10-Q 1 libertyglobaljune30201610q.htm 10-Q Document
 
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 June 30, 2016
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.)
 
 
Griffin House, 161 Hammersmith Rd, London, United Kingdom
 
W6 8BS
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
+44.208.483.6449 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 July 29, 2016 was:
 
Class A
 
Class B
 
Class C
Liberty Global ordinary shares
264,369,238

 
10,805,850

 
644,760,940

LiLAC ordinary shares
51,008,927

 
1,888,323

 
121,161,693

 



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 1A.
ITEM 2.
ITEM 6.




LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 
 
June 30,
2016
 
December 31,
2015
 
in millions
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,286.3

 
$
982.1

Trade receivables, net
1,844.3

 
1,467.7

Derivative instruments (note 4)
381.3

 
421.9

Prepaid expenses
312.8

 
144.2

Other current assets
656.0

 
341.5

Total current assets
4,480.7

 
3,357.4

Investments (including $1,961.7 million and $2,591.8 million, respectively, measured at fair value) (note 5)
2,165.3

 
2,839.6

Property and equipment, net (note 6)
24,705.0

 
21,684.0

Goodwill (note 6)
32,462.0

 
27,020.4

Intangible assets subject to amortization, net (note 6)
7,975.0

 
7,092.5

Other assets, net (note 4)
6,765.6

 
5,565.1

Total assets
$
78,553.6

 
$
67,559.0

 




























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

1


LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
(unaudited)
 
 
June 30,
2016
 
December 31,
2015
 
in millions
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,370.0

 
$
1,050.1

Deferred revenue and advance payments from subscribers and others
1,511.6

 
1,393.5

Current portion of debt and capital lease obligations (notes 5 and 7)
2,143.3

 
2,537.9

Accrued interest
820.0

 
832.8

Derivative instruments (note 4)
588.2

 
346.3

Accrued income taxes
502.0

 
483.5

Accrued capital expenditures
496.5

 
441.8

Other accrued and current liabilities (note 11)
2,452.1

 
2,072.0

Total current liabilities
9,883.7

 
9,157.9

Long-term debt and capital lease obligations (notes 5 and 7)
49,500.7

 
44,211.2

Other long-term liabilities (notes 4 and 11)
5,154.3

 
4,015.6

Total liabilities
64,538.7

 
57,384.7

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

 

Equity (note 9):
 
 
 
Liberty Global shareholders:
 
 
 
Liberty Global Shares — Class A, $0.01 nominal value. Issued and outstanding 272,572,110 and 252,766,455 shares, respectively
2.7

 
2.5

Liberty Global Shares — Class B, $0.01 nominal value. Issued and outstanding 10,805,850 and 10,472,517 shares, respectively
0.1

 
0.1

Liberty Global Shares — Class C, $0.01 nominal value. Issued and outstanding 646,703,723 and 584,044,394 shares, respectively
6.5

 
5.9

LiLAC Shares — Class A, $0.01 nominal value. Issued and outstanding 16,310,279 and 12,630,580 shares, respectively
0.2

 
0.1

LiLAC Shares — Class B, $0.01 nominal value. Issued and outstanding 540,089 and 523,423 shares, respectively

 

LiLAC Shares — Class C, $0.01 nominal value. Issued and outstanding 39,748,448 and 30,772,874 shares, respectively
0.4

 
0.3

Additional paid-in capital
18,582.8

 
14,908.1

Accumulated deficit
(5,427.8
)
 
(5,160.1
)
Accumulated other comprehensive earnings (loss), net of taxes
(102.9
)
 
895.9

Treasury shares, at cost
(0.3
)
 
(0.4
)
Total Liberty Global shareholders
13,061.7

 
10,652.4

Noncontrolling interests
953.2

 
(478.1
)
Total equity
14,014.9

 
10,174.3

Total liabilities and equity
$
78,553.6

 
$
67,559.0


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
 
Six months ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
in millions, except per share amounts
 
 
 
 
 
 
 
 
Revenue (note 14)
$
5,074.1

 
$
4,566.5

 
$
9,662.1

 
$
9,083.4

Operating costs and expenses:
 
 
 
 
 
 
 
Operating (other than depreciation and amortization) (including share-based compensation) (note 10)
1,929.5

 
1,675.3

 
3,654.6

 
3,372.5

Selling, general and administrative (SG&A) (including share-based compensation) (note 10)
913.5

 
762.8

 
1,729.9

 
1,556.6

Depreciation and amortization
1,553.0

 
1,477.8

 
2,988.5

 
2,929.2

Impairment, restructuring and other operating items, net (notes 3 and 11)
190.3

 
25.7

 
214.7

 
42.7

 
4,586.3

 
3,941.6

 
8,587.7

 
7,901.0

Operating income
487.8

 
624.9

 
1,074.4

 
1,182.4

Non-operating income (expense):
 
 
 
 
 
 
 
Interest expense
(657.1
)
 
(600.8
)
 
(1,276.4
)
 
(1,216.7
)
Realized and unrealized gains (losses) on derivative instruments, net (note 4)
1,052.0

 
(679.7
)
 
543.3

 
(61.2
)
Foreign currency transaction gains (losses), net
(298.1
)
 
340.4

 
40.9

 
(695.2
)
Realized and unrealized gains (losses) due to changes in fair values of certain investments and debt, net (notes 5 and 7)
(376.4
)
 
110.8

 
(644.6
)
 
262.2

Losses on debt modification and extinguishment, net (note 7)
(19.6
)
 
(73.8
)
 
(23.9
)
 
(348.3
)
Other income (expense), net (note 13)
(23.5
)
 
(1.7
)
 
29.8

 
(2.7
)
 
(322.7
)
 
(904.8
)
 
(1,330.9
)
 
(2,061.9
)
Earnings (loss) before income taxes
165.1

 
(279.9
)
 
(256.5
)
 
(879.5
)
Income tax expense (note 8)
(56.0
)
 
(130.0
)
 
(7.1
)
 
(52.1
)
Net earnings (loss)
109.1

 
(409.9
)
 
(263.6
)
 
(931.6
)
Net earnings attributable to noncontrolling interests
(7.7
)
 
(54.8
)
 
(4.1
)
 
(70.6
)
Net earnings (loss) attributable to Liberty Global shareholders
$
101.4

 
$
(464.7
)
 
$
(267.7
)
 
$
(1,002.2
)
 
 
 
 
 
 
 
 
Basic and diluted earnings (loss) attributable to Liberty Global shareholders per share (notes 1 and 12):
 
 
 
 
 
 
 
Liberty Global Shares
$
0.23

 
 
 
$
(0.15
)
 
 
LiLAC Shares
$
(2.04
)
 
 
 
$
(3.00
)
 
 
Old Liberty Global Shares
 
 
$
(0.53
)
 
 
 
$
(1.13
)
 
 
 
 
 
 
 
 

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
 
Six months ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
in millions
 
 
 
 
 
 
 
 
Net earnings (loss)
$
109.1

 
$
(409.9
)
 
$
(263.6
)
 
$
(931.6
)
Other comprehensive earnings (loss), net of taxes:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(1,010.8
)
 
929.7

 
(994.2
)
 
238.6

Reclassification adjustments included in net earnings (loss)
0.1

 
0.9

 
(0.6
)
 
1.0

Other
(1.7
)
 
0.5

 
(4.6
)
 
(1.0
)
Other comprehensive earnings (loss)
(1,012.4
)
 
931.1

 
(999.4
)
 
238.6

Comprehensive earnings (loss)
(903.3
)
 
521.2

 
(1,263.0
)
 
(693.0
)
Comprehensive earnings attributable to noncontrolling interests
(7.1
)
 
(54.8
)
 
(3.5
)
 
(70.7
)
Comprehensive earnings (loss) attributable to Liberty Global shareholders
$
(910.4
)
 
$
466.4

 
$
(1,266.5
)
 
$
(763.7
)



























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
 
Liberty Global Shares
 
LiLAC Shares
 
Additional
paid-in
capital
 
Accumulated
deficit
 
Accumulated
other
comprehensive
earnings (loss),
net of taxes
 
Treasury shares, at cost
 
Total Liberty Global
shareholders
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2016
$
8.5

 
$
0.4

 
$
14,908.1

 
$
(5,160.1
)
 
$
895.9

 
$
(0.4
)
 
$
10,652.4

 
$
(478.1
)
 
$
10,174.3

Net loss

 

 

 
(267.7
)
 

 

 
(267.7
)
 
4.1

 
(263.6
)
Other comprehensive loss, net of taxes

 

 

 

 
(998.8
)
 

 
(998.8
)
 
(0.6
)
 
(999.4
)
Impact of the CWC Acquisition (note 3)
1.1

 
0.1

 
4,488.9

 

 

 

 
4,490.1

 
1,451.8

 
5,941.9

Repurchase and cancellation of Liberty Global ordinary shares (note 9)
(0.2
)
 

 
(973.2
)
 

 

 

 
(973.4
)
 

 
(973.4
)
Share-based compensation (note 10)

 

 
130.0

 

 

 

 
130.0

 

 
130.0

Liberty Global call option contracts

 

 
119.1

 

 

 

 
119.1

 

 
119.1

Adjustments due to changes in subsidiaries’ equity and other, net
(0.1
)
 
0.1

 
(90.1
)
 

 

 
0.1

 
(90.0
)
 
(24.0
)
 
(114.0
)
Balance at June 30, 2016
$
9.3

 
$
0.6

 
$
18,582.8

 
$
(5,427.8
)
 
$
(102.9
)
 
$
(0.3
)
 
$
13,061.7

 
$
953.2

 
$
14,014.9











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

5


LIBERTY GLOBAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Six months ended
 
June 30,
 
2016
 
2015
 
in millions
Cash flows from operating activities:
 
 
 
Net loss
$
(263.6
)
 
$
(931.6
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Share-based compensation expense
143.6

 
128.0

Depreciation and amortization
2,988.5

 
2,929.2

Impairment, restructuring and other operating items, net
214.7

 
42.7

Amortization of deferred financing costs and non-cash interest accretion
39.1

 
34.2

Realized and unrealized losses (gains) on derivative instruments, net
(543.3
)
 
61.2

Foreign currency transaction losses (gains), net
(40.9
)
 
695.2

Realized and unrealized losses (gains) due to changes in fair values of certain investments and debt, including impact of dividends
644.6

 
(261.1
)
Losses on debt modification and extinguishment, net
23.9

 
348.3

Deferred income tax benefit
(196.4
)
 
(142.7
)
Excess tax benefit from share-based compensation
(3.2
)
 
(17.9
)
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions
(340.4
)
 
(199.7
)
Net cash provided by operating activities
2,666.6

 
2,685.8

Cash flows from investing activities:
 
 
 
Cash paid in connection with acquisitions, net of cash acquired
(1,325.8
)
 
(279.3
)
Capital expenditures
(1,276.1
)
 
(1,262.4
)
Investments in and loans to affiliates and others
(44.6
)
 
(161.4
)
Other investing activities, net
78.5

 
11.0

Net cash used by investing activities
$
(2,568.0
)
 
$
(1,692.1
)
 













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)
 
 
Six months ended
 
June 30,
 
2016
 
2015
 
in millions
Cash flows from financing activities:
 
 
 
Borrowings of debt
$
6,174.5

 
$
11,192.3

Repayments and repurchases of debt and capital lease obligations
(5,189.0
)
 
(10,717.8
)
Repurchase of Liberty Global ordinary shares
(717.5
)
 
(908.1
)
Change in cash collateral
117.7

 
61.8

Payment of financing costs and debt premiums
(89.4
)
 
(356.5
)
Net cash paid related to derivative instruments
(43.3
)
 
(303.3
)
Net cash received (paid) associated with call option contracts on Liberty Global ordinary shares
9.2

 
(121.2
)
Purchase of additional shares of subsidiaries

 
(142.2
)
Other financing activities, net
(94.2
)
 
(37.5
)
Net cash provided (used) by financing activities
168.0

 
(1,332.5
)
 
 
 
 
Effect of exchange rate changes on cash
37.6

 
(0.2
)
 


 


Net increase (decrease) in cash and cash equivalents
304.2

 
(339.0
)
Cash and cash equivalents:
 
 
 
Beginning of period
982.1

 
1,158.5

End of period
$
1,286.3

 
$
819.5

 
 
 
 
Cash paid for interest
$
1,276.8

 
$
1,138.2

Net cash paid for taxes
$
246.7

 
$
167.3





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

7


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(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, mobile and other communications services to consumers and businesses, with consolidated operations at June 30, 2016 in more than 30 countries.

In Europe, we provide consumer and business-to-business (B2B) services in (i) the United Kingdom (U.K.) and Ireland through Virgin Media Inc. (Virgin Media), (ii) the Netherlands through Ziggo Group Holding B.V. (Ziggo Group Holding), (iii) Germany through Unitymedia GmbH (Unitymedia), (iv) Belgium through Telenet Group Holding N.V. (Telenet), a 57.4%-owned subsidiary, and (v) seven other European countries through UPC Holding B.V. (UPC Holding). Virgin Media, Ziggo Group Holding, Unitymedia and UPC Holding are each wholly-owned subsidiaries of Liberty Global. The operations of Virgin Media, Ziggo Group Holding, Unitymedia, Telenet and UPC Holding are collectively referred to herein as the “European Operations Division.”

In addition, we provide consumer and B2B services in (i) 18 countries, predominantly in Latin America and the Caribbean, through our wholly-owned subsidiary Cable & Wireless Communications Limited (formerly known as Cable & Wireless Communications Plc) (CWC), (ii) Chile through our wholly-owned subsidiary VTR.com SpA (VTR) and (iii) Puerto Rico through Liberty Cablevision of Puerto Rico LLC (Liberty Puerto Rico), an entity in which we hold a 60.0% ownership interest. CWC also provides (a) B2B services in certain other countries in Latin America and the Caribbean and (b) wholesale services over its sub-sea and terrestrial networks that connect over 30 markets in that region. CWC owns less than 100% of certain of its consolidated subsidiaries, including Cable & Wireless Panama, SA (CWC Panama) (a 49.0%-owned entity that owns most of our operations in Panama), The Bahamas Telecommunications Company Limited (CWC BTC) (a 49.0%-owned entity that owns all of our operations in the Bahamas), Cable & Wireless Jamaica Limited (CWC Jamaica) (an 82.0%-owned entity that owns the majority of our operations in Jamaica) and Cable & Wireless (Barbados) Limited (an 81.1%-owned entity that owns the majority of our operations in Barbados). The operations of CWC, VTR and Liberty Puerto Rico are collectively referred to herein as the “LiLAC Division.”

On July 1, 2015, we completed the approved steps of the “LiLAC Transaction” whereby we (i) reclassified our then outstanding Class A, Class B and Class C Liberty Global ordinary shares into corresponding classes of new Liberty Global ordinary shares (collectively, the Liberty Global Shares) and (ii) capitalized a portion of our share premium account and distributed as a dividend (or a “bonus issue” under U.K. law) our LiLAC Class A, Class B and Class C ordinary shares (collectively, the LiLAC Shares). In these notes, the term “Old Liberty Global Shares” refers to our previously-outstanding Class A, Class B and Class C Liberty Global ordinary shares. The impact of the LiLAC Transaction on our capitalization and earnings or loss per share (EPS) presentation has been reflected in these condensed consolidated financial statements prospectively from July 1, 2015. Accordingly, (a) our net earnings (loss) attributed to Liberty Global Shares and LiLAC Shares relates to the three and six months ended June 30, 2016 and (b) our net loss attributed to Old Liberty Global Shares relates to the three and six months ended June 30, 2015.

The Liberty Global Shares and the LiLAC Shares are tracking shares. Tracking shares are intended by the issuing company
to reflect or “track” the economic performance of a particular business or “group,” rather than the economic performance of the
company as a whole. The Liberty Global Shares and the LiLAC Shares are intended to track the economic performance of the Liberty Global Group and the LiLAC Group, respectively (each as defined and described below). While the Liberty Global Group and the LiLAC Group have separate collections of businesses, assets and liabilities attributed to them, neither group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of tracking shares have no direct claim to the group’s assets and are not represented by separate boards of directors. Instead, holders of tracking shares are shareholders of the parent corporation, with a single board of directors, and are subject to all of the risks and liabilities of the parent corporation. We and our subsidiaries each continue to be responsible for our respective liabilities. Holders of Liberty Global Shares, LiLAC Shares and any other of our capital shares designated as ordinary shares from time to time will continue to be subject to risks associated with an investment in our company as a whole, even if a holder does not own both Liberty Global Shares and LiLAC Shares.

The “LiLAC Group” comprises our businesses, assets and liabilities in Latin America and the Caribbean and has attributed to it (i) LGE Coral Holdco Limited (LGE Coral) and its subsidiaries, which include CWC, (ii) VTR Finance B.V. (VTR Finance) and its subsidiaries, which include VTR, (iii) Lila Chile Holding B.V., which is the parent entity of VTR Finance, (iv) LiLAC Holdings Inc. (LiLAC Holdings) and its subsidiaries, which include Liberty Puerto Rico, and (v) prior to July 1, 2015, the costs

8


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



associated with certain corporate employees of Liberty Global that are exclusively focused on the management of the LiLAC Group (the LiLAC Corporate Costs). Effective July 1, 2015, these corporate employees were transferred to LiLAC Holdings. The “Liberty Global Group” comprises our businesses, assets and liabilities not attributed to the LiLAC Group, including Virgin Media, Ziggo Group Holding, Unitymedia, Telenet, UPC Holding, our corporate entities (excluding the LiLAC Corporate Costs) and certain other less significant entities.

For additional information regarding our tracking share capital structure, including unaudited attributed financial information of the Liberty Global Group and the LiLAC Group, see Exhibit 99.1 to this Quarterly Report on Form 10-Q.

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 2015 consolidated financial statements and notes thereto included in our 2015 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 June 30, 2016.

Certain prior period amounts have been reclassified to conform to the current period presentation, including the reclassification of deferred financing costs from other long-term assets to long-term debt and capital lease obligations and the reclassification of certain costs between operating and SG&A expenses. For additional information regarding the change in the classification of deferred financing costs, see note 2.

(2)    Accounting Changes and Recent Accounting Pronouncements

Accounting Changes

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. For public entities, ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. We adopted ASU 2015-03 on January 1, 2016 and, accordingly, deferred financing costs are presented as a reduction of debt in our June 30, 2016 and December 31, 2015 condensed consolidated balance sheets. Prior to the adoption of ASU 2015-03, we presented deferred financing costs in other assets, net.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 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, as amended by ASU No. 2015-14, will replace existing revenue recognition guidance when it becomes effective for annual and interim reporting periods beginning after December 15, 2017. Early application is permitted for annual and interim reporting periods that begin after December 15, 2016. This new standard permits the use of either the retrospective or cumulative effect transition method. We will adopt ASU 2014-09 effective January 1, 2018, and we are currently evaluating the

9


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



effect that ASU 2014-09 will have on 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.

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which, for most leases, will result in lessees recognizing lease assets and lease liabilities on the balance sheet with additional disclosures about leasing arrangements. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach also includes a number of optional practical expedients an entity may elect to apply. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification within the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the effect that ASU 2016-09 will have on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (ASU 2016-13), which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the effect that ASU 2016-13 will have on our consolidated financial statements and related disclosures.

(3)   Acquisition and Joint Venture Transactions

Pending Joint Venture Transaction
On February 15, 2016, we and Liberty Global Europe Holding B.V., our wholly-owned subsidiary, entered into a Contribution and Transfer Agreement (the Contribution Agreement) with Vodafone Group plc (Vodafone) and one of its wholly-owned subsidiaries. Pursuant to the Contribution Agreement, our company and Vodafone agreed to form a 50:50 joint venture (the Dutch JV), which will combine Ziggo Group Holding and our Sport1 premium sports channel with Vodafone’s mobile businesses in the Netherlands (Vodafone NL) to create a national unified communications provider in the Netherlands with complementary strengths across video, broadband, mobile and B2B services.
At the closing of the transaction contemplated by the Contribution Agreement, Vodafone will pay to our company an equalization payment equal to approximately €1.0 billion ($1.1 billion), as adjusted for the net debt of Ziggo Group Holding and Vodafone NL at the time of closing and certain working capital adjustments. Ziggo Group Holding will be contributed to the Dutch JV together with its outstanding third-party debt, while our Sport1 premium channel and Vodafone’s business in the Netherlands will be contributed on a debt and cash free basis. 
The parties expect to raise additional debt financing at the Dutch JV to increase the Dutch JV’s net leverage ratio to a level that ranges between 4.5 and 5 times EBITDA (as calculated pursuant to Ziggo Group Holding’s existing financing arrangements) and to make a pro rata distribution of the net proceeds from the additional debt to our company and Vodafone. The Dutch JV will be required to make regular cash distributions to its shareholders on a pro rata basis equal to the unrestricted cash held by the Dutch JV (subject to the Dutch JV maintaining a minimum amount of cash and complying with the terms of its financing arrangements). As an ongoing operation, it is intended that the Dutch JV will be funded solely from its net cash flow from operations and third-party financing. This transaction will not trigger any of Ziggo Group Holding’s requirements under its debt agreements to redeem its outstanding debt pursuant to applicable change in control provisions.

Following completion of the transaction, we expect to account for our 50% interest in the Dutch JV as an equity method investment, and we expect to attribute our 50% interest in the Dutch JV to the Liberty Global Group. Ziggo Group Holding and Sport1 are not considered to be held-for-sale as of June 30, 2016 due to uncertainty surrounding the regulatory review process. When Ziggo Group Holding and Sport1 are considered held-for-sale or are actually contributed to the Dutch JV, we will not present these entities as discontinued operations as this transaction does not represent a strategic shift for Liberty Global.

10


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



The consummation of the transaction contemplated by the Contribution Agreement is subject to certain conditions, including competition clearance by the European Commission. On August 3, 2016, the European Commission approved the transaction subject to the divestment by Vodafone of its fixed-line business in the Netherlands. It is anticipated that the transaction contemplated by the Contribution Agreement will close around the end of 2016. The Contribution Agreement also includes customary termination rights, including a right of the parties to terminate the transaction if it has not closed by August 15, 2017.

2016 Acquisitions

CWC. On May 16, 2016, pursuant to a scheme of arrangement and following shareholder approvals, we acquired CWC for shares of Liberty Global (the CWC Acquisition). Under the terms of the transaction, CWC shareholders received in the aggregate: 31,607,008 Class A Liberty Global Shares, 77,379,774 Class C Liberty Global Shares, 3,648,513 Class A LiLAC Shares and 8,939,316 Class C LiLAC Shares. Further, in accordance with the scheme of arrangement and immediately prior to the acquisition, CWC declared a special cash dividend (the Special Dividend) to its shareholders in the amount of £0.03 ($0.04 at the transaction date) per CWC share. The Special Dividend was paid to CWC shareholders promptly following the closing and the payment, together with fees and expenses related to the acquisition, was funded with CWC liquidity, including incremental debt borrowings, and LiLAC Group corporate liquidity. We acquired CWC in order to achieve certain financial, operational and strategic benefits through the integration of CWC with our existing operations in the LiLAC Group.

The CWC Acquisition triggered regulatory approval requirements in certain jurisdictions in which CWC operates. The regulatory authorities in certain of these jurisdictions, including the Bahamas, Jamaica, Trinidad & Tobago, the Seychelles and the Cayman Islands, have not completed their review of the CWC Acquisition or granted their approval. While we expect to receive all outstanding approvals, such approvals may include binding conditions or requirements that could have an adverse impact on CWC’s operations and financial condition.

For accounting purposes, the CWC Acquisition was treated as the acquisition of CWC by Liberty Global. In this regard, the equity and cash consideration paid to acquire CWC is set forth below (in millions):
Class A Liberty Global Shares (a)
$
1,167.2

Class C Liberty Global Shares (a)
2,803.5

Class A LiLAC Shares (a)
144.1

Class C LiLAC Shares (a)
375.3

Special Dividend (b)
193.8

     Total
$
4,683.9

_______________

(a)
Represents the fair value of the 31,607,008 Class A Liberty Global Shares, 77,379,774 Class C Liberty Global Shares, 3,648,513 Class A LiLAC Shares and 8,939,316 Class C LiLAC Shares issued to CWC shareholders in connection with the CWC Acquisition. These amounts are based on the market price per share at closing on May 16, 2016 of $36.93, $36.23, $39.50 and $41.98, respectively.

(b)
Represents the Special Dividend of £0.03 ($0.04 at the transaction date) per CWC share paid pursuant to the scheme of arrangement based on 4,433,222,313 outstanding shares of CWC on May 16, 2016.


11


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



We have accounted for the CWC Acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of CWC based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The preliminary opening balance sheet is subject to adjustment based on our final assessment of the fair values of the acquired identifiable assets and liabilities. Most items in the valuation process remain open and are subject to change upon finalization of the valuation process. A summary of the purchase price and the preliminary opening balance sheet of CWC at the May 16, 2016 acquisition date is presented in the following table (in millions):
Cash and cash equivalents
$
210.8

Other current assets
712.0

Property and equipment, net
2,895.7

Goodwill (a)
5,606.5

Intangible assets subject to amortization, net (b)
1,266.3

Other assets, net
428.0

Current portion of debt and capital lease obligations
(94.4
)
Other accrued and current liabilities
(761.0
)
Long-term debt and capital lease obligations
(3,280.8
)
Other long-term liabilities
(847.4
)
Noncontrolling interests (c)
(1,451.8
)
Total purchase price (d)
$
4,683.9

_______________

(a)
The goodwill recognized in connection with the CWC Acquisition is primarily attributable to (i) the ability to take advantage of CWC’s existing advanced broadband communications and sub-sea and terrestrial networks to gain immediate access to potential customers and (ii) synergies that are expected to be achieved through the integration of CWC with other operations in the LiLAC Group.

(b)
Amount primarily includes intangible assets related to customer relationships. At May 16, 2016, the preliminary assessment of the weighted average useful life of CWC’s intangible assets was approximately eight years.

(c)
Represents the aggregate fair value of the noncontrolling interests in CWC’s subsidiaries as of May 16, 2016.

(d)
Excludes direct acquisition costs of $116.5 million which are included in impairment, restructuring and other operating items, net, in our condensed consolidated statements of operations.

Following completion of the CWC Acquisition, we attributed CWC to the LiLAC Group, with the Liberty Global Group being granted an inter-group interest in the LiLAC Group representing the fair value (as determined by our board of directors) of the Liberty Global Shares issued as part of the purchase consideration. On July 1, 2016, we distributed (as a bonus issue) 117,425,359 LiLAC Shares to Liberty Global Group shareholders on a pro-rata basis (the LiLAC Distribution), thereby eliminating the Liberty Global Group's inter-group interest in the LiLAC Group. The LiLAC Distribution, which will be accounted for prospectively effective July 1, 2016, has not been reflected in our June 30, 2016 condensed consolidated financial statements.

BASE. On February 11, 2016, pursuant to a definitive agreement and following regulatory approval, Telenet acquired Telenet Group BVBA, formerly known as BASE Company NV (BASE), for a cash purchase price of €1,321.9 million ($1,497.7 million at the transaction date) (the BASE Acquisition). BASE is the third-largest mobile network operator in Belgium. We expect that the BASE Acquisition will provide Telenet with cost-effective long-term mobile access to effectively compete for future growth opportunities in the Belgium mobile market. The BASE Acquisition was funded through a combination of €1.0 billion ($1.1 billion at the transaction date) of new debt facilities and existing liquidity of Telenet. The acquisition was approved by the European Commission subject to Telenet’s agreement to divest both the JIM Mobile prepaid customer base and BASE’s 50% stake in Viking Co NV (Viking) to MEDIALAAN NV. In February 2016, Telenet completed the sale of its stake in Viking. The divestiture of the JIM Mobile prepaid customer base is expected to occur during the third quarter of 2017.


12


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



We have accounted for the BASE Acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of BASE based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The preliminary opening balance sheet is subject to adjustment based on our final assessment of the fair values of the acquired identifiable assets and liabilities. Although most items in the valuation process remain open, the items with the highest likelihood of changing upon finalization of the valuation process include property and equipment, goodwill, intangible assets associated with mobile spectrum, customer relationships and trademarks and income taxes. A summary of the purchase price and the preliminary opening balance sheet of BASE at the February 11, 2016 acquisition date is presented in the following table (in millions):
Cash and cash equivalents
$
160.1

Other current assets
176.2

Property and equipment, net
785.8

Goodwill (a)
345.9

Intangible assets subject to amortization, net:
 
Mobile spectrum (b)
261.0

Customer relationships (c)
127.0

Trademarks (d)
40.7

Other assets, net
10.7

Other accrued and current liabilities
(311.8
)
Other long-term liabilities
(97.9
)
Total purchase price (e)
$
1,497.7

_______________

(a)
The goodwill recognized in connection with the BASE Acquisition is primarily attributable to (i) the ability to take advantage of BASE’s existing mobile network to gain immediate access to potential customers and (ii) synergies that are expected to be achieved through the integration of BASE with Telenet.

(b)
As of February 11, 2016, the weighted average useful life of BASE’s mobile spectrum was approximately 11 years.

(c)
As of February 11, 2016, the weighted average useful life of BASE’s customer relationships was approximately six years.

(d)
As of February 11, 2016, the weighted average useful life of BASE’s trademarks was approximately 20 years.

(e)
Excludes direct acquisition costs of $17.1 million, including $7.1 million incurred during 2016, which are included in impairment, restructuring and other operating items, net, in our consolidated statements of operations.

2015 Acquisition

On June 3, 2015, pursuant to a stock purchase agreement with the parent entity of Puerto Rico Cable Acquisition Company Inc., dba Choice Cable TV (Choice) and following regulatory approval, one of our subsidiaries, together with investment funds affiliated with Searchlight Capital Partners, L.P. (collectively, Searchlight), acquired 100% of Choice (the Choice Acquisition). Choice is a cable and broadband services provider in Puerto Rico. We acquired Choice in order to achieve certain financial, operational and strategic benefits through the integration of Choice with Liberty Puerto Rico. The combined business is 60.0%-owned by our company and 40.0%-owned by Searchlight.
The purchase price for Choice of $276.4 million was funded through (i) Liberty Puerto Rico’s incremental debt borrowings, net of discount and fees, of $259.1 million, (ii) cash of $10.5 million and (iii) an equity contribution from Searchlight of $6.8 million.

13


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



We have accounted for the Choice Acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of Choice based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. A summary of the purchase price and opening balance sheet of Choice at the June 3, 2015 acquisition date is presented in the following table. The opening balance sheet presented below reflects our final purchase price allocation (in millions):
Cash and cash equivalents
$
3.6

Other current assets
7.8

Property and equipment, net
79.8

Goodwill (a)
51.6

Intangible assets subject to amortization, net (b)
59.1

Franchise rights
147.8

Other assets, net
0.3

Other accrued and current liabilities
(13.2
)
Non-current deferred tax liabilities
(60.4
)
Total purchase price (c)
$
276.4

_______________

(a)
The goodwill recognized in connection with the Choice Acquisition is primarily attributable to (i) the ability to take advantage of Choice’s existing advanced broadband communications network to gain immediate access to potential customers and (ii) synergies that are expected to be achieved through the integration of Choice with Liberty Puerto Rico.

(b)
Amount primarily includes intangible assets related to customer relationships. As of June 3, 2015, the weighted average useful life of Choice’s intangible assets was approximately ten years.

(c)
Excludes direct acquisition costs of $8.5 million incurred through December 31, 2015, which were included in impairment, restructuring and other operating items, net, in our consolidated statement of operations for the year ended December 31, 2015.


14


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



Pro Forma Information
The following unaudited pro forma condensed consolidated operating results give effect to (i) the CWC Acquisition, (ii) the BASE Acquisition and (iii) the Choice Acquisition, as if they had been completed as of January 1, 2015. These pro forma amounts are not necessarily indicative of the operating results that would have occurred if these transactions had occurred on such date. The pro forma adjustments are based on certain assumptions that we believe are reasonable. In the following table, we present the revenue that is attributed to the Liberty Global Group and the LiLAC Group as if such revenue had been attributed to each group at the beginning of each period presented. However, our presentation of net loss and basic and diluted loss per share attributed to (a) Liberty Global Shares, (b) LiLAC Shares and (c) Old Liberty Global Shares only includes the results of operations for the periods during which these shares were outstanding. Accordingly, (1) our net loss attributed to Liberty Global Shares and LiLAC Shares relates to the period from January 1, 2016 through June 30, 2016 and (2) our net loss attributed to Old Liberty Global Shares relates to the period from January 1, 2015 through June 30, 2015.
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
in millions, except per share amounts
Revenue:
 
 
 
 
 
 
 
Liberty Global Group
$
4,471.2

 
$
4,424.0

 
$
8,829.7

 
$
8,822.7

LiLAC Group
891.8

 
909.4

 
1,800.7

 
1,829.3

Total
$
5,363.0

 
$
5,333.4

 
$
10,630.4

 
$
10,652.0

 
 
 
 
 
 
 
 
Net earnings (loss) attributable to Liberty Global shareholders:
 
 
 
 
 
 
 
Liberty Global Shares
$
204.2

 
$

 
$
(129.8
)
 
$

LiLAC Shares
21.4

 

 
131.1

 

Old Liberty Global Shares

 
(516.4
)
 

 
(1,225.3
)
Total
$
225.6

 
$
(516.4
)
 
$
1.3

 
$
(1,225.3
)
 
 
 
 
 
 
 
 
Basic and diluted earnings (loss) attributable to Liberty Global shareholders per share:
 
 
 
 
 
 
 
Liberty Global Shares:
 
 
 
 
 
 
 
Basic
$
0.22

 
 
 
$
(0.14
)
 
 
Diluted
$
0.21

 
 
 
$
(0.14
)
 
 
LiLAC Shares:
 
 
 
 
 
 
 
Basic
$
0.38

 
 
 
$
2.32

 
 
Diluted
$
0.37

 


 
$
2.30

 


Old Liberty Global Shares:
 
 
 
 
 
 
 
Basic
 
 
$
(0.52
)
 
 
 
$
(1.24
)
Diluted
 
 
$
(0.52
)
 
 
 
$
(1.24
)
Our condensed consolidated statements of operations for the three and six months ended June 30, 2016 include (i) revenue (after intercompany eliminations) of $285.4 million and net loss of $41.9 million attributable to CWC and (ii) revenue (after intercompany eliminations) of $166.9 million and $256.1 million, respectively, and net loss of $14.3 million and $18.8 million, respectively, attributable to BASE.

15


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



(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 Jamaican dollar (JMD), the Polish zloty (PLN) and the Romanian lei (RON). With the exception of a limited number of our foreign currency forward contracts, we 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.

The following table provides details of the fair values of our derivative instrument assets and liabilities:
 
June 30, 2016
 
December 31, 2015
 
Current
 
Long-term (a)
 
Total
 
Current
 
Long-term (a)
 
Total
 
in millions
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts:
 
 
 
 
 
 
 
 
 
 
 
Liberty Global Group
$
324.0

 
$
2,048.1

 
$
2,372.1

 
$
263.6

 
$
1,518.5

 
$
1,782.1

LiLAC Group
6.2

 
200.7

 
206.9

 
11.8

 
291.7

 
303.5

Total cross-currency and interest rate derivative contracts (b)
330.2

 
2,248.8

 
2,579.0

 
275.4

 
1,810.2

 
2,085.6

Equity-related derivative instruments – Liberty Global Group (c)
35.5

 
926.3

 
961.8

 
135.5

 
273.0

 
408.5

Foreign currency forward contracts:
 
 
 
 


 
 
 
 
 
 
Liberty Global Group
15.2

 
13.7

 
28.9

 
6.2

 

 
6.2

LiLAC Group

 

 

 
4.2

 

 
4.2

Total foreign currency forward contracts
15.2

 
13.7

 
28.9

 
10.4

 

 
10.4

Other – Liberty Global Group
0.4

 
0.6

 
1.0

 
0.6

 
1.0

 
1.6

Total assets:
 
 
 
 
 
 
 
 
 
 
 
Liberty Global Group
375.1

 
2,988.7

 
3,363.8

 
405.9

 
1,792.5

 
2,198.4

LiLAC Group
6.2

 
200.7

 
206.9

 
16.0

 
291.7

 
307.7

Total
$
381.3


$
3,189.4


$
3,570.7


$
421.9


$
2,084.2


$
2,506.1

 
 
 
 
 
 
 
 
 
 
 
 

16


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



 
June 30, 2016
 
December 31, 2015
 
Current
 
Long-term (a)
 
Total
 
Current
 
Long-term (a)
 
Total
 
in millions
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Cross-currency and interest rate derivative contracts:
 
 
 
 
 
 
 
 
 
 
 
Liberty Global Group
$
514.4

 
$
1,559.5

 
$
2,073.9

 
$
304.9

 
$
1,194.7

 
$
1,499.6

LiLAC Group
21.1

 
61.2

 
82.3

 

 
13.8

 
13.8

Total cross-currency and interest rate derivative contracts (b)
535.5

 
1,620.7

 
2,156.2

 
304.9

 
1,208.5

 
1,513.4

Equity-related derivative instruments – Liberty Global Group (c)
41.7

 

 
41.7

 
34.7

 
39.7

 
74.4

Foreign currency forward contracts:
 
 
 
 
 
 
 
 
 
 
 
Liberty Global Group
2.1

 

 
2.1

 
1.1

 

 
1.1

LiLAC Group
8.9

 
0.6

 
9.5

 

 

 

Total foreign currency forward contracts
11.0

 
0.6

 
11.6

 
1.1

 

 
1.1

Other – Liberty Global Group

 
0.1

 
0.1

 
5.6

 
0.1

 
5.7

Total liabilities:
 
 
 
 
 
 
 
 
 
 
 
Liberty Global Group
558.2

 
1,559.6

 
2,117.8

 
346.3

 
1,234.5

 
1,580.8

LiLAC Group
30.0

 
61.8

 
91.8

 

 
13.8

 
13.8

Total
$
588.2


$
1,621.4


$
2,209.6


$
346.3


$
1,248.3


$
1,594.6

_______________ 

(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 June 30, 2016 and December 31, 2015, (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 $127.1 million and $64.0 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 $160.4 million and $86.5 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 a net gain (loss) of ($14.3 million) and $77.2 million during the three months ended June 30, 2016 and 2015, respectively, and net gains of $7.1 million and $60.3 million during the six months ended June 30, 2016 and 2015, 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 primarily include the fair value of (i) the share collar (the ITV Collar) with respect to ITV plc (ITV) shares held by our company, (ii) the share collar (the Sumitomo Collar) with respect to the shares of Sumitomo Corporation (Sumitomo) held by our company, (iii) the prepaid forward transaction (the Lionsgate Forward) with respect to 2.5 million of the shares of Lions Gate Entertainment Corp (Lionsgate) held by our company and (iv) 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 the ITV Collar, the Sumitomo Collar and the Lionsgate Forward 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

17


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



counterparty would be, subject to relevant insolvency laws, fully offset against amounts we owe to such counterparty pursuant to the related secured borrowing arrangements.

The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows:
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
in millions
Cross-currency and interest rate derivative contracts:
 
 
 
 
 

 
Liberty Global Group
$
699.8

 
$
(547.7
)
 
$
64.4

 
$
114.6

LiLAC Group
(43.6
)
 
(0.6
)
 
(181.2
)
 
77.6

Total cross-currency and interest rate derivative contracts
656.2

 
(548.3
)
 
(116.8
)
 
192.2

Equity-related derivative instruments – Liberty Global Group:
 
 
 
 
 

 
ITV Collar
308.3

 
(53.5
)
 
513.7

 
(158.9
)
Sumitomo Collar
66.3

 
(61.8
)
 
135.0

 
(71.9
)
Lionsgate Forward
3.3

 

 
22.0

 

Other
0.5

 
0.5

 
0.9

 
1.1

Total equity-related derivative instruments
378.4

 
(114.8
)
 
671.6


(229.7
)
Foreign currency forward contracts:
 
 
 
 
 

 
Liberty Global Group
19.8

 
(18.1
)
 
(1.9
)
 
(27.4
)
LiLAC Group
(1.8
)
 
1.8

 
(8.9
)
 
3.0

Total foreign currency forward contracts
18.0

 
(16.3
)
 
(10.8
)
 
(24.4
)
Other – Liberty Global Group
(0.6
)
 
(0.3
)
 
(0.7
)
 
0.7

 
 
 
 
 
 
 
 
Total Liberty Global Group
1,097.4

 
(680.9
)
 
733.4

 
(141.8
)
Total LiLAC Group
(45.4
)
 
1.2

 
(190.1
)
 
80.6

Total
$
1,052.0


$
(679.7
)

$
543.3


$
(61.2
)
 

18


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



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 foreign currency forward contracts that are used to hedge capital expenditures, the net cash received or paid is classified as an adjustment to capital expenditures in our condensed consolidated statements of 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 net cash outflows is as follows:
 
Six months ended
 
June 30,
 
2016
 
2015
 
in millions
Operating activities:
 
 
 
Liberty Global Group
$
(1.5
)
 
$
(161.3
)
LiLAC Group
2.8

 
(17.7
)
Total operating activities
1.3

 
(179.0
)
Investing activities – LiLAC Group
(0.4
)
 
(0.4
)
Financing activities – Liberty Global Group
(43.3
)
 
(303.3
)
Total cash outflows:
 
 
 
Liberty Global Group
(44.8
)
 
(464.6
)
LiLAC Group
2.4

 
(18.1
)
Total
$
(42.4
)
 
$
(482.7
)

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. With the exception of a limited number of instances where we have required a counterparty to post collateral, collateral has not been posted by either party under the derivative instruments of our subsidiary borrowing groups. At June 30, 2016, our exposure to counterparty credit risk included derivative assets with an aggregate fair value of $2,441.3 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 with multiple derivative instruments that mature within the same calendar month, the notional amounts 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 June 30, 2016, we present a single date that represents the applicable final maturity date. For derivative instruments that become effective subsequent to June 30, 2016, we present a range of dates that represents the period covered by the applicable derivative instruments.
 

19


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



Cross-currency and Interest Rate Derivative Contracts

Cross-currency Swaps:

The terms of our outstanding cross-currency swap contracts at June 30, 2016 are as follows:
Subsidiary /
Final maturity date
 
Notional
amount
due from
counterparty
 
Notional
amount
due to
counterparty
 
Interest rate
due from
counterparty
 
Interest rate
due to (from)
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 (a)
 
$
2,208.5

 
£
1,378.7

 
3.29%
 
3.61%
June 2023
 
$
1,855.0

 
£
1,198.3

 
6 mo. LIBOR + 2.75%
 
6 mo. GBP LIBOR + 3.18%
January 2023
 
$
1,000.0

 
£
648.6

 
5.25%
 
5.32%
August 2024
 
$
750.0

 
£
527.0

 
5.50%
 
5.46%
April 2023 (a)
 
$
480.0

 
£
299.1

 
1.55%
 
1.78%
February 2022 - April 2023
 
$
475.0

 
£
295.6

 
4.88%
 
5.32%
October 2022
 
$
450.0

 
£
272.0

 
6.00%
 
6.43%
January 2021
 
$
447.9

 
£
276.7

 
5.25%
 
6 mo. GBP LIBOR + 2.06%
January 2022
 
$
425.0

 
£
255.8

 
5.50%
 
4.86%
January 2022 - January 2025
 
$
425.0

 
£
255.8

 
3 mo. LIBOR
 
4.86%
April 2019
 
$
191.5

 
£
122.3

 
5.38%
 
5.49%
April 2019 - February 2022
 
$
191.5

 
£
122.3

 
5.38%
 
5.54%
October 2019
 
$
100.0

 
£
65.4

 
7.19%
 
7.23%
November 2016 (a)
 
$
55.0

 
£
27.7

 
6.50%
 
7.03%
October 2019 - October 2022
 
$
50.0

 
£
30.7

 
6.00%
 
5.75%
October 2019 - April 2023
 
$
50.0

 
£
30.3

 
6.38%
 
6.84%
October 2019 (a)
 
£
30.3

 
$
50.0

 
2.14%
 
2.00%
UPC Broadband Holding B.V. (UPC Broadband Holding), a subsidiary of UPC Holding:
 
 
 
 
 
 
 
 
 
January 2023
 
$
1,140.0

 
1,043.7

 
5.38%
 
3.71%
July 2021
 
$
440.0

 
337.2

 
6 mo. LIBOR + 2.50%
 
6 mo. EURIBOR + 2.87%
January 2017 - July 2021
 
$
262.1

 
194.1

 
6 mo. LIBOR + 2.50%
 
6 mo. EURIBOR + 2.51%
November 2019
 
$
250.0

 
181.5

 
7.25%
 
7.74%
November 2021
 
$
250.0

 
181.4

 
7.25%
 
7.50%
January 2022
 
$
171.6

 
127.7

 
6 mo. LIBOR + 3.85%
 
6 mo. EURIBOR + 4.06%
January 2020
 
$
163.8

 
124.9

 
6 mo. LIBOR + 4.88%
 
7.49%
January 2022
 
$
88.8

 
67.6

 
6 mo. LIBOR + 5.03%
 
7.16%

20


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



Subsidiary /
Final maturity date
 
Notional
amount
due from
counterparty
 
Notional
amount
due to
counterparty
 
Interest rate
due from
counterparty
 
Interest rate
due to (from)
counterparty
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
January 2020
 
$
49.4

 
37.7

 
6 mo. LIBOR + 4.86%
 
6 mo. EURIBOR + 4.81%
June 2021
 
$
26.5

 
19.4

 
6 mo. LIBOR + 3.00%
 
6 mo. EURIBOR + 3.31%
December 2016
 
$
340.0

 
CHF
370.9

 
6 mo. LIBOR + 3.50%
 
6 mo. CHF LIBOR + 4.01%
July 2016 (a)
 
$
225.0

 
CHF
206.3

 
6 mo. LIBOR + 4.81%
 
1.00%
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%
January 2017 - July 2023
 
$
200.0

 
CHF
185.5

 
6 mo. LIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.48%
November 2021
 
$
175.0

 
CHF
158.7

 
7.25%
 
6 mo. CHF LIBOR + 5.01%
January 2017 - July 2021
 
$
100.0

 
CHF
92.8

 
6 mo. LIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.49%
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%
September 2022
 
435.6

 
CHF
528.2

 
6 mo. EURIBOR + 2.62%
 
6 mo. CHF LIBOR + 2.72%
January 2021
 
398.6

 
CHF
485.0

 
6 mo. EURIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.65%
January 2017 - September 2022
 
383.8

 
CHF
477.0

 
6 mo. EURIBOR + 2.00%
 
6 mo. CHF LIBOR + 2.22%
October 2016
 
285.1

 
CHF
346.7

 
10.51%
 
(0.73)%
October 2016 - January 2020
 
285.1

 
CHF
346.7

 
10.51%
 
9.42%
July 2023
 
200.0

 
CHF
216.9

 
—%
 
(0.51)%
January 2017
 
199.4

 
CHF
325.0

 
6 mo. EURIBOR + 3.75%
 
6 mo. CHF LIBOR + 3.95%
January 2020
 
175.0

 
CHF
258.6

 
7.63%
 
6.76%
January 2020
 
161.0

 
CHF
264.0

 
6 mo. EURIBOR + 3.75%
 
6 mo. CHF LIBOR + 2.88%
July 2023
 
85.3

 
CHF
95.0

 
6 mo. EURIBOR + 2.21%
 
6 mo. CHF LIBOR + 2.65%
January 2017
 
75.0

 
CHF
110.9

 
7.63%
 
6.98%
July 2021
 
70.1

 
CHF
84.8

 
6 mo. EURIBOR + 2.50%
 
6 mo. CHF LIBOR + 2.88%
January 2020
 
318.9

 
CZK
8,818.7

 
5.58%
 
5.44%
January 2022
 
60.0

 
CZK
1,703.1

 
5.50%
 
5.71%
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 - December 2021
 
260.0

 
HUF
75,570.0

 
5.50%
 
8.97%
December 2021
 
150.0

 
HUF
43,367.5

 
5.50%
 
3.75%
July 2018
 
78.0

 
HUF
19,500.0

 
5.50%
 
9.15%
January 2022
 
245.0

 
PLN
1,000.6

 
5.50%
 
9.17%
September 2016
 
200.0

 
PLN
892.7

 
6.00%
 
3.91%
July 2016 - January 2022
 
180.0

 
PLN
788.2

 
4.50%
 
7.14%
January 2020
 
144.6

 
PLN
605.0

 
5.50%
 
7.98%
July 2017
 
82.0

 
PLN
318.0

 
3.00%
 
5.60%

21


LIBERTY GLOBAL PLC
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2016
(unaudited)



Subsidiary /
Final maturity date
 
Notional
amount
due from
counterparty
 
Notional
amount
due to
counterparty
 
Interest rate
due from
counterparty
 
Interest rate
due to (from)
counterparty
 
 
in millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amsterdamse Beheer-en Consultingmaatschappij B.V. (ABC B.V.), a subsidiary of Ziggo Group Holding:
 
 
 
 
 
 
 
 
 
January 2022
 
$
2,350.0

 
1,819.0

 
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
 
$
2,450.0

 
1,799.0

 
5.62%
 
4.76%
Telenet International Finance S.a.r.l (Telenet International), a subsidiary of Telenet:
 
 
 
 
 
 
 
 
 
June 2024
 
$
850.0

 
743.3

 
3 mo. LIBOR + 3.50%
 
3.47%
Sable International Finance Limited (Sable), a subsidiary of CWC:
 
 
 
 
 
 
 
 
 
July 2016 - December 2022
 
$
78.3

 
JMD
10,000.0

 
—%
 
8.65%
VTR:
 
 
 
 
 
 
 
 
 
January 2022
 
$
1,400.0

 
CLP
951,390.0

 
6.88%
 
6.36%
_______________ 

(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 derivative instruments are interest payments and receipts.

Interest Rate Swaps:

The terms of our outstanding interest rate swa