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Dispositions and the VodafoneZiggo JV Transaction | 12 Months Ended
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Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract] |
Dispositions and the VodafoneZiggo JV Transaction | Dispositions and the VodafoneZiggo JV Transaction Dispositions Vodafone Disposal Group On July 31, 2019, we completed the sale of our operations in Germany, Romania, Hungary and the Czech Republic to Vodafone Group plc (Vodafone). The operations of Germany, Romania, Hungary and the Czech Republic are collectively referred to herein as the “Vodafone Disposal Group.” After considering debt and working capital adjustments (including cash disposed) and €183.7 million ($205.8 million at the transaction date) of cash paid by our company to settle centrally-held vendor financing obligations associated with the Vodafone Disposal Group, we received net cash proceeds of €10.0 billion ($11.1 billion at the applicable rates). In August 2019, we used a portion of the net proceeds from the sale of the Vodafone Disposal Group to prepay in full the $1,645.0 million outstanding principal amount on a U.S. dollar-denominated term loan facility under the UPC Holding Bank Facility. Pursuant to the agreement underlying the sale of the Vodafone Disposal Group, we transferred cash to fund certain third-party escrow accounts (the Vodafone Escrow Accounts) pending the fulfillment by our company of certain terms of the agreement. The current and long-term portions of the receivables associated with the Vodafone Escrow Accounts are included in “other current assets” and “other assets, net”, respectively, on our consolidated balance sheet. As of December 31, 2019, the aggregate balance of the Vodafone Escrow Accounts was $295.2 million. In connection with the sale of the Vodafone Disposal Group, we recognized a gain of $12.2 billion that includes cumulative foreign currency translation gains of $88.2 million and income taxes of $35.4 million. In connection with the sale of the Vodafone Disposal Group, we have agreed to provide certain transitional services to Vodafone for a period of up to four years. These services principally comprise network and information technology-related functions. During 2019, we recorded revenue of $63.1 million associated with these transitional services. For information regarding certain tax indemnities we provided in connection with the sale of the Vodafone Disposal Group, see note 19. UPC DTH On May 2, 2019, we completed the sale of UPC DTH to M7 Group (M7). After considering debt and working capital adjustments (including cash disposed), we received net cash proceeds of €128.9 million ($144.1 million at the applicable rates). The proceeds from the sale of UPC DTH were used for general corporate purposes. In connection with the sale of UPC DTH, we recognized a gain of $106.0 million that includes cumulative foreign currency translation losses of $10.0 million. No income taxes were required to be provided on this gain. In connection with the sale of UPC DTH, we have agreed to provide certain transitional services to M7 for a period of up to two years. These services principally comprise network and information technology-related functions. During 2019, we recorded revenue of $1.4 million associated with these transitional services. UPC Austria On July 31, 2018, we completed the sale of our Austrian operations, “UPC Austria,” to Deutsche Telekom AG (Deutsche Telekom). After considering debt, working capital and noncontrolling interest adjustments and $35.5 million (equivalent at the transaction date) of cash paid by our company to settle centrally-held vendor financing obligations associated with UPC Austria, we received net cash proceeds of $2,058.2 million (equivalent at the applicable rates). A portion of the net proceeds were used to repay or redeem an aggregate $1.5 billion (equivalent at the applicable dates) principal amount of our outstanding debt, including (i) the repayment of $913.4 million (equivalent at the repayment date) principal amount under the UPC Holding Bank Facility, (ii) the redemption of $69.6 million (equivalent at the redemption date) principal amount of the UPCB SPE Notes and (iii) the redemption of $515.5 million (equivalent at the redemption date) principal amount of the VM Notes. The remaining net proceeds from the sale of UPC Austria were made available for general corporate purposes, including an additional $500.0 million of share repurchases. In connection with the sale of UPC Austria, we recognized a gain of $1,098.1 million that includes cumulative foreign currency translation gains of $79.5 million. No income taxes were required to be provided on this gain, which is included in gain on disposal of discontinued operations, net of taxes, in our consolidated statement of operations. In connection with the sale of UPC Austria, we have agreed to provide certain transitional services to Deutsche Telekom for a period of up to four years. These services principally comprise network and information technology-related functions. During 2019 and 2018, we recorded revenue of $42.8 million and $17.9 million, respectively, associated with these transitional services. In October of 2019, we received notification of certain claims made by Deutsche Telekom related to our disposal of UPC Austria. For additional information, see note 19. Split-off Transaction On December 29, 2017, in order to effect the split-off of the LiLAC Group (the Split-off Transaction), we distributed 100% of the common shares (the Distribution) of Liberty Latin America Ltd. (Liberty Latin America) to the holders of our then outstanding LiLAC Shares. Just prior to the completion of the Split-off Transaction, all of the businesses, assets and liabilities of the LiLAC Group were transferred to Liberty Latin America, which was then a wholly-owned subsidiary of Liberty Global. Following the Distribution, the LiLAC Shares were redesignated as deferred shares (which had virtually no economic rights) and Liberty Latin America became an independent publicly-traded company that is no longer consolidated by Liberty Global. No gain or loss was recognized in connection with the Split-off Transaction. Presentation of Discontinued Operations The operations of the Vodafone Disposal Group, UPC Austria and UPC DTH are presented as discontinued operations in our consolidated financial statements for all applicable periods. In connection with the signing of each respective sale agreement, we ceased to depreciate or amortize the long-lived assets of (i) UPC Austria on December 22, 2017, (ii) the Vodafone Disposal Group on May 9, 2018 and (iii) UPC DTH on December 21, 2018. Our operations in Austria, Romania, Hungary and the Czech Republic as well as the operations of UPC DTH were held through UPC Holding prior to their respective disposal dates. No debt, interest expense or derivative instruments of the UPC Holding borrowing group, other than with respect to certain borrowings that are direct obligations of the entities that were disposed, has been allocated to discontinued operations. Conversely, all of Unitymedia’s debt, interest expense and derivative instruments through the disposal date has been included in discontinued operations as its debt and derivative instruments are direct obligations of entities within the Vodafone Disposal Group. A portion of the proceeds from the disposition of UPC Austria was used to reduce the outstanding debt of the UPC Holding borrowing group. In addition, the entities comprising the LiLAC Group are reflected as discontinued operations in our consolidated statements of operations and cash flows for the year ended December 31, 2017. The carrying amounts of the major classes of assets and liabilities of the Vodafone Disposal Group and UPC DTH as of December 31, 2018 are summarized below. These amounts exclude intercompany assets and liabilities that are eliminated within our consolidated balance sheet.
| Vodafone Disposal Group |  | UPC DTH |  | Total
| in millions
Assets: |  |  |  |  |
Current assets other than cash | $ | 348.0 |  |  | $ | 8.5 |  |  | $ | 356.5 |
Property and equipment, net | 5,591.4 |  |  | 79.7 |  |  | 5,671.1 |
Goodwill | 3,986.7 |  |  | — |  |  | 3,986.7 |
Other assets, net | 509.4 |  |  | 7.4 |  |  | 516.8 |
Total assets | $ | 10,435.5 |  |  | $ | 95.6 |  |  | $ | 10,531.1 |
Liabilities: |  |  |  |  |
Current portion of debt and finance lease obligations | $ | 809.0 |  |  | $ | 11.2 |  |  | $ | 820.2 |
Other accrued and current liabilities | 1,114.8 |  |  | 32.5 |  |  | 1,147.3 |
Long-term debt and finance lease obligations | 9,037.1 |  |  | 37.5 |  |  | 9,074.6 |
Other long-term liabilities | 997.5 |  |  | 0.3 |  |  | 997.8 |
Total liabilities | $ | 11,958.4 |  |  | $ | 81.5 |  |  | $ | 12,039.9 |
The operating results of UPC Austria, the Vodafone Disposal Group, UPC DTH and the LiLAC Group for the periods indicated are summarized in the following tables. These amounts exclude intercompany revenue and expenses that are eliminated within our consolidated statements of operations.
| Vodafone Disposal Group (a) |  | UPC DTH (b) |  | Total
| in millions
Year ended December 31, 2019 |  |  |  |  |
Revenue | $ | 2,017.9 |  |  | $ | 36.7 |  |  | $ | 2,054.6 |
Operating income | $ | 1,165.6 |  |  | $ | 10.7 |  |  | $ | 1,176.3 |
Earnings before income taxes | $ | 994.7 |  |  | $ | 9.5 |  |  | $ | 1,004.2 |
Income tax expense | (273.9 | ) |  | — |  |  | (273.9 | )
Net earnings attributable to Liberty Global shareholders | $ | 720.8 |  |  | $ | 9.5 |  |  | $ | 730.3 |
_______________
(a) | Includes the operating results of the Vodafone Disposal Group from January 1, 2019 through the July 31, 2019 disposal date.
(b) | Includes the operating results of the UPC DTH from January 1, 2019 through the May 2, 2019 disposal date.
| UPC Austria (a) |  | Vodafone Disposal Group |  | UPC DTH |  | Total
| in millions
Year ended December 31, 2018 |  |  |  |  |  |  |
Revenue | $ | 252.4 |  |  | $ | 3,584.2 |  |  | $ | 117.0 |  |  | $ | 3,953.6 |
Operating income | $ | 139.0 |  |  | $ | 1,787.0 |  |  | $ | 11.7 |  |  | $ | 1,937.7 |
Earnings before income taxes | $ | 138.7 |  |  | $ | 1,396.3 |  |  | $ | 9.6 |  |  | $ | 1,544.6 |
Income tax benefit (expense) | (23.3 | ) |  | (365.2 | ) |  | 7.3 |  |  | (381.2 | )
Net earnings | 115.4 |  |  | 1,031.1 |  |  | 16.9 |  |  | 1,163.4 |
Net earnings attributable to noncontrolling interests | (4.2 | ) |  | — |  |  | — |  |  | (4.2 | )
Net earnings attributable to Liberty Global shareholders | $ | 111.2 |  |  | $ | 1,031.1 |  |  | $ | 16.9 |  |  | $ | 1,159.2 |
_______________
(a) | Includes the operating results of UPC Austria from January 1, 2018 through the July 31, 2018 disposal date.
| UPC Austria |  | Vodafone Disposal Group |  | UPC DTH |  | LiLAC Group |  | Total
| in millions
Year ended December 31, 2017 |  |  |  |  |  |  |  |  |
Revenue | $ | 394.9 |  |  | $ | 3,263.0 |  |  | $ | 114.6 |  |  | $ | 3,590.0 |  |  | $ | 7,362.5 |
Operating income (loss) | $ | 150.0 |  |  | $ | 976.0 |  |  | $ | 11.7 |  |  | $ | (162.9 | ) |  | $ | 974.8 |
Earnings (loss) before income taxes | $ | 150.0 |  |  | $ | 395.4 |  |  | $ | 9.7 |  |  | $ | (651.1 | ) |  | $ | (96.0 | )
Income tax expense | (4.5 | ) |  | (66.1 | ) |  | — |  |  | (204.0 | ) |  | (274.6 | )
Net earnings (loss) | 145.5 |  |  | 329.3 |  |  | 9.7 |  |  | (855.1 | ) |  | (370.6 | )
Net loss (earnings) attributable to noncontrolling interests | (6.8 | ) |  | — |  |  | — |  |  | 20.6 |  |  | 13.8 |
Net earnings (loss) attributable to Liberty Global shareholders | $ | 138.7 |  |  | $ | 329.3 |  |  | $ | 9.7 |  |  | $ | (834.5 | ) |  | $ | (356.8 | )
Our basic and diluted earnings from discontinued operations attributable to Liberty Global shareholders per Liberty Global Share (as defined in note 14) for 2019, 2018 and 2017 is presented below.
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Basic and diluted earnings from discontinued operations attributable to Liberty Global shareholders per Liberty Global share | $ | 1.03 |  |  | $ | 1.49 |  |  | $ | 0.56 |
Our basic and diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC Share (as defined in note 14) for 2017 is presented below. These amounts relate to the operations of the LiLAC Group.
| Year ended December 31, 2017
Basic and diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC share | $ | (4.86 | )
Weighted average ordinary shares outstanding (LiLAC Shares) - basic and diluted | 171,846,133 |
VodafoneZiggo JV Transaction On December 31, 2016, pursuant to a Contribution and Transfer Agreement with Vodafone and one of its wholly-owned subsidiaries, we and Liberty Global Europe Holding B.V., our wholly-owned subsidiary, contributed VodafoneZiggo Holding B.V. (VodafoneZiggo Holding) and its subsidiaries (including Liberty Global Netherlands Content B.V.) to VodafoneZiggo Group Holding B.V., a 50:50 joint venture (referred to herein as the “VodafoneZiggo JV”). The VodafoneZiggo JV combined VodafoneZiggo Holding with Vodafone’s mobile businesses in the Netherlands to create a national unified communications provider in the Netherlands with complementary strengths across video, broadband internet, fixed-line telephony, mobile and B2B services (the VodafoneZiggo JV Transaction). For additional information regarding our investment in the VodafoneZiggo JV, see note 7. During 2017, in connection with the completion of the VodafoneZiggo JV Transaction, our company received cash of €2.2 billion ($2.4 billion at the transaction dates) comprising (i) our 50% share of the €2.8 billion ($2.9 billion at the transaction date) of net proceeds from the various debt financing arrangements entered into by certain subsidiaries of VodafoneZiggo Holding during the third quarter of 2016, which proceeds were held in escrow through December 31, 2016, and (ii) an equalization payment from Vodafone of €806.8 million ($845.3 million at the transaction dates) that was subject to post-closing adjustments.

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