applicable Agreement. Any such Restricted Shares and Retained Distributions that shall not become vested shall be forfeited and cancelled or deposited in an employee benefit trust established by the Company or its Subsidiary or to such other entity or employee as determined by the Committee, and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares and Retained Distributions that shall have been so forfeited. The Committee may, in its discretion, provide for the deferral of an Award of Restricted Shares and Retained Distributions, provided that any such deferral election of a recipient shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee may provide, and shall be made in compliance with Section 409A of the Code to the extent applicable.

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ARTICLE IX     
RESTRICTED SHARE UNITS
9.1      Grant . Subject to the limitations of the Plan, the Committee shall designate those eligible Persons to be granted Awards of Restricted Share Units, shall determine the time when each such Award shall be granted, and shall designate (or set forth the basis for determining) the Vesting Date or Vesting Dates for each such Award of Restricted Share Units, and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Share Units in addition to those provided in the Plan. The Committee shall determine the price to be paid by the Holder for the Restricted Share Units; provided, however, that the issuance of Shares in settlement of such Awards shall be made for at least the minimum consideration necessary to permit such Shares to be deemed fully paid. All determinations made by the Committee pursuant to this Section 9.1 shall be specified in the Agreement.
9.2      Restrictions with Respect to Restricted Share Units . Any Award of Restricted Share Units, including any Shares which are represented by an Award of Restricted Share Units, may not be assigned, sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the date provided by the Committee at the time of the Award. A breach of any restrictions, terms or conditions provided in the Plan or established by the Committee with respect to any Award of Restricted Share Units will cause a forfeiture of such Restricted Share Units and any Dividend Equivalents with respect thereto.
9.3      Award of Restricted Share Units . An Award of Restricted Share Units shall not constitute issued and outstanding Shares, and the Holder shall not have any of the rights of a Shareholder with respect to any Shares represented by an Award of Restricted Share Units, in each case until Shares shall have been issued to the Holder as provided in Section 9.4. To the extent provided by the Committee in an Agreement, the Holder may be entitled to receive Dividend Equivalents with respect to an Award of Restricted Share Units, which may be subject to such restrictions, including, but not limited to, the rules applicable to Retained Distributions in Section 8.3 hereof, as the Committee shall determine.
9.4      Completion of Restriction Period . On the Vesting Date with respect to each Award of Restricted Share Units and the satisfaction of any other applicable restrictions, terms and conditions, (i) all or the applicable portion of such Restricted Share Units shall become vested and Shares issued to the Holder therefor and (ii) any unpaid Dividend Equivalents with respect to such Restricted Share Units shall become vested and payable to the Holder to the extent that the Award related thereto shall have become vested, in accordance with the terms of the applicable Agreement. Any such Restricted Share Units and any unpaid Dividend Equivalents that shall not become vested shall be forfeited with no Shares issued therefor, and the Holder shall not thereafter have any rights with respect to such Restricted Share Units and any unpaid Dividend Equivalents that shall have been so forfeited. The Committee may, in its discretion, provide for the deferral of an Award of Restricted Share Units and unpaid Dividend Equivalents, provided that any such deferral election of a recipient shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee

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may provide, and shall be made in compliance with Section 409A of the Code to the extent applicable.
ARTICLE X     

PERFORMANCE AWARDS
10.1      Designation as a Performance Award . The Committee shall have the right to designate any Award of Options, SARs, Restricted Shares or Restricted Share Units as a Performance Award.
10.2      Performance Objectives. The grant or vesting of a Performance Award shall be subject to the achievement of Performance Objectives over a performance period established by the Committee based upon one or more of the following business criteria that apply to the Holder, one or more business units, divisions or Subsidiaries of the Company or the applicable sector of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies: increased revenue; net income measures (including income after capital costs and income before or after taxes); share price measures (including growth measures and total shareholder return); price per Share; market share; earnings per Share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization (EBITDA); economic value added (or an equivalent metric); market value added; debt to equity ratio; cash flow measures (including operating cash flow, operating free cash flow, free cash flow, cash flow return on capital, cash flow return on tangible capital, net cash flow and net cash flow before financing activities); return measures (including return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); net promoter score or other metrics regarding quality or extent of customer satisfaction or service; expense measures (including overhead cost and general and administrative expense); margins; shareholder value; total shareholder return; proceeds from dispositions; total market value and corporate values measures (including ethics compliance, corporate responsibility, environmental and safety). Unless otherwise stated, such a Performance Objective need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The Committee shall have the authority to determine whether the Performance Objectives and other terms and conditions of the Award are satisfied, and the Committee’s determination as to the achievement of Performance Objectives relating to a Performance Award shall be made in writing.
10.3      Section 162(m) of the Code. Notwithstanding the foregoing provisions, if the Committee intends for a Performance Award to be granted and administered in a manner designed to preserve the deductibility of the compensation resulting from such Award in accordance with Section 162(m) of the Code, then the Performance Objectives for such particular Performance Award relative to the particular period of service to which the Performance Objectives relate shall be established by the Committee in writing (i) no later than 90 days after the beginning of such period and (ii) prior to the completion of 25% of such period.

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10.4      Waiver of Performance Objectives. The Committee shall have no discretion to modify or waive the Performance Objectives or conditions to the grant or vesting of a Performance Award unless such Award is not intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and the relevant Agreement provides for such discretion.
ARTICLE XI     
GENERAL PROVISIONS
11.1      Acceleration of Awards .
(a)      Death or Disability . If a Holder’s employment with the Company and its Subsidiaries shall terminate by reason of death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of Shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Retained Distributions shall become vested; and (iii) in the case of Restricted Share Units, each such Award of Restricted Share Units and any unpaid Dividend Equivalents shall become vested in full.
(b)      Approved Transactions; Board Change; Control Purchase . (i) In the event of any Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (A) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall become exercisable in full in respect of the aggregate number of Shares covered thereby; (B) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Retained Distributions shall become vested; and (C) in the case of Restricted Share Units, each such Award of Restricted Share Units and any unpaid Dividend Equivalents shall become vested in full, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. (ii) Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the applicable class of Shares may be changed, converted or exchanged in connection with the Approved Transaction.

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11.2      Termination of Employment .
(a)      General . If a Holder’s employment with the Company and its Subsidiaries shall terminate prior to an Option or SAR becoming exercisable or being exercised (or deemed exercised, as provided in Section 7.2 or pursuant to a policy adopted under Section 6.5(a)) in full, or during the Restriction Period with respect to any Restricted Shares or prior to the vesting of any Restricted Share Units, then such Option or SAR shall thereafter become or be exercisable, and the Holder’s rights to any unvested Restricted Shares, Retained Distributions, any such unvested Restricted Share Units and unpaid Dividend Equivalents shall thereafter vest, in each case solely to the extent provided in the applicable Agreement; provided, however, that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Option or SAR may be exercised after the scheduled expiration date thereof; (ii) if the Holder’s employment terminates by reason of death or Disability, the Option or SAR shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option or SAR); and (iii) any termination of the Holder’s employment for cause will be treated in accordance with the provisions of Section 11.2(c).
(b)      Retirement . Notwithstanding the provisions of Section 11.2(a) to the contrary and unless otherwise determined by the Committee, if a Holder’s employment with the Company and its Subsidiaries is terminated due to Retirement during a Restriction Period applicable to any Restricted Shares or prior to any Option or SAR becoming exercisable or being exercised in full or prior to the vesting of any Restricted Share Units, then such Option or SAR shall thereafter become or be exercisable, and the Holder’s rights to any unvested Restricted Shares, Retained Distributions, any such unvested Restricted Share Units and unpaid Dividend Equivalents shall immediately vest to the extent that such Awards (including any Retained Distributions and unpaid Dividend Equivalents) would have become vested and exercisable had the Holder remained in continuous employment with the Company through the date that is one year after the date of the Holder’s Retirement. Unless otherwise determined by the Committee and provided in the applicable Agreement, upon termination of a Holder’s employment with the Company and its Subsidiaries due to Retirement, Options and SARs that are vested and exercisable as of the date of the Holder’s Retirement shall remain exercisable until the first to occur of the date that is two years after the date of the Holder’s Retirement or the scheduled expiration of such Options or SARs. Notwithstanding the foregoing and unless otherwise determined by the Committee, for purposes of any Performance Award, a Holder’s Retirement during the performance period applicable to such Performance Award shall have no effect on such Performance Award, provided that the additional one-year of vesting service described in this Section 11.2(b) shall apply to a Performance Award if a Holder’s Retirement occurs during a service period applicable to such Performance Award following completion of the performance period.
(c)      Termination for Cause . If a Holder’s employment with the Company and its Subsidiaries shall be terminated by the Company or a Subsidiary for “cause” during the Restriction Period with respect to any Restricted Shares or prior to any Option or SAR becoming exercisable or being exercised in full or prior to the vesting of any Restricted

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Share Unit (for these purposes, “cause” shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his or her duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction or Control Purchase or Board Change, termination for “cause” shall mean only a felony conviction (or its equivalent under local law) for fraud, misappropriation, or embezzlement), then, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) all Options and SARs and all unvested Restricted Share Units held by such Holder shall immediately terminate, and (ii) such Holder’s rights to all Restricted Shares, Retained Distributions, any unpaid Dividend Equivalents shall be forfeited immediately.
(d)      Miscellaneous . The Committee may determine whether any given leave of absence constitutes a termination of employment; provided, however, that for purposes of the Plan, (i) a leave of absence, duly authorized in writing by the Company for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed 90 days, and (ii) a leave of absence in excess of 90 days, duly authorized in writing by the Company provided the employee’s right to reemployment is guaranteed either by statute or contract, shall not be deemed a termination of employment. Unless otherwise determined by the Committee and provided in the applicable Agreement, Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company.
11.3      Right of Company to Terminate Employment . Nothing contained in the Plan or in any Award, and no action of the Company or the Committee with respect thereto, shall confer or be construed to confer on any Holder any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any Subsidiary of the Company to terminate the employment of the Holder at any time, with or without cause, subject, however, to the provisions of any employment agreement between the Holder and the Company or any Subsidiary of the Company.
11.4      Nonalienation of Benefits . Except as set forth herein, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the Person entitled to such benefits.
11.5      Written Agreement . Each Award of Options shall be evidenced by a share option agreement; each Award of SARs shall be evidenced by a share appreciation rights agreement; each Award of Restricted Shares shall be evidenced by a restricted shares agreement; each Award of Restricted Share Units shall be evidenced by a restricted share units agreement; and each Performance Award shall be evidenced by a performance award agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve; provided, however , that if more than one type of

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Award is made to the same Holder, such Awards may be evidenced by a single Agreement with such Holder. Each grantee of an Option, SAR, Restricted Shares, Restricted Share Units or Performance Award shall be notified promptly of such grant, and a written Agreement shall be promptly executed and delivered by the Company. Any such written Agreement may contain (but shall not be required to contain) such provisions as the Committee deems appropriate to insure that the penalty provisions of Section 4999 of the Code will not apply to any Shares received by the Holder from the Company. Any such Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by Section 11.7(b).
11.6      Nontransferability; Designation of Beneficiaries .
(a)      Nontransferability . Awards shall not be transferable other than as approved by the Committee and provided in the applicable Agreement, or by will or the laws of descent and distribution or pursuant to a Domestic Relations Order, and, except as otherwise required pursuant to a Domestic Relations Order, during the lifetime of the Holder Awards may be paid only to and exercised only by such Holder (or his or her court-appointed legal representative).
(b)      Designation of Beneficiaries . The Committee may, to the extent permissible and deemed to have operable effect under applicable law, permit a Holder to designate a beneficiary or beneficiaries with respect to Awards under the Plan by filing a written designation of beneficiary or beneficiaries with the Committee on a form and in such manner as the Committee may prescribe from time to time.
11.7      Termination and Amendment .
(a)      General . Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may, from time to time, be suspended or discontinued or modified or amended if such action is deemed advisable by the Committee.
(b)      Modification . No termination, modification or amendment of the Plan may, without the consent of the Person to whom any Award shall theretofore have been granted, adversely affect the rights of such Person with respect to such Award. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder and subject to the terms and conditions of the Plan (including Section 11.7(a)), the Committee may amend outstanding Agreements with any Holder, including any amendment which would (i) accelerate the time or times at which the Award may be exercised and/or (ii) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Committee may, but solely with the Holder’s consent unless otherwise provided in the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made. Nothing contained in the foregoing provisions of this Section 11.7(b) shall be construed to prevent the Committee from providing in any Agreement that the rights of the Holder with

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respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any such provision.
11.8      Government and Other Regulations . The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations, including the Act, and to such approvals by any governmental agencies as may be required, including the effectiveness of any registration statement required under the U.S. Securities Act of 1933, and the rules and regulations of any securities exchange or association on which the Shares may be listed or quoted. For so long as any class of Shares is registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the U.S. Securities Act of 1933 with respect to all Shares of the applicable class that may be issued to Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the Exchange Act.
11.9      Withholding . The Company’s obligation to deliver Shares under the Plan shall be subject to applicable national, state and local tax and employee social security contribution withholding requirements. National, state and local withholding tax and employee social security contribution withholding due at the time of an Award, upon the exercise of any Option or SAR or upon the vesting of, or expiration of restrictions with respect to, Restricted Shares or Restricted Share Units or the satisfaction of the Performance Objectives applicable to a Performance Award, as appropriate, may, in the discretion of the Committee, be paid through the withholding of Shares otherwise issuable to such Holder (subject to compliance with applicable law, including, but not limited to, “financial assistance” prohibitions under UK law), upon such terms and conditions (including the conditions referenced in Section 6.5) as the Committee shall determine. If the Holder shall fail to pay, or make arrangements satisfactory to the Committee for the payment to the Company of, all such national, state and local taxes and employee social security contributions required to be withheld by the Company, then the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Holder an amount equal to any national, state or local taxes and employee social security contributions of any kind required to be withheld by the Company with respect to such Award.
11.10      Nonexclusivity of the Plan . The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including the granting of Share options and the awarding of Shares otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
11.11      Exclusion from Pension and Profit-Sharing Computation . By acceptance of an Award, unless otherwise provided in the applicable Agreement, each Holder shall be deemed to have agreed that such Award is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan, program or policy of the Company or any Subsidiary of the Company. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage, if any,

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provided by the Company on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary of the Company.
11.12      Unfunded Plan . Neither the Company nor any Subsidiary of the Company shall be required to segregate any Shares which may at any time be represented by Awards, and the Plan shall constitute an “unfunded” plan of the Company. Except as provided in Article VIII with respect to Awards of Restricted Shares and except as expressly set forth in an Agreement, no employee shall have voting or other rights with respect to the Shares covered by an Award prior to the delivery of such Shares. Neither the Company nor any Subsidiary of the Company shall, by any provisions of the Plan, be deemed to be a trustee of any Shares or any other property, and the liabilities of the Company and any Subsidiary of the Company to any employee pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are created by or pursuant to the Plan, and the rights of any employee, former employee or beneficiary under the Plan shall be limited to those of a general creditor of the Company or the applicable Subsidiary of the Company, as the case may be. In its sole discretion, the Board may authorize the creation of trusts (including, without limitation, employee benefit trusts) or other arrangements to meet the obligations of the Company under the Plan, provided, however , that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.
11.13      Governing Law . Except as otherwise set forth in an Agreement, the Plan and Awards shall be governed by, and construed in accordance with, the laws of England and Wales.
11.14      Accounts . The delivery of any Shares shall be for the account of the Company or the applicable Subsidiary of the Company, as the case may be, and any such delivery or payment shall not be made until the recipient shall have paid or made satisfactory arrangements for the payment of any applicable withholding taxes as provided in Section 11.9.
11.15      Legends . Shares subject to an Award shall bear or otherwise be subject to such legends as the Committee deems necessary or appropriate to reflect or refer to any terms, conditions or restrictions of the Award applicable to such Shares, including any to the effect that the Shares represented thereby may not be disposed of unless the Company has received an opinion of counsel, acceptable to the Company, that such disposition will not violate any federal or state securities laws.
11.16      Company’s Rights . The grant of Awards pursuant to the Plan shall not affect in any way the right or power of the Company to make reclassifications, reorganizations or other changes of or to its capital or business structure or to merge, consolidate, liquidate, sell or otherwise dispose of all or any part of its business or assets.
11.17      Interpretation . The words “include,” “includes,” “included” and “including” to the extent used in the Plan shall be deemed in each case to be followed by the words “without limitation.”
11.18      Section 409A. The Plan and Awards are intended to be exempt from or compliant with the requirements of Code Section 409A and related regulations and United States Department of the Treasury pronouncements (“Section 409A”) to the extent that Section 409A is applicable to a Holder. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award

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under the Plan would result in the imposition of an additional tax under Section 409A, that Plan provision or Award will be reformed to be exempt from Section 409A or comply with the requirements of Section 409A, and no such action taken shall be deemed to adversely affect the Holder’s rights to an Award.

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ANNEX 1

This Annex 1 to the Liberty Global 2014 Incentive Plan governs Cash Awards and Awards granted under the Plan that are payable in cash, Shares or any combination thereof. Any Awards granted pursuant to this Annex 1 are subject to all of the terms and conditions set forth in the Plan except as modified by the following provisions, which shall replace and/or supplement certain provisions of the Plan, as indicated below. Any Award that may be settled in cash or in a combination of cash and Shares shall be granted only under an Annex to the Plan.

ARTICLE I
1.    The following paragraph shall replace Section 1.1 of the Plan:
1.1     Purpose . The purpose of this Annex 1 of the Plan is to promote the success of the Company by providing a method whereby eligible Persons may be awarded additional remuneration for services rendered that are payable in cash, Shares or any combination thereof, thereby encouraging them to remain in the service of the Company or its Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its Subsidiaries.

ARTICLE II

2.1     Certain Defined Terms . Capitalized terms used in this Annex 1 shall have the same definitions as set forth in the Plan except for the following terms:

“Agreement” means a share option agreement, share appreciation rights agreement, restricted share agreement, restricted share unit agreement, cash award agreement or an agreement evidencing more than one type of Award, specified in Section 11.5, as such Agreement may be supplemented or amended from time to time.

“Award” means a grant of Options, SARs, Restricted Shares, Restricted Share Units, Performance Awards, Cash Awards and/or cash amounts under the Plan.

“Cash Award” means an Award made pursuant to Section 10.5 of the Plan to the Holder that is paid solely on account of attainment of one or more Performance Objectives that have been pre-established by the Committee.

“Restricted Share Unit” means a unit representing the right to receive one Share or the equivalent value in cash that is subject to a Restriction Period and awarded pursuant to Article IX.

ARTICLE III

3.2     Powers . The following sentence shall replace the first sentence of Section 3.2 for purposes of Awards granted under this Annex 1:

    

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The Committee shall have full power and authority to grant to eligible Persons Options under Article VI of the Plan, SARs under Article VII of the Plan, Restricted Shares under Article VIII of the Plan, Restricted Share Units under Article IX of the Plan, Cash Awards under this Annex 1 and Article X of the Plan and/or Performance Awards under Article X of the Plan, to determine the terms and conditions (which need not be identical) of all Awards so granted, to interpret the provisions of the Plan, this Annex 1 and any Agreements relating to Awards granted under the Plan, to adopt sub-plans under the Plan or special terms for Awards granted to Persons in countries outside the United Kingdom and the United States, to enter into arrangements with the trustee of any employee benefit trust established by the Company or any of its Affiliates to facilitate the administration of Awards under the Plan, and to supervise the administration of the Plan.

ARTICLE IV

4.1     Number of Shares; Award Limits . The following paragraph shall supplement Section 4.1 for purposes of Awards granted under this Annex 1:

Notwithstanding the foregoing, Shares subject to any Award that are settled for cash shall again be available for purposes of the Plan. In addition, no Person shall receive payment for Cash Awards during any calendar year aggregating in excess of $10,000,000 U.S. dollars.

4.2     Adjustments . The following paragraph shall supplement Section 4.2 for purposes of Awards granted under this Annex 1:

The Committee may, if deemed appropriate, provide for a cash payment to any Holder of an Award in connection with any adjustment made pursuant to Section 4.2.

ARTICLE V

5.1     General . The following shall replace Section 5.1 for purposes of Awards granted under this Annex 1:

5.1     General. The Persons who shall be eligible to participate in the Plan and to receive Awards under the Plan shall, subject to Section 5.2, be such employees (including officers and directors) of the Company or its Subsidiaries or such other Persons eligible under Annex 2 as the Committee shall select. Awards may be made to Persons who hold or have held Awards under the Plan or any similar or other awards under any other plan of the Company or any of its Affiliates. For purposes of this Section 5.1, Subsidiary shall mean a subsidiary within the meaning of Section 1159 of the Act.

ARTICLE VII

7.4     Consideration . The following paragraph shall supplement Section 7.4 for purposes of Awards granted under this Annex 1:


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Notwithstanding the foregoing, the Committee may permit the Holder of a SAR who is not subject to United States federal income tax to be paid consideration in the form of cash, or a combination of cash and the applicable class of Shares with respect to which the SAR was granted.

ARTICLE VIII

8.3     Restrictions. The last three clauses of the last sentence of Section 8.3 shall be deleted for purposes of Awards granted under this Annex 1.

8.4     Completion of Restricted Period . The following clause (iii) shall supplement the first sentence of Section 8.4 for purposes of Awards granted under this Annex 1:

and (iii) any cash amount to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Agreement.

8.4     Completion of Restricted Period . The following paragraph shall supplement Section 8.4 for the purposes of Awards granted under this Annex 1:

The Committee may, in its discretion, provide for the deferral of any cash amounts related to an Award of Restricted Shares and Retained Distributions, provided that any such deferral election of a recipient shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee may provide, and shall be made in compliance with Section 409A of the Code to the extent applicable.

8.5     Cash Payments . The following Section 8.5 shall supplement Article VIII for purposes of Awards granted under this Annex 1:

8.5     Cash Payments . In connection with any Award of Restricted Shares, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Shares after such Restricted Shares shall have become vested. Such cash amounts shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Committee in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from the Company.

ARTICLE IX

9.3     Restrictions. The last three clauses of the last sentence of Section 9.3 shall be deleted for purposes of Awards granted under this Annex 1.

9.4     Completion of Restricted Period . The following clause (iii) shall supplement the first sentence of Section 9.4 for purposes of Awards granted under this Annex 1:

and (iii) any cash amount to be received by the Holder with respect to such Restricted Share Units shall become payable, all in accordance with the terms of the applicable Agreement.

    

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9.4     Completion of Restricted Period . The following paragraph shall supplement Section 9.4 for the purposes of Awards granted under this Annex 1:

The Committee may, in its discretion, provide for the deferral of any cash amounts related to an Award of Restricted Share Units and unpaid Dividend Equivalents, provided that any such deferral election of a recipient shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee may provide, and shall be made in compliance with Section 409A of the Code to the extent applicable.

9.5     Cash Payments . The following Section 9.5 shall supplement Article IX for purposes of Awards granted under this Annex 1:

9.5     Cash Payments . In connection with any Award of Restricted Share Units, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Share Units after such Restricted Share Units shall have become vested. Such cash amounts shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Committee in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from the Company.

ARTICLE X

10.2     Designation as a Performance Award . The following sentence shall supplement Section 10.2 for purposes of Awards granted under this Annex 1:

All Cash Awards shall be designed as Performance Awards.

10.5     Cash Awards . The following Section 10.5 shall supplement Article 10 for purposes of Awards granted under this Annex 1:

10.5     Cash Awards . In addition to granting Options, SARs, Restricted Shares and Restricted Share Units, the Committee shall, subject to the limitations of the Plan and this Annex 1, have authority to grant to eligible Persons Cash Awards. Each Cash Award shall be subject to such terms and conditions, restrictions and contingencies as the Committee shall determine. Restrictions and contingencies limiting the right to receive a cash payment pursuant to a Cash Award shall be based upon the achievement of single or multiple Performance Objectives over a performance period established by the Committee. The determinations made by the Committee pursuant to this Section 10.5 and this Annex 1 shall be specified in the applicable Agreement.
    
ARTICLE XI

11.1(a)     Death or Disability . The following sentence shall supplement Section 11.1(a) for purposes of Awards granted under this Annex 1:


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Upon the deemed expiration of the Restriction Period applicable to each such Award of Restricted Shares in connection with the Holder’s termination of employment by reason of death or Disability, any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provide in the Agreement.

11.1(b)     Approved Transactions; Board Change; Control Purchase . The following paragraph shall supplement Section 11.1(b) for purposes of Awards granted under this Annex 1:

Upon the deemed expiration of the Restriction Period applicable to each such Award of Restricted Shares in connection with any Approved Transaction, Board Change or Control Purchase, unless the applicable Agreement provides otherwise, any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement. The effect, if any, on a Cash Award of an Approved Transaction, Board Change or Control Purchase shall be prescribed in the applicable Agreement.

11.2(a)     General . The following paragraph shall supplement Section 11.2(a) for purposes of Awards granted under this Annex 1:

If the Holder’s employment with the Company and its Subsidiaries shall terminate during the Restriction Period with respect to any Restricted Shares or Restricted Share Units, the Holder’s rights to any related cash amounts shall thereafter vest solely to the extent provided in the applicable Agreement. The effect on a Cash Award of the termination of a Holder’s employment for any reason, other than for cause, shall be prescribed in the applicable Agreement.

11.2(b)     Retirement . The following paragraph shall supplement Section 11.2(b) for purposes of Awards granted under this Annex 1:

If the Holder’s employment with the Company and its Subsidiaries shall terminate due to Retirement during the Restriction Period with respect to any Restricted Shares or Restricted Share Units or prior to the payment of a Cash Award, the Holder’s rights to any cash amounts related to such Award of Restricted Shares or Restricted Share Units and the Cash Award shall thereafter vest as determined under Section 11.2(b) unless otherwise provided in the applicable Agreement.

11.2(c)     Termination for Cause . The following paragraph shall supplement Section 11.2(c) for purposes of Awards granted under this Annex 1:

If the Holder’s employment with the Company and its Subsidiaries shall be terminated by the Company or the Subsidiary for “cause” (as defined in Section 11.2(c) of the Plan), then, unless otherwise determined by the Committee and provided in the applicable Agreement, all (i) unpaid Cash Awards held by such Holder shall immediately terminate, and (ii) all cash amounts related to Restricted Shares or Restricted Share Units shall be forfeited immediately.

11.5     Written Agreement . The following paragraph shall supplement Section 11.5 for the purposes of Awards granted under this Annex 1:


26



Each Cash Award shall be evidenced by a cash award agreement in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve. If more than one type of Award is granted to the one Holder, the cash award agreement may be separate from the Agreements evidencing such other types of Awards or may evidence the other types of Awards granted to such Holder. Any such Agreement may contain such provisions as the Committee deems appropriate and may be supplemented or amended from time to time as approved by the Committee and contemplated by Section 11.7(b).

11.9     Withholding . The following sentence shall supplement Section 11.9 for purposes of Awards granted under this Annex 1:

The foregoing powers of the Company and the Committee with respect to withholding for taxes shall apply to Cash Awards or cash amounts paid in settlement of any Award (or portion thereof) under the Plan.

11.12     Unfunded Plan . The following sentence shall supplement Section 11.12 for purposes of Awards granted under this Annex 1:

Neither the Company nor any Subsidiary of the Company shall be required to segregate any cash which may at any time be represented by Awards, and the Plan shall constitute an “unfunded” plan for the Company.

11.14     Accounts . The following sentence shall supplement Section 11.14 for purposes of Awards granted under this Annex 1:

The payment of any cash amounts payable in respect of an Award shall be for the account of the Company or the applicable Subsidiary of the Company, as the case may be, and any such payment shall not be made until the recipient shall have paid or made satisfactory arrangements for the payment of any applicable taxes as provided in Section 11.9.


27




ANNEX 2

This Annex 2 to the Liberty Global 2014 Incentive Plan governs Awards granted to independent contractors under the Plan or Annex 1. Any Awards granted pursuant to this Annex 2 are subject to all of the terms and conditions set forth in the Plan and Annex 1, as applicable, except as modified by the following provisions, which shall replace and/or supplement certain provisions of the Plan and Annex 1, as indicated below.

ARTICLE I

The following paragraph shall replace Section 1.1 of the Plan:
1.1     Purpose . The purpose of this Annex 2 of the Plan is to promote the success of the Company by providing a method whereby independent contractors providing services to the Company and its Subsidiaries may be awarded additional remuneration for services rendered and encouraged to invest in capital shares of the Company, thereby increasing their proprietary interest in the Company’s businesses, encouraging them to remain in the service of the Company or its Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its Subsidiaries. The Plan is also intended to aid in inducing independent contractors to agree to provide services to the Company and its Subsidiaries.

ARTICLE III

3.2     Powers . The following sentence shall supplement Section 3.2 for purposes of Awards granted under this Annex 2:

In making determinations hereunder, the Committee may take into account the nature of the services rendered by the independent contractors, their present and potential contributions to the success of the Company and its Subsidiaries, and such other factors as the Committee in its discretion deems relevant.

ARTICLE V

5.1     General . The following shall replace Section 5.1 for purposes of Awards granted under this Annex 2:

5.1     General. The Persons who shall be eligible to participate in the Plan to receive Awards under the Plan and Annex 1 shall, subject to Section 5.2, be such Persons who are independent contractors of the Company or its Subsidiaries as the Committee shall select. Awards may be made to independent contractors who hold or have held Awards under the Plan or Annex 1 or any similar or other awards under any other plan of the Company or any of its Affiliates. For purposes of this Section 5.1, Subsidiary shall mean a subsidiary within the meaning of Section 1159 of the Act.


28



ARTICLE VI

6.3     Term of Options. References in Section 6.3 to “employment” shall be replaced with references to “service” for purposes of Awards granted under this Annex 2.

ARTICLE VII

7.1     Grant of SARs . References in Section 7.1 to “employee” shall be replaced with references to “independent contractor” for purposes of Awards granted under Annex 2.

7.3     Free Standing SARs . References in Section 7.3 to “employment” shall be replaced with references to “service” for purposes of Awards granted under Annex 2.

ARTICLE IX

9.2     Rules . References in Section 9.2(c) to “employee” shall be replaced with references to “independent contractor” and references to “employment” shall be replaced with references to “service” for purposes of Awards granted under this Annex 2.

ARTICLE XI

11.1(a)     Death or Disability . References in Section 11.1(a) to “employment” shall be replaced with references to “service” for purposes of Awards granted under this Annex 2.

11.2     Termination of Service . Section 11.2(b) shall be deleted for purposes of Awards granted under this Annex 2. References in Sections 11.2(a), 11.2(c) and 11.2(d) to “employment” shall be replaced with references to “service” and references in Section 11.2(d) to “employee” shall be replaced with references to “independent contractor” for purposes of Awards granted under this Annex 2.

11.3     Right of Company to Terminate Service . References in Section 11.3 to “employment” and “employ” shall be replaced by references to “service” for purposes of Awards granted under this Annex 2.

11.12     Unfunded Plan . References in Section 11.12 to “employee” shall be replaced by references to “independent contractor” for purposes of Awards granted under this Annex 2, provided , however , that references to an “employee benefit trust” shall remain unchanged.


29

EXHIBIT 10.4
Dated February 24, 2015
 
 
Virgin Media Inc.
 
 
 
 

 
RULES

OF THE

VIRGIN MEDIA INC.

2015 SHARESAVE PLAN
 
 
 







CONTENTS

CLAUSE
PAGE

 
 
 
1.
DEFINITIONS, INTERPRETATION, INTRODUCTION AND PURPOSE OF THE PLAN
1
 
 
 
2.
GRANT OF OPTIONS
4
 
 
 
3.
SCALING DOWN
6
 
 
 
4.
LIMITATIONS ON EXERCISE OF OPTIONS
6
 
 
 
5.
TIME FOR EXERCISE OF OPTIONS
6
 
 
 
7.
REPLACEMENT OF OPTIONS ON CHANGE OF CONTROL OF LIBERTY GLOBAL
10
 
 
 
8.
EXERCISE OF OPTIONS
11
 
 
 
9.
VARIATIONS IN THE CAPITAL OF LIBERTY GLOBAL
12
 
 
 
10.
EARLY REPAYMENT OR DEFAULT UNDER SAVINGS CONTRACT
13
 
 
 
11.
ADMINISTRATION OF THE PLAN
13
 
 
 
12.
AMENDMENT OF THE PLAN
13
 
 
 
13.
GENERAL PROVISIONS
14





VIRGIN MEDIA INC.
VIRGIN MEDIA INC. 2015 SHARESAVE PLAN
1.
DEFINITIONS, INTERPRETATION, INTRODUCTION AND PURPOSE OF THE PLAN
1.1
Definitions and Interpretation
In the Plan:
" Acquiring Company " means a company which is an acquiring company as defined in paragraph 38(2) of Schedule 3;
" Adoption Date " means 1 March 2014, being the date on which the Liberty Global 2014 Plan was adopted by Liberty Global;
" Associated Company " means a company which is an associated company of the Company as defined in paragraph 47(1) of Schedule 3;
" Bonus " means any sum payable as a final bonus under a Savings Contract being any additional payment made by the Savings Authority once all monthly contributions have been made by a Participant when repaying contributions made under either a Three-Year Savings Contract or a Five-Year Savings Contract;
" Bonus Date " means the earliest date on which the Bonus is or would be payable under the relevant Savings Contract;
" Company " means Virgin Media Inc. which is the Scheme Organiser and which is also the parent scheme company for the purposes of the Plan;
" Control " means the control of a company within the meaning of section 995 of the Tax Act and for the purposes of clause 6 a person is deemed to have control of a company if he or she and others acting in concert with him or her have together obtained control of the company within the meaning of section 995 of the Tax Act;
" Controlling Company " means a company other than Liberty Global and an Acquiring Company which has control of Liberty Global or the Acquiring Company as referred to in paragraph 39 of Schedule 3;
" Dealing Day " means a day on which transactions take place on the NASDAQ or, if relevant, any other recognised exchange on which Shares are traded;
" Eligible Employee " means any employee or director of one or more members of the Participating Group who:
(a)
is chargeable to tax on the earnings from his or her office or employment under section 15 of ITEPA; and
(b)
has been a director or employee of a member of the Participating Group for any qualifying period determined by the VM Board being a period starting no earlier than five years before the Grant Date; and
the VM Board may waive either or both clauses (a) or (b) in any particular case;
" Exercise Price " means the price for a Share converted into UK £ sterling using the Wall Street Journal's closing exchange rate on the Grant Date payable on the exercise of an Option as specified by the VM Board which must not be less than the greater of:


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(a)
the nominal value of a Share if Shares are to be subscribed; and
(b)
eighty per cent of the Market Price of a Share on the Grant Date or the Market Price at any other time or times as may be previously agreed in writing with HMRC and if permitted under the Liberty Global 2014 Plan;
" Five-Year Savings Contract " means a Savings Contract under which a Participant agrees to make 60 monthly contributions;
" Grant Date " means the date on which an Option is granted or is to be granted under clause 2;
" HMRC " means HM Revenue & Customs;
" Invitation Date " means the date on which the VM Board invites Eligible Employees to apply for Options under clause 2.1;
" ITEPA " means the Income Tax (Earnings and Pensions) Act 2003;
" LG Board " means the board of directors of Liberty Global or a duly authorised committee of the board of directors of Liberty Global;
" Liberty Global " means Liberty Global plc (Registered Number 08379990);
" Liberty Global 2014 Plan" means the Liberty Global 2014 Incentive Plan;
" Market Price " means the market value of a Share on any day, being:
(a)
if and for as long as the Shares are traded on the NASDAQ the last sale price (or, if no last sale price is reported, the average of the high bid price and low asked prices) for a Share for that day (or, if such day is not a trading day, on the next preceding trading day); or
(b)
in all other cases, the market value determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in writing in advance with HMRC;
" Misconduct " means the behaviour of a Participant resulting in the termination of his or her office and/or employment with the Company or any Associated Company as a result of the relevant company terminating the Participant's employment by applying any of the provisions for summary dismissal in the Participant's service contract with that company;
" NASDAQ " means the NASDAQ Global Select Market;
" Non-UK Company Reorganisation " means a non-UK company reorganisation arrangement as defined in paragraph 47A of Schedule 3;
" Operative Period " means the period of ten years starting on the Adoption Date;
" Option " except as provided in clause 7, means a right to buy Shares under the Plan;
" Option Period " means for an Option the period of six months during which the Option is exercisable under the Plan starting on the Bonus Date applicable to the Savings Contract related to the Option;
" Participant " means a person who has been granted an Option including his or her personal representative;



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" Participating Group " means the Company and those of the Subsidiaries that the VM Board has resolved may participate in the Plan and "member of the Participating Group" means any one of those Subsidiaries;
" Plan " means the Virgin Media Inc. 2015 Sharesave Plan constituted by this document established by the Company as the Scheme Organiser for the purposes of Schedule 3 and which is a sub-plan of the Liberty Global 2014 Plan;
" Savings Authority " means the provider of the Savings Contracts as nominated by the VM Board for the purposes of the Plan;
" Savings Contract " means a contract under which regular monthly contributions are paid to the Savings Authority under a certified SAYE savings arrangement which is an approved savings arrangement under paragraph 24 of Schedule 3;
" Schedule 3 " means Schedule 3 to ITEPA;
" Schedule 3 SAYE option scheme " means an SAYE option scheme which satisfies the requirements of Parts 2 to 7 of Schedule 3;
" Scheme Organiser " means the scheme organiser as defined in paragraph 2(2) of Schedule 3;
" Shares " except as provided in clauses 6 and 7.3(a), means Class C ordinary shares in the capital of Liberty Global which satisfy the conditions referred to in Part 4 of Schedule 3;
" Subsidiary " means any company which is:
(a)
under the Control of the Company; and
(b)
a subsidiary of the Company within the meaning of section 1159 of the Companies Act 2006;
" Tax Act " means the Income Tax Act 2007;
" Three-Year Savings Contract " means a Savings Contract under which a Participant agrees to make 36 monthly contributions;
" TUPE regulations " means the Transfer of Undertakings (Protection of Employment) Regulations 2006; and
" VM Board " means the board of directors of the Company or a duly authorised committee of the board of directors of the Company.
Any reference to a statutory provision includes a reference to that provision as amended or re-enacted. The singular includes the plural and the other way round and the masculine gender includes the feminine and the other way round.
1.2
Introduction
On 24 February 2015 the shareholders of Liberty Global approved an amendment to the Liberty Global 2014 Plan to permit the grant of Options to acquire Shares to Eligible Employees with an Exercise Price per Share of not less than 80% of the fair market value of a Share on the Grant Date. The LG Board approved the adoption of the 2015 Virgin Media Inc. Sharesave Plan by the Company as a sub-plan to the Liberty Global 2014 Plan. The rules of the Plan, comply with the requirements of Schedule 3 to ITEPA to ensure that the Plan qualifies as a Schedule 3 SAYE option scheme and so that Participants will be eligible to benefit from sections 516 to 519 of ITEPA. The rules of the



- 4 -

Liberty Global 2014 Plan apply to the Plan unless the rules of the Plan expressly or by implication provide to the contrary but so that nothing in either the rules of the Liberty Global 2014 Plan or the rules of the Plan will operate to prejudice the status of the Plan as a Schedule 3 SAYE option scheme.
1.3
Purpose of the Plan
The purpose of the Plan is to provide benefits for employees and directors of the Participating Group in the form of share options in accordance with Schedule 3. The Plan does not provide benefits to employees or directors of the Participating Group otherwise than in accordance with Schedule 3.
2.
GRANT OF OPTIONS
2.1
Invitations
The VM Board may decide whether or not to operate the Plan at any time by offering Options to Eligible Employees. If the VM Board decides at any time to offer Options to Eligible Employees, the VM Board must first obtain consent from the LG Board to do so and the LG Board must confirm the maximum number of Shares available for the offer of Options under the Plan on that occasion. If the VM Board decides to offer Options under the Plan and the LG Board consents, the VM Board must invite each Eligible Employee to apply for an Option. The VM Board may send an invitation to every person who is or who will become an Eligible Employee by the relevant Grant Date, to apply for an Option at the Exercise Price, for up to the maximum number of Shares, the exercise monies for which can be provided from the repayment to be made and the Bonus payable under a Savings Contract in accordance with the terms of the Plan. The invitation must:
(a)
include details of eligibility;
(b)
include details of how the Exercise Price will be determined on the Grant Date and notified to Eligible Employees;
(c)
include the date by which applications made under clauses 2.2 and 2.3 must be received;
(d)
include details of:
(i)
the maximum aggregate monthly contribution permitted under Schedule 3 being the lower of £500 (or any other maximum amount specified in paragraph 25(3)(a) of Schedule 3) and if lower and if relevant the maximum monthly contribution (or maximum aggregate monthly contribution) determined by the VM Board for the invitation (being a multiple of £1 and not less than £5); and/or
(ii)
any requirement determined by the VM Board as to participation such as variations based on levels of remuneration, length of service or similar factors to be applied to the invitation and which comply with the requirements of Schedule 3;
(e)
state if Eligible Employees can choose to enter into:
(i)
a Three-Year Savings Contract only;
(ii)
a Five-Year Savings Contract only; or
(iii)
either a Three-Year Savings Contract or a Five-Year Savings Contract or both;



- 5 -

(f)
state if Eligible Employees are allowed to include any Bonus in the repayment under the Savings Contract for the exercise of an Option; and
(g)    state the maximum number of Shares over which Options may be granted if any.
2.2
Agreement to be bound by the rules of the Plan
An invitation to apply for an Option is personal to the Eligible Employee to whom it is issued and is made on the basis that if an Eligible Employee decides to participate in the Plan he or she agrees to be bound by the rules of the Plan. The invitation must be accepted in the manner and within the period the VM Board specifies which must be a period of not less than 14 days nor more than 25 days from the Invitation Date.
2.3
Undertaking to pay contributions
On applying for an Option by accepting an invitation an Eligible Employee must:
(a)
undertake to make:
(i)
36 regular monthly contributions in the case of a Three-Year Savings Contract; or
(ii)
60 regular monthly contributions in the case of a Five-Year Savings Contract,
of the amount which must be a multiple of £1 and not less than £5 as specified in his or her acceptance;
(b)
state that his or her proposed monthly contribution when aggregated with any contributions payable by the Eligible Employee under any existing savings contract will not exceed the maximum permitted monthly contribution or aggregate monthly contribution as specified in the invitation;
(c)
choose whether the Bonus, if relevant, is included in the sum to be used to pay for Shares on exercise of an Option; and
(d)
authorise the company by which he or she is employed to deduct the specified amount on a weekly, fortnightly, four weekly or monthly basis from his or her wages or salary and to pay it to the Savings Authority.
2.4
Applications
Each Eligible Employee's application will be treated as an application for an Option over the greatest number of Shares which the Eligible Employee could buy at the relevant Exercise Price with an amount equal to the expected repayment under the related Savings Contract.
2.5
Grant of Options
Except as provided in clause 3, the Company must grant Options to all Eligible Employees from whom valid applications have been received on a date which is no later than the thirtieth day after the date of the first Dealing Day taken for the purposes of calculating the relevant Exercise Price. The grant of an Option must be evidenced in writing in the form specified by the VM Board. The Option is personal to the Participant and may not be transferred to or exercised by any other person except his or her personal representative under clause 5.2.



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2.6
Life of the Plan
Options may only be granted under the Plan during the Operative Period.
3.
SCALING DOWN
3.1
If the VM Board receives applications for Options over a total number of Shares which would, if granted, exceed the maximum number of Shares determined by the VM Board under clause 2.1 or the limit in Section 4.1 of the Liberty Global 2014 Plan, then the VM Board must adjust individual applications downwards on a proportionate basis or on any other basis which complies with the requirements of Schedule 3.
3.2
If the VM Board has to adjust applications downwards then:
(a)
if possible, every applicant who so wishes should be able to participate at least to the extent represented by a minimum monthly contribution of £5 under the Savings Contract;
(b)
if there are insufficient Shares available even for Options based on the minimum monthly contribution to be granted to every applicant, then Options based on the minimum monthly contribution must be granted to those applicants who are selected at random in a ballot conducted by the VM Board; and
(c)
the Company must grant the resulting Options no later than 42 days after the date of the first Dealing Day taken for the purposes of calculating the relevant Exercise Price.
4.
LIMITATIONS ON EXERCISE OF OPTIONS
4.1
Exercise
Except as provided in clauses 5 or 6, only a Participant who is a director or an employee of a company in a Participating Group may exercise an Option.
4.2
Lapse on transfer of Option
If a Participant acts in a way that causes, or will cause, him or her to be deprived of the legal or beneficial ownership of an Option then, other than if the Participant dies, the Option lapses.
5.
TIME FOR EXERCISE OF OPTIONS
5.1
Time for exercise
Except as provided in clauses 5.2 to 5.7 inclusive and clause 6, a Participant may only exercise an Option during the Option Period. Except as provided in clause 5.2, an Option which is not exercised before the end of the Option Period lapses.
5.2
Death
If a Participant dies:
(a)
before the relevant Bonus Date his or her personal representative may exercise any of the Participant's Options at any time within 12 months after his or her death; or
(b)
after the relevant Bonus Date but before the expiry of the Option Period his or her personal representative may exercise any Option of his or hers then subsisting at any time within 12 months after the Bonus Date.



- 7 -

The maximum number of Shares over which the Option may be exercised is limited to the number of Shares which may be bought at the Exercise Price with an amount equal to the proceeds of the related Savings Contract. If the Option is not exercised it lapses.
5.3
Cessation of office or employment - good leaver
Except as provided in clause 5.2, if a Participant ceases to hold the office or employment by virtue of which he or she is an Eligible Employee because of:
(a)
injury;
(b)
disability;
(c)
redundancy within the meaning of the Employment Rights Act 1996;
(d)
retirement;
(e)
a relevant transfer within the meaning of the TUPE Regulations;
(f)
a transfer of a business or part of a business which is transferred to a person who is not an Associated Company and the transfer is not a relevant transfer within the TUPE Regulations; or
(g)
an Associated Company ceasing to be an Associated Company by reason of a change of control (as determined in accordance with sections 450 and 451 of the Corporation Tax Act 2010) where the Participant holds office with or is employed by an Associated Company,
the Participant may exercise any Option then subsisting at any time within six months after the cessation of office or employment or before the expiry of the Option Period, whichever is the earlier. The maximum number of Shares over which the Option may be exercised is limited to the number of Shares which may be bought at the Exercise Price with an amount equal to the proceeds of the related Savings Contract. If the Option is not exercised it lapses.
5.4
Cessation of office or employment - leavers after three years
Except as provided in clause 5.2, if:
(a)
a Participant ceases to hold the office or employment by virtue of which the Participant is an Eligible Employee other than for a reason specified in clauses 5.2 and 5.3 and not because of the Participant's Misconduct; and
(b)
the Participant has held his or her Option for at least three years,
the Participant may exercise his or her Option within six months after the cessation of office or employment or before the expiry of the Option Period, whichever is the earlier. The maximum number of Shares over which the Option may be exercised is limited to the number of Shares which may be bought at the Exercise Price with an amount equal to the proceeds of the related Savings Contract. If the Option is not exercised it lapses.
5.5
Cessation of office or employment - bad leavers
If a Participant ceases to hold the office or employment with the Company and any Associated Company by reason of Misconduct his or her Option will lapse on the date of the cessation.



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5.6
Date of cessation of office or employment
A Participant must not be treated as ceasing to hold the office or employment by virtue of which the Participant is an Eligible Employee until he or she ceases to hold any office or employment in the Company or any Associated Company.
5.7
Continuing office or employment within the Company's group
A Participant who ceases to hold the office or employment by virtue of which the Participant is an Eligible Employee will be entitled to exercise his or her Option during the Option Period if at that time he or she holds an office or employment with the Company or with any Associated Company.
6.
TAKEOVERS AND LIQUIDATIONS
6.1
Control of Liberty Global
Clause 6.2 applies:
(c)
if any person obtains Control of Liberty Global as a result of making:
(i)
a general offer to acquire the whole of the issued ordinary share capital of Liberty Global (other than that which is already owned by that person) made on a condition which if satisfied will result in the person making the offer having Control of Liberty Global; or
(ii)
a general offer to acquire all the Shares (or those Shares not already owned by that person); or
(d)
if under section 899 of the Companies Act 2006 the Court sanctions a compromise or arrangement applicable to or affecting:
(i)
all the ordinary share capital of Liberty Global or all the Shares of the same class as the Shares to which the Option relates; or
(ii)
all the Shares, or all the Shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in an Schedule 3 SAYE option scheme;
(e)
if any person becomes bound or entitled to acquire Shares under sections 979 to 982 inclusive or sections 983 to 985 inclusive of the Companies Act 2006; or
(f)
if there is a Non-UK Company Reorganisation applicable to or affecting:
(i)
all the ordinary share capital of Liberty Global or all the same class as to the Shares to which the Option relates; or
(ii)
all the Shares, or all the Shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employments or directorships or their participation in a Schedule 3 SAYE option scheme.
6.2
Exercise of Options on change of Control
Except as provided in clause 5.2, a Participant may exercise his or her Option at any time before the first to end of the Option Period and the appropriate period as referred to in clause 6.3. The maximum number of Shares over which the Option may be exercised is limited to the number of Shares which may be bought at the Exercise Price with an



- 9 -

amount equal to the proceeds of the related Savings Contract. Except as provided in clause 5.2, any Option which is not exercised lapses. This clause 6.2 will not apply if a Participant agrees with an Acquiring Company to release his or her Option in consideration of the grant to him or her of a New Option under clause 7 before the end of the appropriate period referred to in clause 7.4.
6.3
Exercise period on change of Control
The appropriate period referred to in clause 6.2 is:
(a)
if clause 6.1(a) applies:
(i)
and the Shares no longer meet the requirements of Part 4 of Schedule 3, a period of 20 days starting on the date when the person making the offer obtains Control of Liberty Global; or
(ii)
a period of six months starting on the date when the person making the offer obtains Control of Liberty Global and any condition subject to which the offer is made is satisfied;
(b)
if clause 6.1(b) applies:
(iii)
and the Shares no longer meet the requirements of Part 4 of Schedule 3, a period of 20 days starting on the date when the person obtains Control of Liberty Global as a result of the compromise or arrangement; or
(iv)
a period of six months starting with the time when the Court sanctions the compromise or arrangement;
(c)
if clause 6.1(c) applies:
(i)
and the Shares no longer meet the requirements of Part 4 of Schedule 3, during a period of 20 days starting on the date when the person who is bound or entitled to acquire Shares obtains Control of Liberty Global; or
(ii)
the period during which the person making the offer remains so bound or entitled;
(d)
if clause 6.1(d) applies:
(i)
and the Shares no longer meet the requirements of Part 4 of Schedule 3, a period of 20 days starting on the date when the person obtains Control of Liberty Global as a result of the Non-UK Company Reorganisation which has become binding on shareholders covered by it; or
(ii)
a period of six months starting on the date the Non-UK Company Reorganisation becomes binding on shareholders covered by it.
6.4
Voluntary winding-up of Liberty Global
If Liberty Global gives notice of a general meeting to consider a resolution for the voluntary liquidation of Liberty Global (otherwise than in connection with a compromise or arrangement as referred to in clauses 6.1(b), 6.1(d), 7.1(b) or 7.1(d)) a Participant may exercise his or her Option at any time before the first to end of the Option Period and the date on which the resolution is duly passed or defeated or withdrawn. Any exercise under this clause 6.4 is conditional upon and will only take effect upon the resolution being passed. The maximum number of Shares over which the Option may be exercised is limited to the number of Shares which may be bought at the Exercise Price with an amount equal to the proceeds of the related Savings Contract. If the Option is not



- 10 -

exercised it lapses. If a Participant exercises an Option under this clause 6.4 he or she is entitled to share in the assets of Liberty Global with existing holders of the Shares in the same way as if the Shares had been registered in his or her name before the resolution was passed.
6.5
Liquidation of Liberty Global
Except as provided in clause 6.4, and otherwise than in connection with a compromise or arrangement as referred to in clauses 6.1(b), 6.1(d), 7.1(b) or 7.1(d), all Options lapse on the start of any liquidation of Liberty Global.
7.
REPLACEMENT OF OPTIONS ON CHANGE OF CONTROL OF LIBERTY GLOBAL
7.1
Change of Control of Liberty Global
Clause 7.2 applies where an Acquiring Company:
(a)
obtains Control of Liberty Global as a result of making:
(i)
a general offer to acquire the whole of the issued ordinary share capital of Liberty Global (other than that which it already owns and/or which is owned by any of its subsidiaries) made on a condition which, if satisfied, will result in the Acquiring Company having Control of Liberty Global; or
(ii)
a general offer to acquire all the Shares (or those Shares not already owned by the Acquiring Company and/or by any of its subsidiaries); or
(b)
obtains Control of Liberty Global under a compromise or arrangement sanctioned by the Court under section 899 of the Companies Act 2006; or
(c)
becomes bound or entitled to acquire Shares under sections 979 to 982 inclusive or sections 983 to 985 inclusive of the Companies Act 2006; or
(d)
obtains Control of Liberty Global as a result of a Non-UK Company Reorganisation which has become binding on shareholders covered by it.
7.2
Exchange of Options
A Participant may, at any time within the appropriate period as defined in clause 7.4 by agreement with the Acquiring Company, release his or her Option (the "Old Option" for the purposes of this clause) in consideration of the grant to him or her of a new option (the "New Option" for the purposes of this clause) as long as any New Option satisfies the conditions specified in clause 7.3.
7.3
Conditions for New Options
The New Option must satisfy the conditions specified in paragraph 39(4) of Schedule 3 and in particular must:
(a)
be over shares in the Acquiring Company or a Controlling Company, which meet the conditions in paragraph 18 to 20 and paragraph 22 of Schedule 3 (and the term "Shares" in this Plan will mean those shares when applying the rules of the Plan to a New Option);
(b)
be a right to acquire that number of shares which on acquisition of the New Option have an aggregate market value substantially the same as the aggregate market value (determined on a like basis) of the Shares the subject of the Old Option immediately before its release. The methodology for determining the market



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value of the Shares for the purpose of this clause 7.3(b) must be agreed by HMRC;
(c)
have an exercise price per share so that the aggregate price payable on complete exercise of the New Option is substantially the same as the aggregate price which would have been payable on complete exercise of the Old Option at the time of its release.
7.4
Time for exchange of Options
The appropriate period referred to in clause 7.2 is:
(a)
if clause 7.1(a) applies, six months starting on the date when the Acquiring Company making the offer obtains Control of Liberty Global and any condition subject to which the offer is made is satisfied;
(b)
if clause 7.1(b) applies, six months starting with the time when the Court sanctions the compromise or arrangement; and
(c)
if clause 7.1(c) applies, the period during which the Acquiring Company remains so bound or entitled; and
(d)
if clause 7.1(d) applies, six months starting on the date the Non-UK Company Reorganisation becomes binding on shareholders covered by it.
7.5
Exercise of New Options
The New Option will be exercisable in the same manner as the Old Option and subject to the provisions of the Plan as it had effect in relation to the Old Option immediately before its release (and the term "Option" in the Plan rules will refer to the New Option). The New Option will be treated for the purposes of the Plan other than clause 7.6 as having been granted on the date when the corresponding Old Option was granted.
7.6
Interpretation
With effect from the grant of a New Option under this clause 7, clauses 6, 7, 8, 9, 11.2, 12.3, and 13, will in relation to the New Option be interpreted as if references to the Liberty Global were references to the Acquiring Company or, if relevant, the Controlling Company.
8.
EXERCISE OF OPTIONS
8.1
Manner of exercise
An Option may be exercised during the Option Period or otherwise as permitted in clauses 4 to 7 in whole or in part but once only by a Participant giving to the Company at its registered office a notice in the form specified by the VM Board. The notice must be signed by the Participant and must specify the number of Shares over which Option is being exercised. The Participant must supply with the notice:
(a)
a cheque or postal order payable to the Company in full payment of the aggregate Exercise Price of the Shares (or by wire transfer or any other method of payment as the VM Board may specify);
(b)
the document evidencing the grant of the Option for cancellation if requested by the VM Board; and
(c)
any other documentation the VM Board may specify.



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The amount paid must not exceed the repayment made (excluding the repayment of any monthly contribution the due date for which falls more than one month after the date on which the repayment is made) and the relevant Bonus or interest paid to the Participant. An Option will be treated as exercised on the date when a valid notice, payment of the aggregate Exercise Price, the document evidencing the grant of an Option (if requested) and any other documents specified by the VM Board are received by the Company.
8.2
Issue or transfer of Shares
The Company must within 30 days after the exercise of the Option either procure the:
(a)
allotment and issue; or
(b)
transfer from treasury of:
the appropriate number of Shares to the Participant (or to the Participant's nominee at his or her written direction) and deliver to the Participant (or his or her nominee as appropriate) a definitive share certificate (or any other evidence of allotment and issue prescribed by the VM Board if the allotment and issue is by means of a relevant system, as defined in Regulation 2(1) of the Uncertificated Securities Regulations 2001) or, if applicable, the equivalent system in relation to Shares traded on any stock exchange other than the NASDAQ.
8.3
Shares
Any Shares allotted and issued on the exercise of an Option will rank equally with the Shares in issue on the date of allotment except that they will not entitle a Participant to any dividend or other distribution or any issue of Shares by way of capitalisation of profits or reserves or any issue of securities by way of rights which under the terms of a resolution passed by Liberty Global is to be or is proposed to be paid or made to the holders of Shares on the register on a date before to the date of the allotment.
9.
VARIATIONS IN THE CAPITAL OF LIBERTY GLOBAL
9.1
Adjustment of Options
If, after the Grant Date and before an Option ceases to be exercisable, there is a variation of the capital of Liberty Global which involves the Shares by way of rights or capitalisation of reserves or a reduction, sub-division or consolidation of capital or otherwise the VM Board, with the consent of the LG Board must determine whether any adjustment should be made and if so, how.
9.2
Terms of any adjustment of Options
If the VM Board determines that an adjustment should be made under clause 9.1, the following provisions apply:
(a)
the aggregate Market Price of the Shares under each Option immediately after any adjustment must be substantially the same as the Market Price of the Shares under each Option immediately before the adjustment;
(b)
the aggregate Exercise Price payable on the exercise of any Option immediately after any adjustment must be substantially the same as the aggregate Exercise Price payable immediately before the adjustment;
(c)
no adjustment may be made which would result in the requirements of Schedule 3 not being met in relation to Options; and



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(d)
for Options to be satisfied by the transfer of existing Shares, no adjustment may be made without the prior written consent of any person who is bound to transfer Shares on exercise of the Option.
9.3
Capitalisation of reserves
Except as provided in this clause 9.3, no adjustment under clause 9.1 may have the effect of reducing the Exercise Price for Shares to be subscribed to less than the nominal value of a Share. Any adjustment must only be made to the Exercise Price to the extent that the LG Board is authorised to capitalise from the reserves of Liberty Global and to apply in paying up amounts on the Shares a sum equal to the amount by which the nominal value of the Shares over which the Option is exercised exceeds the adjusted Exercise Price. On the exercise of any Option in respect of which the reduction to the Exercise Price has been made the LG Board must capitalise and apply the sum needed to pay up the relevant amount. If an Option is granted over both existing Shares and Shares which are to be subscribed any adjustment may only be made if the reduction of the Exercise Price in relation to the Option can be made to the same extent in respect of existing Shares and Shares which are to be subscribed.
9.4
Notification
All Participants must be notified of an adjustment as soon as practicable and the Company is entitled to call in the documents evidencing the grant of any Option affected by the adjustment for endorsement or replacement, as appropriate.
10.
EARLY REPAYMENT OR DEFAULT UNDER SAVINGS CONTRACT
Except as provided in clauses 5 and 6, if a Participant voluntarily obtains repayment under his or her Savings Contract or if repayment is made under the terms of the Savings Contract by reason of his or her default in paying the contributions under his or her Savings Contract, in either case prior to the relevant Bonus Date, any subsisting Option which is linked to the Savings Contract lapses.
11.
ADMINISTRATION OF THE PLAN
11.1
Administration by the VM Board
The Plan will be administered by the VM Board. The VM Board may make further rules for the conduct of the Plan, which must be consistent with the provisions of the Plan. Any dispute about the interpretation of the Plan or the terms of any Option must be determined by the VM Board (after seeking any advice as it considers necessary) and its decision will be final and binding.
11.2
Maintenance of Shares for exercise of Options
The Company must at all times ensure that Liberty Global has sufficient Shares available to be issued or if relevant transferred to satisfy the exercise of all Options.
12.
AMENDMENT OF THE PLAN
12.1
Amendment
Except as provided in clause 12.2, the VM Board may amend all or any of the provisions of the Plan, except that no amendment may be made to the Plan which would prejudice its status as a Schedule 3 SAYE option scheme.



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12.2
Consent of Participant
If an amendment proposed under clause 12.1 would materially prejudice the subsisting rights of an existing Participant, the VM Board may only make the amendment with the prior written consent of the Participant unless clause 12.3 applies.
12.3
Consent of Participant not necessary
Clause 12.2 does not apply to any amendment which:
(a)
is necessary to secure and maintain the status of the Plan as a Schedule 3 SAYE option scheme, to ensure that the status of the Plan as a Schedule 3 SAYE option scheme is not withdrawn under any statutory modification of the provisions of the Tax Act or ITEPA, or any other enactment or to take account of a change in legislation, or to obtain or maintain favourable taxation, exchange control or regulatory treatment of Liberty Global, the Company, any Subsidiary or any Participant; or
(b)
is a minor amendment which is necessary or desirable to benefit or facilitate the administration of the Plan.
12.4
Overseas taxation
Except as provided in clause 12.1, the VM Board may, for Options granted to Eligible Employees who are or who may become subject to taxation, securities of exchange control laws outside the United Kingdom on their remuneration, amend the provisions of the Plan as it considers necessary or desirable to take account of, mitigate or comply with relevant overseas taxation, securities or exchange control laws but so that the terms of Options granted to these Eligible Employees are not overall more favourable than the terms of Options granted to other Eligible Employees.
12.5
Notification
The VM Board must notify all Participants in writing as soon as practicable after any amendment is made under this clause 12.
12.6
Termination of the Plan
The LG Board may terminate the Plan at any time but Options previously granted will continue to be valid and exercisable in accordance with the provisions of the Plan.
13.
GENERAL PROVISIONS
13.1
Terms of office or employment
The rights and obligations of a Participant under his or her terms of employment with the Company or any of its Subsidiaries will not be affected by his or her participation in the Plan. The Plan does not entitle a Participant to rights of continued employment with the Company or any Associated Company. A Participant waives any rights to compensation or damages as a result of the termination of his or her employment for any reason insofar as those rights arise or may arise from his or her ceasing to have rights under the Plan as a result of the termination of his or her employment.
13.2
Tax and other similar liabilities
Any liability of a Participant to taxation or social security obligations or similar liabilities in respect of an Option will be for the account of the Participant. The VM Board may make the exercise of the Option conditional on the Participant complying with arrangements specified by the VM Board for the payment of any taxation or employee's social security



- 15 -

obligations in respect of the exercise of the Option and the VM Board may authorise the Participant's employing company to withhold any taxes or employee's social security obligations due in respect of the Option out of salary, bonus or other payment due to the Participant.
13.3
Notices
Any notice or other communication under or in connection with the Plan may be given by personal delivery, electronically or by sending the notice or communication by post, in the case of a company, to its registered office and in the case of an individual to his or her last known address. If the individual is a director or employee of the Company or an Associated Company the notice or communication may be sent to his or her last known address or to the address of the place of business where he or she performs all or most of the duties of his or her office or employment. If a notice or communication is given by first class post it is deemed to have been received 48 hours after it was put into the post properly addressed and stamped.
13.4
Regulation
No Shares may be issued or transferred to a Participant following the exercise of an Option if the issue or transfer would be contrary to any enactment or regulation of the United Kingdom or of any other country having jurisdiction in relation to the Plan, Liberty Global, the Company, any Associated Company or the Participant. The Company will not be bound to take any action to obtain the consent of any governmental authority to the issue or transfer of Shares or to take any action to ensure that any issue or transfer is in accordance with any enactment or regulation if that action would in the opinion of the VM Board be unduly onerous.
13.5
Data protection provisions
(a)
Liberty Global and the Company will store and process information about each Participant on their computers and in other ways. By "information about each Participant" Liberty Global and the Company mean personal information they have obtained from each Participant, his or her group employing company and any other members of the group or other organisations in anticipation of the grant of the Option.
(b)
Liberty Global and the Company will use information about each Participant to manage and administer the Option, communicate information about the Option, develop and improve services to each Participant and protect the Participant's interests.
(c)
Liberty Global and the Company may give information about the Participant to the following:
(i)
the Participant's group employing company and its agents or service providers where disclosure is necessary to enable Liberty Global and the Company to discharge their duties and obligations in the management and administration of the Plan including any disclosure of information that may be necessary to enable the group employing company to comply with the requirements of any relevant tax, social security or other governmental authority. (In this clause 13.5 "group employing company" includes any company or other entity of the group which may become the Participant's employer during the term of the Option and any other company or entity which has a duty to comply with any requirements imposed by any relevant tax, social security or other governmental authority in connection with the Option.);



- 16 -

(ii)
people who provide a service to Liberty Global and the Company or are acting as their agents on the understanding that they will keep the information confidential;
(iii)
anyone to whom Liberty Global and the Company transfers or may transfer their rights and duties under the Plan; and
(iv)
any body or authority, where Liberty Global and the Company have a duty to do so or if the law allows Liberty Global and the Company to do so (including any relevant tax, social security or other governmental authority);
otherwise Liberty Global and the Company will keep information about the Participant confidential.
(d)
If Liberty Global and/or the Company transfers information about the Participant to a service provider or agent in another country, it will procure that the service provider or agent agrees to apply the same levels of protection as Liberty Global and/or the Company is required to apply in the UK and other European Union jurisdictions and to use information about the Participant only for the purpose of providing the service to Liberty Global and/or the Company.
13.6
Costs
The costs of the introduction, operation and administration of the Plan must be borne by the Company and members of the Participating Group in the proportion determined by the VM Board.
13.7
Governing law
This Plan and all contractual obligations arising in any way whatsoever out of or in connection with it are governed by and construed in accordance with English law. The courts of England have exclusive jurisdiction to settle any claim, dispute, matter or difference which may arise in any way whatsoever out of or in connection with this Deed or the legal relationships established by it.





Exhibit 31.1
CERTIFICATION

I, Michael T. Fries, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Liberty Global plc;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and
d)
Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2015     
/s/ Michael T. Fries
 
Michael T. Fries
 
President and Chief Executive Officer
 





Exhibit 31.2
CERTIFICATION

I, Charles H.R. Bracken, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Liberty Global plc;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and
d)
Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2015     
/s/ Charles H.R. Bracken
 
Charles H.R. Bracken
 
Executive Vice President and Co-Chief Financial Officer
 
(Principal Financial Officer)
 




Exhibit 31.3
CERTIFICATION

I, Bernard G. Dvorak, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Liberty Global plc;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and
d)
Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2015     
/s/ Bernard G. Dvorak
 
Bernard G. Dvorak
 
Executive Vice President and Co-Chief Financial Officer
 
(Principal Accounting Officer)
 




Exhibit 32

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)


Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Liberty Global plc (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2015 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of March 31, 2015 and December 31, 2014 , and for the three months ended March 31, 2015 and 2014 .

Dated:
May 7, 2015
 
/s/     Michael T. Fries
 
 
 
Michael T. Fries
 
 
 
Chief Executive Officer
 
 
 
 
 
 
 
 
Dated:
May 7, 2015
 
/s/     Charles H.R. Bracken
 
 
 
Charles H.R. Bracken
 
 
 
Executive Vice President and Co-Chief Financial Officer
 
 
 
(Principal Financial Officer)
 
 
 
 
 
 
 
 
Dated:
May 7, 2015
 
/s/     Bernard G. Dvorak
 
 
 
Bernard G. Dvorak
 
 
 
Executive Vice President and Co-Chief Financial Officer
 
 
 
(Principal Accounting Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.