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 for litigation and impairment, restructuring and other operating items). Other operating items include (i) gains and losses on the disposition of long-lived assets, (ii) direct acquisition costs, such as third-party due diligence, legal and advisory costs, and (iii) 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 (i) readily view operating trends, (ii) perform analytical comparisons and benchmarking between segments and (iii) 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 (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 earnings (loss) from continuing operations before income taxes is presented below.

During the second quarter of 2013, we began presenting our Telenet (Belgium) segment within our European Operations Division as a result of our decision to change how Telenet reports into our management structure. Beginning on January 1, 2013, a programming business that was previously managed by Chellomedia was transferred to and, accordingly, is now reported within, our European Operations Division’s central operations. Beginning in the fourth quarter of 2012, the management responsibility for certain of our operations in Switzerland was transferred to our Austrian operations and, accordingly, such operations are now reported within our Other Western Europe segment. Segment information for the three and six months ended June 30, 2012 has been retrospectively revised to reflect these changes. We present only the reportable segments of our continuing operations in the tables below. We have identified the following consolidated operating segments as our reportable segments:


•	European Operations Division:


•	U.K. (Virgin Media)


•	Germany (Unitymedia KabelBW)


•	Belgium (Telenet)


•	The Netherlands


•	Switzerland


•	Other Western Europe


•	Central and Eastern Europe


•	Chile (VTR Group)

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. All of our reportable segments also provide business-to-business (B2B) services and certain of our reportable segments provide mobile services. At June 30, 2013, 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.” Virgin Media and Telenet provide video, broadband internet, fixed-line telephony and mobile services in the U.K. and Belgium, respectively. Our Other Western Europe segment includes our broadband communications operating segments in Austria and Ireland. Our Central and Eastern Europe segment includes our broadband communications operating segments in the Czech Republic, Hungary, Poland, Romania and Slovakia. The European Operations Division’s central and other category includes (i) the UPC DTH operating segment, (ii) costs associated with certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions and (iii) intersegment eliminations within the European Operations Division. In Chile, the VTR Group includes VTR, which provides video, broadband internet and fixed-line telephony services, and VTR Wireless, which provides mobile services through a combination of its own wireless network and certain third-party wireless access arrangements. Our corporate and other category includes (i) less significant consolidated operating segments that provide (a) broadband communications services in Puerto Rico and (b) programming and other services primarily in Europe and Latin America and (ii) our corporate category. Intersegment eliminations primarily represent the elimination of intercompany transactions between our broadband communications and programming operations, primarily in Europe.

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, the VTR Group 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, the VTR Group, 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 June 30,						Six months ended June 30,
	2013			2012			2013			2012
	in millions
European Operations Division:
U.K. (Virgin Media)	$	401.3		$	—		$	401.3		$	—
Germany (Unitymedia KabelBW)	624.6			566.2			1,242.8			1,126.9
Belgium (Telenet)	534.4			466.2			1,070.6			943.7
The Netherlands	303.2			303.7			618.0			614.4
Switzerland	323.9			313.0			649.9			626.3
Other Western Europe	219.6			208.5			442.2			420.4
Total Western Europe	2,407.0			1,857.6			4,424.8			3,731.7
Central and Eastern Europe	281.5			275.0			569.3			555.9
Central and other	31.3			28.9			63.3			57.1
Total European Operations Division	2,719.8			2,161.5			5,057.4			4,344.7
Chile (VTR Group)	252.7			226.8			503.1			451.3
Corporate and other	210.5			149.0			410.7			301.0
Intersegment eliminations	(21.1		)	(12.8		)	(41.6		)	(35.5		)
Total	$	3,161.9		$	2,524.5		$	5,929.6		$	5,061.5



	Operating cash flow
	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	in millions
European Operations Division:
U.K. (Virgin Media)	$	175.3		$	—		$	175.3		$	—
Germany (Unitymedia KabelBW)	369.4			334.2			729.4			657.2
Belgium (Telenet)	269.2			236.9			516.7			472.7
The Netherlands	171.1			178.8			355.9			361.5
Switzerland	189.2			179.2			371.4			356.2
Other Western Europe	105.6			95.9			210.4			194.5
Total Western Europe	1,279.8			1,025.0			2,359.1			2,042.1
Central and Eastern Europe	135.1			134.9			275.7			272.5
Central and other	(54.4		)	(43.0		)	(100.0		)	(80.0		)
Total European Operations Division	1,360.5			1,116.9			2,534.8			2,234.6
Chile (VTR Group)	86.8			75.3			172.0			150.5
Corporate and other	2.4			2.7			12.5			5.4
Total	$	1,449.7		$	1,194.9		$	2,719.3		$	2,390.5

The following table provides a reconciliation of total segment operating cash flow from continuing operations to earnings (loss) from continuing operations before income taxes:



	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	in millions

Total segment operating cash flow from continuing operations	$	1,449.7		$	1,194.9		$	2,719.3		$	2,390.5
Share-based compensation expense	(93.9		)	(35.6		)	(120.7		)	(63.3		)
Depreciation and amortization	(864.3		)	(668.7		)	(1,557.4		)	(1,339.4		)
Impairment, restructuring and other operating items, net	(46.3		)	(11.6		)	(70.6		)	(14.5		)
Operating income	445.2			479.0			970.6			973.3
Interest expense	(542.4		)	(402.1		)	(1,012.5		)	(820.2		)
Interest and dividend income	35.3			1.9			49.2			20.9
Realized and unrealized gains (losses) on derivative instruments, net	(4.7		)	237.4			191.1			(376.7		)
Foreign currency transaction gains (losses), net	91.5			(474.4		)	(43.4		)	4.6
Realized and unrealized gains (losses) due to changes in fair values of certain investments, net	193.0			(34.1		)	265.2			16.8
Losses on debt modifications and extinguishment, net	(11.7		)	(6.9		)	(170.0		)	(13.7		)
Other expense, net	(1.6		)	(3.7		)	(3.2		)	(4.0		)
Earnings (loss) from continuing operations before income taxes	$	204.6		$	(202.9	)	$	247.0		$	(199.0	)

Revenue by Major Category

Our revenue by major category is set forth below:



	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	in millions
Subscription revenue (a):
Video	$	1,274.8	$	1,143.1	$	2,487.5	$	2,307.5
Broadband internet (b)	765.2		590.1		1,424.5		1,181.3
Telephony (b)	518.7		375.8		928.1		750.8
Total subscription revenue	2,558.7		2,109.0		4,840.1		4,239.6
Other revenue (b) (c)	603.2		415.5		1,089.5		821.9
Total	$	3,161.9	$	2,524.5	$	5,929.6	$	5,061.5

_______________


(a)	Subscription revenue includes amounts received from subscribers for ongoing services, excluding installation fees, late fees and mobile services revenue. 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.


(b)	In connection with the Virgin Media Acquisition, we determined that we would no longer externally report digital subscriber line (DSL) subscribers as RGUs. Accordingly, we have reclassified the revenue from our DSL subscribers in Austria from broadband internet and telephony subscription revenue to other revenue for all periods presented.


(c)	Other revenue includes non-subscription revenue (including B2B, mobile services, interconnect, carriage fee and installation revenue) and programming revenue.

Geographic Segments

The revenue of our geographic segments is set forth below:



	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	in millions
European Operations Division:
United Kingdom	$	401.3		$	—		$	401.3		$	—
Germany	624.6			566.2			1,242.8			1,126.9
Belgium	534.4			466.2			1,070.6			943.7
The Netherlands	303.2			303.7			618.0			614.4
Switzerland	323.9			313.0			649.9			626.3
Austria	107.3			105.2			215.5			212.4
Ireland	112.3			103.3			226.7			208.0
Poland	113.2			109.7			229.7			224.2
Hungary	63.8			60.9			127.2			120.8
The Czech Republic	54.6			56.7			112.1			114.2
Romania	34.3			32.6			68.9			66.0
Slovakia	15.6			15.1			31.4			30.7
Other (a)	31.3			28.9			63.3			57.1
Total European Operations Division	2,719.8			2,161.5			5,057.4			4,344.7
Chellomedia:
Poland	23.6			30.6			44.5			56.6
The Netherlands	24.8			17.3			49.1			45.6
Spain	16.0			16.6			31.8			33.7
Hungary	17.5			15.6			32.7			29.4
Other (b)	54.4			38.3			105.4			76.0
Total Chellomedia	136.3			118.4			263.5			241.3
Chile	252.7			226.8			503.1			451.3
Puerto Rico	74.2			30.6			147.2			59.7
Intersegment eliminations and other	(21.1		)	(12.8		)	(41.6		)	(35.5		)
Total	$	3,161.9		$	2,524.5		$	5,929.6		$	5,061.5

_______________


(a)	Primarily represents revenue of UPC DTH from customers located in Hungary, the Czech Republic, Romania and Slovakia.


(b)	Chellomedia’s other geographic segments are located primarily in the U.K., Latin America, the Czech Republic, Portugal, Romania, Slovakia and Italy.