Liberty Global (LBTYA) CORRESPCorrespondence with SEC

In these arrangements, there are no actual cash flows from us to the vendor nor from the third-party creditors to us at the time our vendors are paid. At the time we enter into these non-cash arrangements we present the purchase of these inventory and other operating related items from the vendor as a hypothetical operating cash outflow, while the debt obligation with the third-party creditor is reported as a hypothetical financing cash inflow. Ultimately our actual cash repayment of the third-party debt obligation is reflected as a financing cash outflow. This presentation is consistent with our interpretation of Staff views as expressed at the 2005 AICPA National Conference on Current SEC and PCAOB Developments. In a speech given at this conference, the Staff expressed their views on the cash flow presentation for certain third-party financed dealer floor plan financing arrangements. Under these arrangements, auto dealers finance the purchase of their inventory with a third-party entity. The third-party entity pays the manufacturer, and then is repaid at a future date by the dealer. The Staff gave their view that this transaction should be accounted for as an “in-substance” financing cash inflow and corresponding operating cash outflow upon purchase of the inventory, followed by a financing cash outflow upon final payment from the dealer to the third-party entity. We have also considered the published statement of cash flows guidance of KPMG, E&Y and Deloitte, all firms which similarly conclude that such an approach is an appropriate accounting policy application in these circumstances. The disclosure of these arrangements in practice is limited due to the lack of authoritative guidance, thus the primary impetus for the FASB’s exposure draft, “Disclosure of Supplier Finance Program Obligations.” We have consistently and transparently disclosed the impacts of these transactions (both the expenses financed and

the amounts ultimately repaid) within our non-GAAP Adjusted FCF metric for the very reasons the exposure draft exists and are pleased to see the FASB is moving forward with an exposure draft to clarify disclosure expectations and create consistency among reporters.

With respect to the Staff’s question regarding our presentation of “Expenses financed by an intermediary” as an adjustment to net cash provided by operating activities in our presentation of Adjusted FCF, we advise the Staff that as stated in our Adjusted FCF disclosure, this metric is intended to provide investors with information about our ability to service debt and fund new investment opportunities. It should be further noted that this is the metric used internally to assess our liquidity and make capital allocation decisions, thus we are providing useful information to investors through the eyes of management. Given our cash flows from operating activities include these hypothetical cash flows, our Adjusted FCF and thus the view of our ability to service debt or fund new investment opportunities is impacted by these vendor financed arrangements. Accordingly, this adjustment to our Adjusted FCF metric and our related disclosures transparently reflects an add back of the hypothetical day one operating cash outflow related to the vendor financed arrangements discussed above. Upon repayment of such amounts, we transparently deduct these amounts from our Adjusted FCF metric as “Principal payments on amounts financed by vendors and intermediaries” thus, our Adjusted FCF metric accurately reflects the impact of the actual timing of cash flows related to these vendor financed arrangements so that our investors are provided with amounts and disclosures with respect to the actual cash inflows and outflows of our business in any given period. Without such adjustment, depending on our actual cash movements in any given period, the cash flows from operating activities included in our Adjusted FCF metric would inaccurately reflect actual cash movements thus, potentially leading an investor to have a significantly understated or overstated view of our ability to service debt or fund new investment opportunities. As we have not tailored our metric in such a way to accelerate or decelerate results, but rather report the actual cash impacts of these arrangements, we believe our approach is (i) transparent and well understood by our investors, (ii) provides important information to our investors with respect to our ability to service debt and fund new investment opportunities and (iii) does not result in a tailored metric that violates the basis for and principles of Q&A 100.04 of the CD&I on Non- GAAP Financial Measures.

    With respect to the Staff’s comment regarding presentation with equal or greater prominence of the most directly comparable financial ratios calculated in accordance with GAAP, we advise the Staff that on a prospective basis we will include a presentation with equal or greater prominence the debt and net debt to net earnings/loss ratios, the most directly comparable GAAP financial ratios, in compliance with the rules under Item 10(e)(1)(i)(A) of Regulation S-K.

With respect to the Staff’s comment regarding a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, we advise the Staff that on a prospective basis we will include a reconciliation of the underlying information used to calculate these non-GAAP ratios starting with LTM (last twelve months) net earnings/loss as reported in our consolidated statements of operations, the most directly comparable GAAP measure in compliance with the rules under Item 10(e)(1)(i)(A) of Regulation S-K,

and reconcile to LTM Adjusted EBITDA as used in our leverage calculations in order to comply with the rules of Item 10(e)(1)(i)(B) under Regulation S-K.